Retailers shift their ad spending from TV, radio and print ads to digital ads.
As consumers demand flexibility in shopping, retailers flex their order and fulfillment channels.
At Harry Rosen Inc., a half-century-old menswear retailer long known for tailored suits for well-to-do and often older gentlemen, the challenge these days is to draw in more and younger buyers. And since many of them like to shop online, via mobile devices and through new media like Facebook—as well as in its personal-service-oriented stores—this apparel merchant is preparing to lay out its welcome mat in all those venues.
At Henry's Camera, which takes orders across stores, several web sites, eBay auctions and social media sites, cross-channel order activity—where customers buy online as well as in stores, or research in one channel and buy in another—boosted sales in the 2010 holiday season by 50% over the year-earlier season, says vice president David McPherson.
As Harry Rosen, Henry's and other multichannel retailers realize, it pays to operate with order management and fulfillment systems that can accept and manage orders from wherever customers want to shop and fulfill those orders from the most appropriate inventory stock. Consumers tend to spend more with the same merchant when they shop across multiple channels. According to a report from research and advisory firm Retail Systems Research LLC, 65% of retailers said multichannel shoppers were more profitable than single-channel shoppers in 2010, up from 40% who said the same in 2007.
"We know that many of our customers are multichannel customers, thus the average per-customer spend with us is higher than it would be for single-channel shoppers," says Tamy Butterfield, head of e-commerce at Harry Rosen. "As a result, our relationships with customers become deeper since we are able to service their needs regardless of their preferred channel. This results in repeat business and higher referrals."
Power of the web
The ability to manage orders across channels is also helping retailers to leverage the strength of the web across stores and call centers. At Henry's, particularly strong growth in e-commerce sales is helping to drive sales across stores and contact centers.
Online shoppers and call center agents, for example, can view products currently available in stores as well as in the distribution center and also see how long it would take the goods to arrive at the shopper's home. Because it can view the orders a customer has placed in different channels, Henry's is better able to run promotions across multiple channels without guessing about customer interest. By being able to fulfill orders from multiple locations, including stores, it's more likely to have the inventory to satisfy customers who respond to promotions.
"Our e-commerce channel is growing significantly, and the ability to seamlessly manage products, promos, orders and customers across all channels is very important to facilitating overall growth," McPherson says.
Harry Rosen manages its cross-channel orders and fulfillment operations on an e-commerce and order management platform from iCongo Inc. integrated with a GERS inventory management system from Escalate Retail; the system automatically routes online orders to either a distribution center or to an individual store nearest the customer.
The routing is based on business rules the retailer creates. For instance, if a distribution center is out of stock of the product ordered, the retailer routs the order to a store with the highest level of that item and nearest the customer.
New sales channels create new opportunities, but also new operational challenges. HauteLook, a members-only online retailer that runs limited-time sales of fashion apparel, is already scoring with increases in both customer traffic and sales through what it calls "off-platform" customer activity—or shopping that's initiated outside of its e-commerce site via mobile phones and social media.
For a typical sales event, which can run over a day or more, HauteLook receives about 10% of its orders off-platform, a spokeswoman says. It learned more about the power of Facebook as a selling channel, however, when it ran a Facebook-only event for the DVF fashion apparel brand, also known by its designer's name, Diane von Furstenberg.
The Facebook-only DVF event in December coincided with a doubling of off-site transactions to 20% of the total. In addition, the DVF promotion generated more than 36,000 new fans for HauteLook and DVF, and new customers accounted for 40% of the DVF Facebook transactions.
Of 23 sales events that HauteLook initiated on the same day last month, the DVF Facebook-only event produced the second-largest volume of gross sales, the retailer says. The DVF Facebook sale's first day produced a conversion rate that was double the conversion rate on HauteLook.com. DVF is one of more than 1,500 brands that HauteLook offers.
HauteLook manages its Facebook orders through Alvenda, which integrates the Facebook storefront with HauteLook's e-commerce site through HauteLook's application programming interface to connect with the retailer's e-commerce shopping cart for processing orders and its product catalog for displaying product images and details. HauteLook uses the same API to tie orders from its mobile apps to its e-commerce order management system, the spokeswoman says. An API is a set of instructions for automatically sharing information with a software system; in this case, it enables HauteLook's Facebook storefront to send order information to the retailer's online shopping cart.
Henry's Camera receives referral orders via Facebook and Twitter as well as several of its own e-commerce sites, eBay auctions, a call center and a chain of 36 stores. It relies on an e-commerce platform and order management system from OrderDynamics that integrates with the retailer's home-grown warehouse management system and an IBM AS/400-based point-of-sale and enterprise resource planning system for back-end financial and other business software.
That set-up allows Henry's to not only manage orders across channels, but to also show customers available inventory across various storage points, McPherson says. Online shoppers can see, for example, if a product is available in a store instead of the e-commerce-dedicated distribution center and how long it will take for home delivery.
Marketing across channels