Creating Consistency

Guide to E-Commerce Technology

Retailers who understand their business, know their niche in the market and serve their customers effectively know that their brand promise is everything and that their entire operation must focus on delivering the brand promise.

However, retailers today face a major challenge in that technology expands the impact of branding into every corner of retail operations. Branding today is not just image; the brand permeates all operational elements: Communications, channels, logistics, employees. A retail organization that does not understand how technology affects its brand image probably will not survive because the operational basis of a retail business is its brand platform; harmony between platform and brand equals success; if the platform does not fit the brand, bye-bye.

A platform is the foundation on which an object is built, and it is no different for a home, a business plan, a brand, or an idea. We take all the elements of a good business—brand identity, back-office infrastructure and the way customer relationships are developed—and wrap them up into a full package called the “brand platform.”

The secret to success is uniqueness—and uniqueness starts with branding. However, a strategy based on branding means more than image, advertising, and products. Every element of an operation must reflect the brand—channel operations, store operations, logistics and fulfillment, IT approach and employees. We want to show how the brand platform is integral to success. A strong brand platform can support many banners, allowing you to expand smoothly in many different ways.

Most retailers understand the need to create a specific online retail brand image to offer a unique value proposition to customers. However, retailers must also ensure that their entire operations are focused on delivering the brand promise. Their brand platform (the end-to-end retail operation) must be structured to support the retail brand. Just as brands are unique, how each retailer structures a brand platform is unique and critical to delivering the elements to its customers.

Elements of a brand platform are:

Retail channels, which may be a combination of catalog, stores and/or a web channel. All are part of the core business identity.

Supply chain process, which delivers the products to customers in a timely fashion. If inefficient, the entire business suffers.

Marketing and customer relationship management, which today are converging and include product marketing, analysis of customers and products and customer service. Basic components include loyalty programs, customer profiles, purchase habits, results of promotions, the impact of weather on business, etc. This information is applied to the store and direct channels. and helps in determining future merchandising. The Internet ties together the web shopping site, the call center and anything you can learn about the store shopper and allows all that data to be delivered to any channel as well.

The pain points

Six primary pain points are addressed via the brand platform:

Channel Cacophony: All retailers are multi-channel and channels must work in harmony to express the brand.

Customers = Strangers: Growth depends on loyal customers, and loyalty is dependent on knowing customers, their needs and wants, and how to present offers that are seen as a benefit, not an annoyance.

Work Force Woes: Sales and service people and your web site represent your brand and they represent a challenge in a low-paid, high turnover sector and virtual relationships.

Online Chaos: The greatest buyer cannot overcome the handicap of out-of-stocks, empty shelves, and disarray.

Supply Chain Busted: Cash flow improves by shortening the time from supplier to warehouse to store.

Fulfillment: Whether customers buy online, in-store or from a catalog, retailers face new outbound logistical problems in getting product to the customer and handling returns.

A successful brand platform requires a consistent presentation to the customer, regardless of the mode or purpose of the interaction. Consumers now choose from an expanding set of channels for their retail shopping and buying. Too often, retailers view these channels as parallel roads—a consumer chooses one road, and then drives down it to the end of the product purchase cycle. The result can be a disjointed experience for the customer, where policies and messages are inconsistent, and sometimes in actual conflict.

By contrast, buyers treat the different channels as a multilane highway, changing lanes when convenience and traffic conditions dictate. For instance the role of the web in researching a product before a customer buys the product offline is well documented. But a retailer who thinks of the web only as a sales channel will miss opportunities to serve customers who are more comfortable buying in person.

Greater reach, greater risks

Clearly, the more selling channels a retailer operates, the greater the reach, opportunity and exposure to the customer. And the greater the risk of a mis-step in one channel or more. Successful multi-channel retailers integrate these channels from user interface, data collection and supply chain perspectives—and address channel conflict and cannibalization issues. Consumers need to see the same face of the retailer, regardless of the channel they use. This single unified face should provide consumers with efficient and ideally near seamless transitions as they move between channels at different points in the buying process.

At its best, this requires integration of information from all channels, so a complete and up-to-date record of interactions, pricing, agreements and selections is available at each touch point. Such a capability will provide a competitive advantage to retailers. Over the longer term, it will be a necessity for high-ticket or complex products.

In building a brand platform, the first question a retailer needs to answer is: Which category of retailer do I fit into and how does the web help me execute my offline strategy with online shoppers? For example, Sears, Roebuck and Co. is known for small and large home appliances and Master Craftsman tools. Its web site delivers tool specs and side-by-side comparisons of appliances to deliver that continuity of experience with shoppers.

Fulfillment is also affected by the web. For instance, a retailer who relies on the manufacturer to fulfill web or catalog orders has to communicate with that supplier via the web to know product and order status all the time. If there is a fulfillment problem the retailer can tell the customer right away. And rapid communication with suppliers is equally important for chains. A web-based supply chain allows a trendy fashion retailer, for instance, to be up to the minute with fashions while they are hot. A web-based supply chain also allows online collaboration with product designers to cut weeks out of the design and sourcing of products to get them to shelves while they’re hot.

The web allows an infinite variety of marketing approaches, but a retailer has to make sure its marketing suits its audience. A discount mass merchandiser, for instance, would want e-mail marketing pieces not to be too elaborate since many customers might not have sophisticated computer systems. But a retailer of high-end, electronic, got-to-have-it gadgets probably would want a campaign that demonstrates the technological sophistication of the retailer and makes the recipient feel cool for having adequate technology. In addition, a retailer must know how its customers use the web—for shopping, for buying or for finding a store.

Finally, the web affects store operations. Web-enabled kiosks and point of sale terminals help establish a brand. Example: Virgin Megastores has web-enabled listening stations so customers can sample music from 200,000 CDs. That helps Virgin live up to the Megastore name. Web-enabled gift registries appeal to young people whose families may be scattered across the country. They like the idea of registering at Field’s in Chicago so their aunt and uncle in Ottumwa, Iowa, can buy them a gift online. And web-based educational initiatives for store personnel quickly address the needs for training and re-training so sales associates can provide experiences to customers that match the retailer’s brand.

Who will last?

A retailer’s identity is shaped by the communication and physical display of its core message, which is the brand, through every facet of the retail operation and that brand must translate onto the web. From the product assortments and promotional offerings, to the store shelves and associates serving customers, all elements are essential contributors to the delivery of the brand promise across all channels.

Soon, the leading retailers will be masters of the brand platform, combining the best of both worlds: uniqueness and efficiency. Wal-Mart Stores Inc. and Target Corp. are likely to be the only mass merchandise discounters standing five years from now because they are already mastering uniqueness—Wal-Mart, driven by low prices, Target, by offering low prices in an upscale setting, and both by mastering the supply chain. So retailers who expect to grow will find it impossible to compete via discounts, promotions and low-price specials.

Thus they will have to build brands that appeal to specific segments —ethnic, life-stage, aspirations, and emotional or needs-based identities. Then they will have to build a brand platform that fully supports their brand strategy—and much of that platform will begin and end on the Internet.

Geri Spieler is research director, Gartner Group Inc.’s Gartner G2 Retail Services Group. She can be reached at geri.spieler@gartner.com