July 30, 2003, 12:00 AM

Multi-Channel E-Commerce

Web-based systems are allowing merchants to become truly multi-channel.

There has never been a more opportune-and challenging-time to be a multi-channel retailer. The opportunities appear limited only by a retailer’s imagination, as merchants continuously explore new ways of leveraging each selling channel to promote and merchandise their goods across all channels.

At the center of all this activity are web-based systems that enable retailers to better communicate with customers, test merchandising strategies, and improve the shopping experience in whichever channel - or combination of channels - a customer prefers to shop.

But while technology is providing for more opportunities, politics and traditions are still presenting challenges to overcome. “Most companies are far from integrating all three channels of stores, web and catalog,” says Jim Okamura, retail consultant who specializes in multi-channel strategies at J.C. Williams & Co. “It’s a case-by-case situation where retailers are learning to use online technology to leverage multi-channel strategies. They often still operate in channel silos with political battles, and multi-channel proponents need time to get buy-in from other executives.”

Early adopters

Still, multi-channel strategies and shopping experiences that encompass the web, catalogs, stores and even television are becoming far more common than in the past. Retailers are using online promotions to drive customers into their stores, offering sweepstakes and other special promotions in stores to elicit e-mail addresses and build an online relationship, and placing kiosks in their stores to give brick-and-mortar shoppers the advantages of online selection and product research.

And more retailers are following the lead of early adopters like REI Inc., RadioShack Corp. and Sharper Image Corp. REI, for example, is giving store shoppers the option of ordering out-of-stock products online through in-store web-based kiosks. To save on shipping costs, products ordered through the kiosks can be shipped directly to stores as part of the next scheduled store shipment. A popular item ordered through the in-store kiosks are canoes, which can be difficult to stock in-store without taking up a lot of space. When a customer comes back to the store for pick-up, REI has the opportunity to cross-sell products like outdoor clothing and a car roof rack for hauling the canoe home. REI recently extended the in-store pickup option to merchandise ordered online from outside the store.

Although in-store web-based kiosks have not grown as much as once expected in supermarkets and other retail locations as a way to offer virtually unlimited product selections, kiosks are popping up as part of multi-channel strategies at companies like RadioShack and 7-Eleven Corp. At RadioShack, the kiosks bring in-store the extensive product research capabilities of RadioShack.com to both customers and employees and show the flexibility of online shopping. RadioShack.com, meanwhile, is designed to display the same kind of advice-focused service common in RadioShack stores. 7-Eleven is taking in-store kiosks in still another multi-channel direction, by connecting them into the Cyphermint Inc. network; shoppers in 7-Eleven stores can now use the chain’s Vcom kiosks to purchase products directly from online retailers such as art vendor Barewalls.com and 1-800-Flowers.com.

Two goals

There are two general goals related to multi-channel retailing: providing customers with the flexibility to shop however they prefer and designing a strategy that uses each channel to a retailer’s advantage. At Sharper Image, which thrives on offering the latest in high-tech consumer products like its patented fanless air purifiers, the web makes it easier for it to offer a broader selection of innovative products than can always fit into its modestly-sized stores. In keeping up its emphasis on customer service and offering customers multiple ways to shop, it has been increasing its number of stores and catalog pages as well as conducting TV infomercials. And if a store customer doesn’t want to wait in line, she can use an in-store kiosk to order something from SharperImage.com.

The flexibility of web technology is likely to continue bringing retailers further into multi-channel retailing, Okamura says. REI, for instance, is using web services technology to integrate CRM data from its multiple selling channels, to provide a centralized ability to view and respond to customer buying behavior regardless of where it occurred.

By coordinating information on how their customers use separate channels, Okamura says, retailers can tailor marketing strategies and channel merchandising to maximize customer response while cutting operating expenses in channels with slower sales. “Slowly but surely retailers are learning to leverage web technology and processes for other channels,” he says.

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