SPONSORED WHITE PAPER: Multi-channel integration
Today’s successful formula in retailing
Multi-channel merchandising is emerging as a top-of-mind issue for merchants
of all sizes. Whether they are local chains or national chains, catalogs or
direct-response TV operations, most have a web component today. And so most
are wrestling with the challenge of creating and integrating merchandising channels.
Tied together by a well-developed integration and e-commerce strategy, multiple
retail channels build customer loyalty, increase sales and generate repeat business.
1-800-Flowers.com, for instance, is enjoying record sales and strong customer
loyalty, thanks in large measure to an integrated merchandising strategy. “We’ve
been aggressive in offering new and different ways to shop with us and as a
result, we’ve increased repeat business from 30% of total sales to more than
40%,” says Chris McCann, president of 1-800-Flowers. “We give customers a total
gifting solution. That’s made possible by our commitment to multi-channel retailing.”
1-800-Flowers was among the first to try new ways of retailing, pioneering
the 1-800 concept to create a national market, then moving online with CompuShare
in 1992. With help from Fry Inc., a leading e-commerce design, development and
managed services provider, 1-800-Flowers opened the first store on America Online
in 1995 and developed a wireless commerce strategy in 1998.
Still in early phases
While the Internet and web technology are helping 1-800-Flowers become an
effective multi-channel retailer, the company is still an exception. Many retailers
have merchandising channels that let customers shop through catalogs, call centers
and the web, as well as in stores. But often those channels aren’t integrated,
with merchandise, prices and customer service policies varying from channel
to channel.
Merely operating multiple sales channels does not constitute multi-channel
retailing. Multi-channel merchandising requires a well-thought-out strategy
anchored by the effective use of e-commerce technology and Internet site design.
“Building a true multi-channel retail program is evolutionary. Many merchants
are still in the first and second phases in which they first optimize each channel,
then develop strategies so all channels share creative values, product assortment
and some business rules,” says David Fry, founder, president and CEO of Fry
Inc. in Ann Arbor, Mich. “More advanced multi-channel retailers are developing
synergy among all three channels by creating strategies that present a single
view of who’s shopping with them.”
Many retailers begin channel integration with merchandising and branding techniques
that encourage shoppers to use multiple venues. These techniques often take
the form of gift certificates purchased online and redeemable in stores, or
coupons for discounts in any channel.
Another strategy is a web-enabled gift registry linking a retailer’s fulfillment
systems to a real-time inventory management database. Fry worked with Crate
and Barrel to build an interactive gift registry at CrateandBarrel.com.
Before the electronic gift registry, engaged couples filled out forms at a
Crate and Barrel store and used the catalog or relied on the advice of sales
associates to select the gifts they wanted. When Crate and Barrel launched the
online registry, couples could create a personalized gift list and browse Crate
and Barrel`s housewares inventory. Wedding guests liked the registry because
it allowed them to buy a present the couple truly wanted even if the buyer did
not live near a Crate and Barrel store.
Crate and Barrel has continued to refine and enhance the online registry.
Today, couples can edit the registry if their gift selections change and browse
Crate and Barrel’s entire inventory of housewares and home furnishings. The
convenience of an integrated multi-channel gift registry means that wedding
guests buy fewer duplicate gifts that couples must exchange or, worse from the
retailer’s point of view, return for a refund.
But more importantly for Crate and Barrel, the online gift registry helped
facilitate the retailer’s multi-channel integration strategy. The web-enabled
gift registry features merchandise priced the same at its web site, catalogs
and stores. Crate and Barrel achieves better channel integration because order
management, customer service and fulfillment systems are tied into a central
database of real-time information. “The gift registry helps promote a seamless
shopping experience for the customer who wants to buy a gift,” says Rudy Pataro,
Fry’s vice president of information technology. “From the retailer’s perspective,
it tells shoppers: ‘We have you covered.’”
Linking disparate systems
Features such as electronic gift registries help merchants create a unified
brand, Pataro says. But before retailers add features and functions to promote
channel integration, their top priority usually is linking disparate operating
systems and databases. A large national chain may have as many as 15 supply
chain, order management, inventory management, point-of-sale and e-commerce
systems supporting store, catalog and web operations. These silos make channel
integration difficult. “The payoff of multi-channel integration is having a
single view of the customer and using an integrated stream of information to
understand the shopper’s complete history of transactions, interactions and
relationships,” Pataro says. “Systems issues can be a deal breaker for achieving
channel integration.”
Many retailers` first experience with channel and systems integration comes
in implementing an information management program to tie the entry of orders
from web to legacy systems. When Eddie Bauer first launched its web site, its
goal was to offer, via this new channel, the same levels of customer service
for which it was known. In making the commitment to e-commerce it recognized
that its customer service legacy was just as great an asset as its legacy IT
systems.
Working with Fry, Eddie Bauer devised a way to integrate its legacy-based
order entry system with orders placed at eddiebauer.com. This web order interface
device is helping the retailer and other Spiegel Group companies to achieve
better channel integration. An interface application stores all online orders
in a web-enabled database where customer service representatives can view incoming
order information on a common electronic order form. In the rare instances where
data discrepancies occur, such as transposed numbers or incorrect merchandise
codes, the customer service reps can easily fix one or two lines of information
and the order is quickly uploaded to the legacy system.
Seamless electronic order entry has allowed Eddie Bauer to significantly increase
the efficiency of its e-commerce customer service representatives and reduce
processing costs. But more importantly, Fry and Eddie Bauer used the web order
interface device as the catalyst to build a common e-commerce platform that
is helping the retailer expedite multi-channel integration.
For instance, Eddie Bauer can determine which customers are redeeming online
coupons or gift certificates at certain stores, assess which shoppers are using
the online version of its catalog, and track who is clicking on EddieBauer.com
and staying to visit other shopping portals such as Eddie Bauer Home or Eddie
Bauer Outlet. This single view of customers ultimately helps the company design
merchandising and promotions that deliver a better customer experience.
Better multi-channel retailing
Better data, integrated systems, and creative design and branding standards
help the retailer give a common look and feel to its merchandising outlets,
while enabling business units to track the progress of specific sales plans
or merchandising strategies.
"Implementing a centralized, services-based architecture,” Pataro says, “and
establishing unique shopper identification numbers that reflect all activity—regardless
of channel—are critical steps that enable retailers to compare customer behavior
online with what`s happening in the catalog and in-store."
While there are common steps, developing a multi-channel retail strategy isn`t
a cookie cutter process. “There is no one-size-fits-all approach that merchants
can use to integrate their offline and online retailing segments,” says Bridget
Fahrland, executive creative director of Fry. “The key is to start with the
consumer rather than the technology.”
To that end, Fry recommends that retailers create “multi-channel consumer
scenarios” as part of their design process by considering how and when consumers
will use channels. Fahrland notes, “It’s not about having ‘everything everywhere’
it’s about providing the right information, tools, and products in the right
channels. Multi-channel is not about echoing—it’s about harmonizing.”
Personal Creations, for instance, uses an online store and a catalog to sell
seasonal and specialty gifts. Four years ago, e-commerce accounted for only
about 10% of the retailer’s total sales, but Internet revenues are now more
than 50% and growing. As a multi-channel retailer, Personal Creations sees equal
value in offering customers a strong catalog and an e-commerce channel.
Personal Creations built its web store to reduce the cost of printing and
mailing catalogs and manual order taking. But working with Fry, PersonalCreations.com
has evolved into a retail channel that identifies catalog customers as well
as drives online sales.
A newly designed site, featuring Fry’s Microsoft-based e-commerce solution
Flagshiptm, is enabling Personal Creations to do a better job of cross-selling
merchandise and to hone its catalog merchandising. A new cross-sell feature
on PersonalCreations.com lets customers order catalog items from the web store,
while analytics tools and personalization applications built into the site’s
back end identify other merchandise that customers may be interested in purchasing.
Once the purchase has been made, the transaction is added to historical data
that helps Personal Creations refine its merchandising strategy. Catalog sales
benefit from the online analytics because Personal Creations uses its web store
to test merchandise for inclusion in catalogs and refine text and images before
publishing new editions.
A testing ground
“Each of our channels has its own strengths and weaknesses, but the Internet
is helping us do a better job of integration and identifying who is shopping
with us and where they are coming from,” says Personal Creations president of
e-commerce and new business development Geoff Smith. “By using the online store
as a testing ground to get a better handle on how customers are interacting
with us, we can improve our contact strategy within each channel, improve our
overall sales and reduce marketing costs for the business in total.”
Personal Creations considers its multiple channel retailing experience a success.
With a more uniform brand, better systems integration and a keen understanding
of how customers are interacting with its two channels, Personal Creations has
in the past two years increased its online sales conversion rate by 25%, reduced
checkout abandonment by 10% and reduced catalog marketing costs.
But as other retailers seek to achieve the same integration success as Personal
Creations, they must bear in mind that true multi-channel retailing is evolutionary—not
revolutionary. Eventually most catalogers will achieve what Fry defines as “phase
three” multi-channel retailing. At that juncture, stores, catalogs and e-commerce
sites are linked with integrated computer systems and stocked with the same
assortment of merchandise, which is universally priced and available in abundant
quantities. Phase three also provides customers multiple access points to all
channels.
Phase three multi-channel retailing means customers can use in-store kiosks
to shop online or from the catalog. They can order online and pick up in the
store. They can redeem coupons and gift certificates across any channel. It
also means retailers know exactly how their customers are shopping because each
shopper receives a single identification number by which cross-channel activity
is recorded. That, in turn, translates into better customer service because
the retailer knows every interaction it has had with a customer. Further, phase
three means consistent systems integration, giving merchants a single view of
inventory management and availability across all channels.
Retailers can succeed with channel integration in a number of ways using Fry
as a strategic planning and project management partner. Fry offers solutions
for merchants of all sizes, such as a suite of managed services including hosting
or a turnkey package that can include strategic consulting, information design
and usability, creative design and branding, application/systems integration,
and data reporting and analysis.
Fry is also launching packaged services such as Open Commerce Platform, a
standardized system with reusable components that support multi-channel merchandising,
membership, personalization and content management initiatives.
“Phase three is the future,” says CEO Fry. “Multi-channel retailing is truly
accomplished when merchants have a 360-degree view of the customer that reflects
all shopping activity and enables each shopper’s experience to be personalized
and enhanced. That’s the Holy Grail of channel integration.”
Manufacturers need to be multi-channel,
too
Manufacturers have long played a role in product retailing. But the web has
amplified that role. Retailers’ and manufacturers’ own experience, backed by
surveys, shows that many consumers turn to manufacturers’ web sites for product
information before they even start thinking about where to buy something.
Manufacturers suddenly find themselves in a position to influence sales in
a way they’ve never experienced before. “Manufacturers play a vital part in
multi-channel retailing and they exert tremendous influence over the purchasing
cycle,” says Ilana Richmond, senior consultant with Fry Inc., which collaborates
with a number of consumer product manufacturers to identify and implement effective
multi-channel strategies. “Manufacturers can help retailers support their various
distribution channels. They can take the lead in areas such as multi-channel
marketing and after-the-sale service where they have the opportunity to establish
a direct customer relationship.”
Whether they serve as the ultimate source of online product information or
use their web sites to create more Internet, catalog or store leads, manufacturers
must develop a multi-channel strategy that optimizes how they help retailers.
“While retailers concentrate on merchandising, we work with manufacturers
to achieve their goals in multi-channel brand awareness and customer service,”
says Andrew Krasner, Fry director of consulting services. “We created a multi-channel
lead effectiveness offering because our clients are looking for ways to generate
more sales leads from their web sites and to integrate the management of those
leads with other channels.”
For instance, manufacturers can use their own sites to provide extensive product
information and then build in features that direct sales leads to merchants.
Shoppers may begin their research on a retailer’s site, but often wind up on
a manufacturer’s site for more extensive information. Manufacturers can support
retailers with online multi-channel marketing applications such as a Store Locater
button, and advanced search and navigation tools that help customers find a
product and tell them which retailer carries it. They can even build Retailer
Buy Now buttons that direct shoppers to retailers’ e-commerce sites or store
locations.
By providing strategic consulting, information design and usability best practices
and the managed services expertise to integrate diverse back-end systems, Fry
works with both manufacturers and retailers to capture more of today’s new “multi-modal”
shopper.
