The e-retailer puts out a fulfillment call that could, by one estimate, increase its warehouse workforce by 10%.
Products being promoted by vendors exhibiting at Retail Systems 2001 demonstrated clearly that the web is changing every facet of the way retailers operate.
A visit to the exhibit hall at Retail Systems 2001 reveals the dramatically changing nature of the retail systems market. Only a year ago, the focus was on using web-based merchandising to boost sales. Today, the focus is on applying the web and technology related to the Internet to every phase of retailing. IR Newslink’s tour of the hall yields three samples of the changing nature of the market.
Net Perceptions Moves Beyond the Net
Net Perceptions Inc., a leader in web-based personalization systems, is expanding from its initial Internet applications market. Using technology developed for the market and experience gained in analyzing consumer web behavior, the Minneapolis-based company used its exhibit at Retail Systems 2001 to focus on its newer call-center and print promotion analytic software for the retail market. “With the demise of the dot-coms, we didn’t want to be web-based only,” explains Steve Van Tassel, senior vice president.
Formed in 1996, Net Perceptions rapidly built a base of 200 customers, mostly web-only merchants who purchased the company’s system for analyzing individual consumer patterns on a web site to determine the most effective product and promotional mix for that consumer. But Van Tassel estimates that only 75 of those initial customers are still in business, and most of the rest are operating on maintenance mode.
As a result, Net Perceptions shifted gears to market products that address the brick-and-mortar market. One, called Personalization Manager, tailors the web-based personalization software for the call center market, allowing customer service reps to quickly suggest certain products that are proven to cross-sell effectively with those products the telephone customer is ordering. Another, called Advertising Advisor, uses similar customer, promotion and product research to allow retailers to design Sunday newspaper circulars that are likely to ring up more and higher-margin sales.
The company still promotes to conventional retailers its more traditional software to enhance the web-site performance, but there’s a major difference between them and the dot-com crowd. “Retailers are looking at this technology, but they are much more methodical,” says Van Tassel. “They aren’t going to dive into it the way the dot-coms did. They want to see an ROI first.”
But Van Tessel believes that retailers will eventually embrace web-based personalization software the way the tech-oriented dot-com market did. “There has been a lull in the retail market for web-based technology, because the pressure has been taken off retailers (with the demise of the dot-coms),” says Van Tessel. “But the conventional retailers have got to get better at the web, because it is the channel that puts the customer dimension into how they run their business.”
Back to Minding the Store
Tony Comparelli, chairman & CEO of Toronto-based Mindthestore.com, spent the 80s and 90s building a successful company marketing a store-based, full-function POS software program to maintain customer, sales, inventory and employee files in addition to processing payment. But by 1995, the company’s sales were declining as its once unique software had been become a commodity product, and Comparelli could see that the Internet was about to change the playing field in retail systems.
Comparelli responded by taking an unusual step. He sold access to his customer base, shut down all marketing, hired 100 programmers and opened up what he calls “a sweat shop with Coke machines.” Using $3.5 million of his own money and $15 million raised in a private placement, Comparelli and his team of programmers spent the next five years developing a “web-centric” POS browser that allows merchants to use the web to gain real-time data on sales, inventory, customer and employee records, process payments and perform e-commerce. “It was a risky proposition to cut off the source of my livelihood,” says entrepreneur Comparelli. “But I knew I could not be successful by retaining our old legacy-based system and build a web application around it. In today’s retail environment, the Internet is the application.”
Mindthestore.com, which unveiled its new technology at Retail Systems 2001, has been piloting the system for the last year with 60 retailers. It recorded its initial sale in February, signing up 160 small commercial accounts since then. The company is now building a dealer network to market the product, which is targeted initially to small and mid-sized retailers. Four retail systems dealers have already signed up, and Comparelli hopes to expand that number to 500 in the next year.
Since the software and the retail database it maintains reside on one of three host servers, retailers do not need to purchase servers to support the new system, and they can access their data on any type of browser, even a wireless unit, from any location in or outside their stores. Retailers pay $199 a month per POS terminal for the service, which include web-site hosting in addition to the full-function POS service. “You can’t give retailers more technology infrastructure; they are up to their necks in it,” says Comparelli. “You can only market this technology by putting it all on the web.”
Compaq Announces A Retail POS Parntership
Robert Corbett, director of industry solutions for Compaq Computer Corp., was reminding visitors at the company’s Retail Systems 2001 exhibit that Compaq is not exactly a newcomer to the retail POS market. He readily points out that the Houston-based computer maker has captured nearly 10% of the market since entering it in 1997 and last year rang up $2 billion in POS terminal sales. But with the XPOS partnership it promoted at the conference, Compaq clearly has designs on a much greater stake in the market.
The partnership includes Microsoft (operating database management systems), QuickSell Commerce (POS software), Avnet (systems integration) and Fifth Third Bank (payments processing), and is spearheaded by Compaq, which provides the servers, POS terminals and kiosks. XPOS is a bundled package of web-enabled POS equipment, software and services that give retailers the real-time access to customer, sales and inventory data via the web using open systems architecture, off-the-shelf software and a complete array of terminals-from kiosks to hand-held wireless devices.