Although most large retail chains say multi-channel retailing is a corporate priority, many haven’t taken the necessary steps to protect their market share from more nimble Internet pure-plays, says AMR Research Inc. analyst Rob Garf. “While everybody’s talking about the online channel as a key area for growth, the question is what are they actually doing?” he tells Internet Retailer.
To effectively leverage the web channel in a multi-channel environment, retail chains need to re-engineer business processes and integrate legacy software systems with new e-commerce systems, Garf says. Store POS and online order management systems, for example, should be fully integrated into a multi-channel merchandising, replenishment, fulfillment, analytics and customer service environment, so that the retailer can use information about customers’ multi-channel shopping behavior to effectively serve them online as well as in stores, he says. In addition, retailers need to train store employees on how to promote the web channel as an option for store shoppers, he adds.
But because Internet sales as a percentage of total revenue have been relatively minuscule for traditional brick-and-mortar retailers, many of them have not focused on the overall effort needed to leverage the opportunity of cross-channel selling, Garf says.
At the same time, however, new online retailers like footwear retailer Zappos.com and computer products merchant Newegg.com have taken market share away from traditional retailers. Zappos has surged in six years to $300 million, while Newegg.com hit $1 billion last year, its fourth year in business.
“Pure-play upstarts are capturing market share because of their hyper-focus on specific categories and their ability to flawlessly execute and service their customers via the web,” Garf says.
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