In its second-largest acquisition, Amazon buys the company for $970 million.
Retailers scramble to meet cross-channel shopper needs
Consumers tend to be a demanding bunch: They order off the web but want to pick up purchases in a store; or they want their products right away, no matter where the retailer might have a warehouse; or they want up-to-the minute data about what stock resides in a specific store.
These are just some of the order management challenges retailers face today as more consumers shop across multiple channels. And e-retailers keep raising the bar, forcing others to keep up. For instance, Amazon.com set a new pace for fast delivery late last year when it began offering same-day shipping on thousands of items in seven cities: Baltimore, Boston, Las Vegas, New York, Philadelphia, Seattle and Washington, D.C.
It's not a unique offering. Barnes & Noble Inc., for example, already offered same-day delivery in Manhattan. But Amazon is making the offer in many more markets.
Competitors and analysts are watching closely to see how Amazon fares. "People underestimate what home delivery is all about—it isn't simple," says Paula Rosenblum, managing partner at Retail Systems Research LLC. "There are endless variables that make it hard to narrow delivery windows, particularly in big cities. With so many moving parts, there are any number of things that can go wrong."
Retailers are also trying to keep their order management systems up to the minute on inventory so they can deliver to consumers the products they want, including seasonal items that can quickly go out of stock.
At the Internet Retailer Conference & Exhibition in June, for instance, Ian MacDonald, vice president and general manager for the party supplies retailer CenturyNovelty.com, told how the company moved off one order management system that did not accommodate the frequent addition of new items, a vital task for a company that sells products geared to specific holidays.
Other retailers make sure their online order management systems enable customers to keep shopping local stores they know. In June, the 87-year-old Alexander Doll Co. Inc. launched its first e-commerce site with about 325 items for sale. Dolls purchased through the site ship directly from the company or a network of more than 50 retailers. The retailer bought an order management system that enables consumers to pick up dolls from physical stores that sell the items.
"We expect that customers who have existing relationships and dealers will keep those relationships," says Robert Porell, CEO of Alexander. "Our web site will capture incremental customers and sales through our brand presence and increased marketing to consumers."
Some retailers have to work around inflexible order management systems. For instance, Equator Estate Coffee & Teas sell small lots of coffee exclusively on its Facebook page because it's too much trouble to add items that will quickly sell out to its web site order management system. That means maintaining two order management systems, but that's not a big deal because Equator is a relatively small operation, says David Pohl, the retailer's head roaster.
Meanwhile, multichannel retailer Performance Bicycle plans to install by the holiday shopping season a new order management system that enables shoppers to see how much inventory the retailer has stocked in its four warehouses. When an order is placed, the system will direct the order to the warehouse closest to the shopper.
"We expect to see a definite improvement in inventory management and customer service," says Jane Parker, vice president of warehouse operations.