Target and Toys R Us posted overall sales declines during the holidays.
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Moreover, building links without web services could cause problems in downloading information due to less robust integration, Palmer adds. “The old way would take more time to code and provide less reliability and performance,” he says. “But my main job is solving problems, and I can see a need for web services-based PDAs.”
At London Drugs, a chain of 56 retail pharmacies, web services are expected to ease an expansion that will nearly double its number of stores over the next few years. The company is using web services development technology from Microsoft, including the BizTalk Server as part of the .Net platform. “Our goal is to grow to 100 stores over the next nine years, and the web services environment we’ve set up will allow us to do that without adding significantly to our infrastructure,” says Nick Curalli, general manager of information technology for London Drugs.
In addition to extending real-time visibility into its supply chain processes, London Drugs is using web services technology to tie several in-store business applications from multiple vendors, such as payroll and human resources programs, to a central server in each store, and from the store server to headquarters. Without web services standards, this kind of in-store and corporatewide integration would require additional coding and network connections as well as a larger IT staff to maintain a more complicated system, Curalli says.
In one of the more effective applications of web services already showing results in higher web sales conversion rates, dozens of manufacturers, including Panasonic, Sharp Electronics Corp. and Hewlett-Packard Co., are using a web services-based system to let shoppers on their web sites see near-real-time updates of linked retailers’ store inventories. In this way, shoppers can be assured of a product being in stock before they choose to buy from a particular retailer.
The system is provided by Celebration, Fla.-based Channel Intelligence, whose co-founder and CEO Rob Wight is a former Microsoft executive who helped develop the .Net platform and its support for web services.
The Channel Intelligence system is also designed to enable shoppers to transfer from the product image on a manufacturer’s site to a retailer’s buy page in two mouse clicks. The combination of the quick links and the inventory updates, Wight says, provides for an improved shopping experience that has resulted in 4 to 10 times more leads from manufacturers’ sites converted into sales on the retailers’ sites. That’s in comparison to the number of sales conversions from earlier versions of linked manufacturers’ and retailers’ sites before Channel Intelligence implemented its web services platform.
Before the current system was put into place, shoppers on manufacturers’ sites who were ready to buy would link to a retailer’s site, then have to search again for the desired product. Often the retailer’s site did not indicate whether it was in stock. “We’ve heard from some manufacturers that these increased rates of conversions have resulted in up to 30% increases in corresponding online sales of particular products,” Wight adds. Channel Intelligence, which launched its service with Panasonic in December 2001, is working with 50 manufacturers and 150 retailers. Many of the retailers connect with multiple manufacturers.
Thanks to web services, Wight says, Channel Intelligence is able to integrate a manufacturer’s web site with the sites of 10 or more retailers within an average of three days. Building that integration without web services, he says, would be far more complicated. “If we had to do this on the other model, I can imagine all the layers for two-way communication that would have to go on. There’d be more client/server applications,” he says. “But by having this web services model, we don’t have to add any middle communication weight to it.”
Wight says many of the participating retailers have no web services in their own infrastructure. But that’s not a problem, he adds, because Channel Intelligence can use its own web services to quickly capture the information it needs from the retailers’ web sites to provide the shopping link with manufacturers. But after the participating retailers begin to experience an increase in sales, Wight will offer to build web services directly into their own infrastructure. Because that would make them integrate even faster with manufacturers’ web sites, Wight figures he can then get these retailers connected with additional manufacturers.
Web services can be useful in the retail industry, experts say, because web services applications developed for a particular purpose can be reused for another purpose. That’s particularly helpful in retail, says Kimberly Knickle, research director for AMR Research Inc., because of the changes retailers constantly face in high employee turnover, a changing supplier base, and changing product lines. She says the turmoil is greater in retail than in other industries.
A human resources application built for a particular retail department during peak employment, for instance, could be reused by a different department as employment needs evolve. An inventory replenishment application developed for suppliers can be reused as the ranks of suppliers change. And a merchandising management application could be redeployed as fashion demand hits a different style.
Moreover, retailers often are pressed for time to get new systems in place in time for particular selling seasons. “Most retailers have a short window to do their technology projects,” says Hughes of REI. When starting out a year with plans to implement new technology systems to support the fourth-quarter’s holiday shopping season, he notes, retailers have barely nine months to get a new system up and running. Because web services don’t require the heavy code-writing or extra hardware installations of conventional technology launches, they make it easier to introduce new systems in a shorter time span. “And web services also provide the flexibility to change that system year to year,” Hughes says.