The online retailer has spent nearly $300 million acquiring three shipping software vendors over the past nine months.
(Page 2 of 2)
In addition, the program includes an alert system that flags stores that are not in compliance, meaning management can react quickly, Anderson says. “The way we normally check compliance is with field people,” he says. “We have one field person for every 60 stores, meaning it was very hard to make sure all stores were in compliance. Now I don’t need any field people and I have every store covered.”
The reasons stores fail to comply with marketing plans can be many, from a lack of adequate staffing at stores due to illness or just plain failure to show up for work to failure of the vendor to deliver the display or product at the right time. Information from this system can help manage those situations, Anderson says.
BP has not computed ROI, Anderson says-”That’s till being worked through because the technology is so new,” he says-but he notes that, in addition to less need for labor, test stores achieved better increases in same-store sales than did the chain as a whole.
Anderson says that, from BP’s point of view, installation of the system was easy. Goliath provides the RFID technology to the manufacturers of signs and display, installs the systems in the stores and meets with managers to promote the system, he says. “It was very easy for the store managers because they didn’t have to do anything over and above what they were doing already,” Anderson says.
As BP rolls out the technology, executives will be looking very closely at which products they want to monitor. “This technology is very good, but understanding what you want to measure and why is key,” Anderson says. “Measuring an item that is only 1% of your sales won’t get you to the promised land. Measuring an item that accounts for 8% of your sales will be much more effective. You want to be strategically looking at your best selling items.”
Senior level advice
While he won’t provide details, Michelson says the RFID system costs “in the single-digit dollar range per month per display.” He adds: “We wanted to price it at a fraction of what it would cost to use auditors to monitor displays.”
He reports that interest has been strong, with a drug store chain and a supermarket chain exploring the system. He also notes that Goliath believes there is a large market for its systems and an ongoing need. “A chain with 1,000 retail locations could have 200 different promotions going on in stores,” he says,
Goliath’s board of advisers include Tom Smith, former CEO of Food Lion, and Vern Brunner, former executive vice president of Walgreen Co. “That kind of expertise on our board makes us a more serious player,” Michelson says. In addition, Goliath in February received a $2.5 million investment from Checkpoint Systems Inc., a provider of RFID systems for tracking consumer products, the first outside funding.
A systems developer with a more ambitious plan of store monitoring is Siva Corp., which primarily serves the restaurant industry. Siva deploys a series of devices that deliver information via the web to management. Among its applications are sensors that report oven and refrigerator temperatures and issues alerts so remote management can make sure food is being stored and prepared properly. The company also has a number of customers who use the sensors to detect how often restroom doors are opened so an employee can be alerted when the restroom might need cleaning. The door-opening technology can also be applied so a central management team can know if someone showed up to open the store in the morning.
In using this technology, president Jim Melvin says management has to make decisions, much as those using the Goliath system must do, as to what’s important enough to monitor-and how often. “There can be too much information,” he says. “Managers have to focus on the three or four things that can make the most impact if improved over the next 90 days. Once that improvement is achieved, they can rotate to the next four or five most important things.”
Aside from behind-the-scenes applications in stores, many web technology companies are providing behind-the-scenes support on the web. Among Dolphin Equity Partners’ recent investments was participation in a $4.5 million round of funding along with Hudson Venture Partners in inQ Inc., a provider to online retailers of post-sale cross-sell and upsell technology.
Once a sale at a participating retailer is complete, inQ launches what it calls a chatskin-a live chat box that appears after the order confirmation. It offers the customer the chance to buy coupon books, discount packages or other products outside the retailer’s core offering. The chatskin’s appearance mimics that of the retailer’s web site, so the customer is unaware that the offer is coming from outside. Says Marcy: “It’s a good example of the kind of Internet technology by a company that consumers don’t know at all.”