Amazon is growing on-demand services after reporting a 20% sales increase in 2015.
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Whatever systems the retailers use, their objective is almost always the same: They want to increase the chances for a customer to buy. “We will be exponentially opening the way a customer can come to us and find a product,” says Kent Zimmerman, director of e-commerce with Finish Line, a retailer of sports shoes and apparel. Finish Line operates 409 stores in 41 states and a web store, FinishLine.com. It started a 50-store pilot in March using the Found inventory system.
If a Finish Line customer is looking for a particular product in a store that does not stock that product or that is simply sold out of it, a sales clerk can input the product information into a point-of-sale terminal, which is linked via a frame relay and the Internet to a central inventory repository maintained by Found. The system then tells the clerk if the product is available in a nearby Finish Line store, other stores or via the web site. The clerk can then place the order for the customer. The customer can pick up the product at another store or have the product shipped to the store for later pick up or shipped to the customer’s home. “There are a lot of restrictions put upon us by floor space and product limitations,” Zimmerman says. “We are trying to get out of that by giving the customer the opportunity to shop the entire company.”
Found spent $50 million creating a system that aggregates data in a master index at a central host and makes it available to a retailer’s operation for search or for transactions. The system also incorporates business rules related to inventory management. For instance, a retailer can tell the system that it wants to report no inventory when the stock reaches a certain number, thus leaving some inventory for sale in certain stores. The Found system integrates with store-level POS systems such as Triversity and Datavantage, which are web-enabled to send the inventory information to the Found database.
Finish Line nightly reports its inventory levels to Found, which then updates the master index for the next day. Finish Line maintains the authoritative company inventory system. “With the Found system, we didn’t have to modify our point-of-sale systems or our web site,” Zimmerman says. “And we didn’t have to re-invent the wheel on how we manage inventory. We created a data feed to Found. At the end of the day, we give them a baseline. As products are sold the next day, they update the master index. The database of record will always be at Finish Line.”
Lawson says retailers can expect to pay several hundred thousand dollars to get such a system up. Zimmerman will not say how much Finish Line paid, other than to note, “We worked with Found to do something that is beneficial to both of us.” With the pilot just under way, Finish Line has no results yet. Says Zimmerman: “It’s a very complex project. We have to think it will pay great dividends for the company.”
Extending the reach
Hudson’s Bay Co. has been tying its store and distribution center inventory into a single system partly to achieve the same goal as Finish Line: extend the inventory of each store. But Hudson’s Bay also wanted to extend the reach of its stores. Hudson’s Bay operates 101 The Bay full-line department stores, 301 Zellers discount stores, 30 Zellers Select stores, 15 Fields department stores as well as the hbc.com web site. An IBM 4694 POS system is Hudson’s Bay’s link into a web-based inventory system that allows store shoppers and personnel as well as Internet customers to know the availability of an item.
Besides the benefit of allowing web customers to buy from Hudson’s Bay’s stores, Hudson’s Bay also gains from this system by making it easier for store sales personnel to close sales. “One of the short-term benefits-particularly at The Bay-is that we want to provide functionality at the store level,” says David Alves, general manager, merchandising and marketing at hbc.com. “With a big-ticket item, store personnel have the ability to dynamically check on inventory and a delivery date.” Previously, checking availability would have taken two or three days and setting up a delivery time, four days.
But longer term, Hudson’s Bay wants to expand the inventory that discount-chain Zellers can carry. “We hope that in markets where there is not a Bay store, we can use web-enabled POS within Zellers to sell products that Bay sells,” Alves says. For instance, tests have shown that customers are willing to buy appliances at a Zellers store by ordering over a web-enabled kiosk. Zellers would stock only four or five samples. “We could create a marketing campaign around the fact that this extends our product offering,” Alves says.
While extending product is important, having the POS system tied to the Internet allows a store to accomplish much more. For instance, a store could use a web-enabled POS device to order a sale product that it is sold out of, rather than issuing a rain check. The store could ship the product directly to the customer, rather than having to deal with the logistics of getting the product, then having the customer pick it up at the store and pay with a rain check.
A retailer could also use a web-enabled POS system to promote items to customers during checkout. In one scenario, a customer would view a split screen. On the left would be the information relating to the transaction taking place; on the right would be promotional content served up by a browser and relating to the transaction or to some other subject. “A department store could be promoting a sale in another department, or a supermarket could be promoting a community activity,” says Tracy Flynn, vice president of product and solution marketing for the retail solutions division of NCR. Elder-Beerman Stores Corp. of Dayton, Ohio, is using NCR’s web-enabled POS devices.