Best practices multichannel-integration
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Best practices multichannel-integration Best practices multichannel-integration Document Transcript

  • BEST PRACTICES: Multichannel Integration Learn what the experts say about the benefits and challenges of multichannel retail integration. Developed and published by:
  • Table of Contents www.retailcustomerexperience.com Joseph Grove, executive editor josephg@networldalliance.com Page 3 Multichannel retail integration: An overview Part I: Industry Insights Page 8 Creating a customer-centric multichannel experience from the inside out Brenna Johnson, product marketing manager, Endeca Page 10 The logistics of inventory sharing in multichannel retail Chris Allan, chief customer officer, Quantum Retail Page 12 The e-commerce ecosystem and online opportunity Jason Katz, EVP and general manager, etailing solutions James Bickers, vice president, custom media jamesb@networldalliance.com Dave Henry, contributing writer Audience Development Dan Scofield dans@networldalliance.com John Renner johnr@networldalliance.com NetWorld Alliance Page 15 Key lessons in multichannel integration Pradeep Goel, senior consultant, MindTree Ltd. Dick Good, CEO dickg@networldalliance.com Page 18 Best practices for developing a trading partner community Jim Frome, CSO and EVP, SPS Commerce Tom Harper, president tomh@networldalliance.com Page 20 Multichannel is not enough — welcome in channel ­ V. Bharathwaj, CMO, 24/7 Customer Alan Fryrear, chairman alanf@networldalliance.com Part II: Case Studies Page 22 Newey & Eyre successfully evolves from in-store to multichannel Carsten Thoma, president, hybris US Page 24 Golfsmith’s multichannel integration with GMT Planet John Ellis, senior director of professional services, GMT Corp. BEST PRACTICES: Multichannel Integration Best Practices: Multichannel Integration ©2011 NetWorld Alliance LLC. 13100 East Point Park Blvd., Louisville, KY 40223. (502) 2417545. All rights reserved. No part of this publication may be reproduced without the express written approval of the publisher. Viewpoints of the editors are his own and do not necessarily represent the viewpoints of the publisher. 2
  • Multichannel retail integration: An overview Today’s information-empowered consumers are essentially “channel agnostic.” They think nothing of encountering a product on a store shelf or in an advertisement, researching it online to compare features and prices, ordering it through the retailer’s call center then stopping to pick it up at a local store. Yet many retailers remain oblivious to these changing realities and formulate their multichannel strategies with serious policy limitations around the integration of process, data and technology. Furthermore, multichannel behavior offers a wealth of opportunities for increasing revenue by up-selling or cross-selling the customer who comes in the store to pick up what he has bought online. Michael Sonier, director of product marketing at GSI  Commerce, calls multichannel “the Lady Gaga of e-commerce and retail — everyone has heard of it, but no one can quite explain it. Like being an international pop music star and fashion icon, if it was easy everybody would be doing it.” While some retailers have effectively developed and implemented clear strategies for managing resources across multiple selling channels, many treat their various channels as independent entities, with each channel having its own operating strategy. At minimum, multichannel retailing involves the selling of merchandise or services to consumers through more than one channel. While operating multiple channels has many benefits, retailers also face many challenges, including organizational resistance, crafting multichannel retailing strategies and creating synergies across channels, making key retail mix decisions and navigating the dynamics of multichannel retailing. While some retailers have effectively developed and implemented clear strategies for managing resources BEST PRACTICES: Multichannel Integration across multiple selling channels, many treat their various channels as independent entities, with each channel having its own operating strategy. Whether such fragmentation is the result of entrenched thinking or incompatible processes/systems inherited through the acquisition of a new channel partner, the result is an inefficient supply chain that leads to inaccurate order promising, poor fulfillment rates, inconsistencies in business practices and policies that may frustrate and confuse customers. A prime example is a customer who discovers that a coupon accepted at the store is not accepted through the call center because of lack of cross-channel information visibility. According to Gopi Krishnan and Arun Channakrishnaiah of Infosys Technologies, channel fragmentation can result in: An inconsistent customer experience Duplication of data, processes and information systems The inability to gain a single view of the customer The inability to gather and share data across channels for analysis/decision making Weak fulfillment percentages Duplication of physical infrastructure The primary challenge, then, is to seamlessly connect channel-specific silos to ensure that the information flowing across channels is enabled in near-real time. Effective fulfillment of orders transcending channels requires total synchronization — that is, the integration of all core functions. There are significant rewards for organizations that manage to achieve this level of synchronization, as both the customer experience and supply-chain efficiencies improve. An integrated multichannel strategy is achieved when: Order-management processes and supply-chain functions across all channels are completely integrated, and all ordering/fulfillment channels have access to the data needed to execute all transactions. 3 View slide
  • Organizational and customer data aggregated from these functions and processes are leveraged to inform decisions about customer offerings, order fulfillment, business policies and operational processes. Social media, used in collaboration with traditional email, is an important catalyst in bringing marketers closer to the goal of true multichannel integration. Social media is where conversations about brands, products or services often take place. Email, however, is still the vehicle that alerts consumers to the social content, effectively delivering “the right message at the right time” that converts shoppers into customers. Case Studies Retailers such as Best Buy, Toys R Us and Nordstrom have focused on providing their customers with the ability to transact across multiple channels. In conjunction with opening smaller stores in urban locations, Walmart has rolled out a multichannel-integration strategy that uses its stores to gain an edge over Web-only competitors such as Amazon.com. Walmart’s U.S. president and CEO, Bill Simon, recently announced plans to offer its customers a number of new multichannel options, including the ability to order items on Walmart.com with free delivery to urban FedEx locations or same-day pickup at local locations. Best Buy reports that  40 percent of its Web orders are marked for in-store pick-up. The Toys ‘R Us and Babies ‘R Us websites provide the ability to filter products based on availability for in-store pickup. Thus, a harried parent can quickly identify which products are available to pick up on the way to a birthday party or baby shower. Integrated multichannel inventory visibility is what makes this possible — and worth the initial setup efforts. Dispersed inventory across both brick-and-mortar stores and Web warehouses becomes a unique asset for retailers, and those that deploy the right commerce-enabling infrastructure are set to deliver a seamless cross-channel experience that drives sales, bolsters brand loyalty and reduces operating costs. In 2010, while many retailers were experiencing sales decreases at stores open for more than a year, sales at Nordstrom were improving and outperforming the department store average. Jamie Nordstrom, president BEST PRACTICES: Multichannel Integration of Nordstrom Direct, attributed the company’s success to recent improvements in its multichannel capabilities. Nordstrom improved its multichannel capabilities in part to improve customer service. (Prior to the upgrade, the most common request received by Nordstrom’s call center was from customers asking if a particular item displayed on the company’s website was available at a local store.) But the changes were also driven by a desire to increase sales. Mr. Nordstrom pointed to research showing that multichannel shoppers spend four times more, on average, than single-source shoppers do. And once a retailer gets an online shopper into the store, he is apt to buy more. To support this change, Nordstrom had to aggregate its inventory across its network and make it visible. As described in the New York Times: The change works this way: Say that a shopper was looking at a blue Marc Jacobs handbag at Nordstrom.com. She could see where it was available at nearby stores and reserve it for pickup the same day. More significant, if the Web warehouse was out of that bag, it did not matter. Inventory from Nordstrom’s 115 regular stores is also included. Maybe there was just one handbag left in the entire company, sitting forlornly in the back of the Roosevelt Field store—it would be displayed online and store employees would ship it to the Web customer. (“Nordstrom Links Online Inventory to Real World” by Stephanie Gifford, New York Times, August 23, 2010.) This change occurred in two stages. First, Nordstrom added the option for customers to shop and buy items online and pick them up at a store. Then the company started providing visibility to individual store inventory on its website. Why can’t an enterprise resource planning, or ERP, solution provide this level of inventory visibility? The problem is that ERP solutions lack the logic and intelligence to track order-fulfillment events from order to delivery and therefore to support multichannel orderfulfillment capabilities. To overcome this challenge, multichannel retailers should consider augmenting their ERP system with a distributed order management, or DOM, system that provides the added visibility and logic to enable cross-channel fulfillment. 4 View slide
  • This extra intelligence is thanks to a feature that DOMs have called “order parsing logic.” For example, if the inventory to fulfill an order is available from multiple sources, order parsing logic determines which warehouse it should be shipped from. Sterling Commerce’s DOM, for instance, has the ability to calculate order lead-times based on service-level agreements, carrier pick up schedules and warehouse or store processing times. The solution also can dynamically allocate customer orders based on priorities such as channel or customer types, and it can configure payment types and preauthorize payments even before the order is placed, which reduces the number of uncollectable payments. The advantages to retailers who choose this path can be immediate and significant. The rate of customers who made a purchase after searching for an item online doubled the first day cross-channel inventory was exposed on Nordstrom.com. This clearly demonstrates that making in-store inventory available online dramatically reduces one of online shopping’s most unpleasant experiences: the “no results” page. So while the changes at Nordstrom were driven by a desire to satisfy customers, the effort also translated to higher profits for the company. Multichannel integration Before retailers can attain multichannel integration they need a technology infrastructure that supports marketing strategy, development, delivery and measurement. A recent Forrester “Big Idea” report outlines a three-step technological approach the company calls the Marketing Technology Backbone. 1. Create a centralized marketing hub.  If your catalog doesn’t have a chief marketing officer or a cross-channel customer database, consider adding them before implementing support technology for multichannel integration and analysis. Marketing management silos — Web, catalog and retail — need to be united under a single vision before effective analysis and implementation can take place, Forrester researchers write. 2. Define a five- to 10-year plan.  As it cuts across organizational and functional boundaries, a multichannel-integration strategy takes time to develop. A lengthy transition time is not uncommon, Forrester notes. And if substantial technological improvement is needed, be sure that both the CMO and chief information officer develop the plan in partnership with one another. BEST PRACTICES: Multichannel Integration 3. Implement in one-year stages.  Attempting to complete multichannel integration in a single iteration is not always practical. It’s best to prioritize the entities to integrate across channels according to an incremental, evolutionary path. Individual initiatives within a five- to 10-year plan, for example, should be completed within 12 months. Whether an organization seeks to improve customer or prospect data quality or to automate the execution of cross-channel campaigns, it is important to ensure each initiative addresses both the technology and business processes to achieve each goal within the allotted time. Other factors a retailer should consider when implementing multichannel include: Single source Building a unified data warehouse for all critical information generated across channels — such as orders, customers, inventory, etc. — is an essential precursor to multichannel integration. Information systems Point systems — whether legacy or new — should have appropriate handshakes and specific roles to play. Legacy systems must have the ability to handle future requirements, while new applications should have the capability to integrate seamlessly with existing applications. Channel conflict If a customer places an order online but picks up from a store, which channel gets the credit for the sale? Stores may want to protect inventory for store customers, but the online channel wants to offer store inventory to its customers as well. Policies to handle such potential conflicts should be clear to all concerned. Channel independence A good multichannel-integration strategy should allow for channel differentiation. For example, “Cyber Mondays” usually have online-only deals. Although retailers routinely sell some products or product categories through a specific channel as a way to calibrate demand, the other channels should recognize such orders, too. 5
  • Cross-channel integration Retailers are focusing more and more on building trust and connections with prospects and customers by offering relevant and targeted content and promotions that add value to customers’ lives. Making that content available and creating touchpoints dependent on the customer lifecycles across multiple channels and at the time the consumer wants it is today’s cross-channel marketing challenge. While many retailers understand the benefits of communicating with customers using multiple channels, few have actually mastered the nuances of true cross-channel marketing. Furthermore, the terms “multichannel” and “cross-channel” are often used interchangeably, as if they are one and the same. They are not. While multichannel drives retail marketing through more than one channel, “cross-channel” marketing uses one channel (such as direct mail or Web) as part of a single campaign with a consistent message to support or promote another channel, such as retail. Retailers that persist in treating channels as independent silos can expect to suffer from ever-declining response rates and weakened customer relationships Each channel — whether direct mail, email, mobile or social media — has unique communication attributes that retailers must be sensitive to to present consistent and coordinated information to their customers. To do this effectively requires a single view of each customer or prospect, along with the ability to centrally drive campaigns that span both traditional and emerging channels. Many of today’s customers are in constant motion and aren’t always accessible using traditional marketing channels. With a single record of each customer or prospect, organizations benefit from flexibility and agility, defining and orchestrating a cross-channel strategy and targeting customers regardless of their location or the nature of the content. Plus, with coordination between channels, if a customer doesn’t respond to one channel, retailers can try another — escalating to high-cost channels only for the highest-value customers. A cross-channel marketing platform enables marketers to essentially create single campaigns with consistent content, graphics and promotions replicated across various channels. BEST PRACTICES: Multichannel Integration These campaigns can be coordinated across channels and with previous campaigns and configured so that no customer receives more than one email offer a week. Retailers that persist in treating channels as independent silos can expect to suffer from ever-declining response rates and weakened customer relationships, while those who integrate emerging channels with traditional channels through cross-channel marketing will have the capability to reach the right person with the right offer through the right channel at the right time, thereby reducing costs and improving the effectiveness of marketing efforts. The range of channels through which marketers can reach customers and prospects will continue to grow over the next several years, making the move to true crosschannel marketing more critical than ever to a retailer’s success. The ability to integrate and manage traditional and emerging technologies — and to use these channels interchangeably — will allow them to reach customers in motion and optimize the full customer experience, with consistent communication at the point of sale. The Interactive Advertising Bureau’s Cross-Media Optimization Study demonstrates that employing crosschannel marketing using a variety of media vehicles in a thoughtful and integrated way greatly increases the likelihood of connecting with a targeted consumer. The two-year study further shows that the same marketing dollars, if effectively synchronized across on- and offline advertising, can lift brand awareness by 8 percent to 34 percent, increase purchase intent by 5 percent to 1,000 percent and dramatically increase sales. Meanwhile, findings from a November 2010 Aberdeen Group study titled  “The Roadmap from  MultiChannel  to  Cross-Channel  Retailing,” reflects the pressures retailers face to be more aggressive in adopting cross-channel strategies. The study finds that in 2011, retail executives must provide customers with an integrated shopping experience across channels. Best-inclass retailers with integrated sales channels are expected to experience greater customer satisfaction, better average sales and increased year-over-year revenue. The report also expects cross-channel technology solutions to complement the goals of brick-and-mortar channels. For example, improved mobile website load times will ensure that prospective customers can look up store locations quickly. It is now more critical than ever that retailers implement “buy anywhere, fulfill anywhere” methodologies for uniform customer fulfillment. 6
  • The greatest challenges to the effective allocation of channel sales and costs are rooted in the inability to measure cross-channel influence (i.e., consumers who shop in one channel, and are influenced to buy in another). Some businesses merely make their best estimate of this influence in lieu of accurate data, while others have integrated their Internet and catalog P and Ls and choose not to accurately measure each channel’s ROI. “Best-in-class retailers share several common characteristics,” according to Sahir Anand, vice president and principal analyst for retail, hospitality and retail banking at Aberdeen Group. “They analyze data on customers across channels, execute a common strategy before, during and after the sale, and have attained some form of cross-channel technology and business-process integration.” Aberdeen also finds that best-in-class retailers are 50 percent more likely than the industry average to create offers and provide services across channels, enabling brands to present customers with a unified look, feel, and shopping experience. Technology solutions such as SiteBuilder from ChannelNet provide retailers with the tools and functionality needed to implement an integrated cross-channel strategy that optimizes customer interactions online, in the store, with a service center or via a mobile device. According to ChannelNet founder and CEO Paula Tompkins, “Retailers must enable customers to seamlessly transition from online to in-store whether it’s finding the product locally or ordering online.  Features such as inventory look-up by store, couponing and mapping are designed as part of a well-integrated retail business.” Conclusion Channel proliferation will continue to drive customer expectations regarding seamless interactions, while at the same time providing retailers with greater opportunities for increased revenues through multichannel commerce. Retailers with integrated data-collection systems are finding that their customers are more multichanneloriented than they originally thought. Consistent brand experiences, regardless of the channels shopped, provide the customer with the type of familiar experience that leads to increased multichannel purchasing behavior. Retailers BEST PRACTICES: Multichannel Integration should aspire to increase the share of total shopping trips their customers make, regardless of which channel those trips are in. When this data is used to tailor offers and create other value-added solutions, customers see the value of providing personal information. As retailers with integrated merchandising strategies continue to invest in inventory management and price-optimization technology, their ability to match supply and demand for each channel will become more precise, and the effective use of collected data will lead to increased sales across channels, as well as a better experience for the customer. multichannel marketing techniques require an organizational structure that promotes such behavior. As consumers become increasingly adept at multichannel shopping and the sales volumes of direct channels continue to grow, retail executives cannot deny the need to tap into the potential of multichannel leverage. However, most retail organizations are not structured to achieve integration benefits. Therefore, significant resources need to be devoted to proving the case for integration and to educating those who remain unconvinced of multichannel leverage. According to a study conducted by retail consulting firm J.C. Williams Group, multichannel marketing techniques require an organizational structure that promotes such behavior. Channel managers should be encouraged to promote other channels and to make more customers multichannel customers. Instead, they often feel threatened by the perception that other channels will cannibalize their sales. On the other hand, multichannel retailers who have embraced integration and are therefore unencumbered by the need to expend energy on convincing their colleagues can expect to pull away from their competitors as they accelerate their growth by efficiently focusing on profitable customers. To realize their multichannel commerce goals, retailers should look at coupling multichannel operations with multichannel integration. Beyond being a customeroriented initiative, multichannel integration also helps achieve collaboration across the entire organization and its processes, as well as with fulfillment partners. Broader multichannel goals can be achieved via tighter integration of the sell-side and buy-side channels and the addition of customer and operational analytics to enable intelligent, proactive and fact-based decision making. 7
  • Part I: Industry Insights Creating a customer-centric multichannel experience from the inside out Consumers don’t think in terms of channels; they simply expect interactions with a retailer’s brand to be consistent wherever they’re looking. But as they glide between mobile devices, social networks, stores, websites and search engines, customers are having inconsistent experiences because retailers have traditionally been channel-oriented. Without integration between the key elements of technology and teams, retailers are not only delivering frustrating experiences, they’re also missing key opportunities to influence consumer behavior. True multichannel integration is rare, because it’s hard to do with legacy technology and processes. As channels collapse and customers demand consistency on their terms, retailers must reevaluate — but undertaking an integration project is no easy task. Data is scattered, exists in different formats and lives in different systems. Internal teams are segregated and are held to channel-oriented goals. Technology is expensive and inflexible. There is no universal view of the customer base or cross-channel performance. Without integration between the key elements of technology and teams, retailers are not only delivering frustrating experiences, they’re also missing key opportunities to influence consumer behavior. So is the process of aligning technology, people and systems worth the hassle? Absolutely. Prepping your business for the new world of commerce is not only inevitable; there also are clear rewards for gaining firstmover advantage by unifying technology, unlocking data and using touchpoints to work in symphony and to deliver great customer experiences. According to a 2010 Forrester study, retailers who had focused on integration found a 48 percent average increase in online sales, a 36 percent increase in customer satisfaction, a 28 percent reduction BEST PRACTICES: Multichannel Integration By Brenna Johnson Product marketing manager, Endeca in operating costs and 25 percent increased profitability. The key is aligning technology, teams and processes to drive multichannel experiences from the inside out. Integration cannot be tied to one group or touchpoint, but it must be an enterprise-sponsored initiative combining long-term vision with tactical short-term goals. Use the following strategies to align your technology decisions, organizational structure and internal processes with customer experience features. Adapt to customers Consumers want the freedom to engage in the ways they please, to take the path that matters most to them and to be shown relevant content along the way to help them make a decision. To understand the nuances of your customer base, assemble a cross-functional team and map the customer lifecycle and purchase behavior. Ask questions. How does your organization respond to customers at different stages? What touchpoints do customers tend to use? Do they engage with different touchpoints for different purposes? How does their behavior fit within your overall business model? How will you measure touchpoint or performance? How is content used in different touchpoints? Consider technologies that deliver dynamic experiences that adapt to customers and that give retailers the flexibility to scale content and merchandising strategies across touchpoints and unpredictable customer paths. Use all of your data Consumers want dynamic experiences that are tailored to them, which means retailers have to know their customers. Today, most retailers are just scratching the surface of their most valuable asset — their customer data. It’s housed in 8
  • Part I: Industry Insights different systems, it’s in different formats and it’s locked in reports that provide little actionable insight. centralized team (such as marketing) could interact with each channel touchpoint team to push change. Identify what data exists, what format it’s in and where it’s housed across the enterprise. Determine what is involved to aggregate data and to ensure it is fresh to glean realtime insight into customer behavior and put it into action with tailored experiences and campaigns. Combine customer intelligence with merchandising analytics to provide a universal view of multichannel behavior. Aggregate in-store and digital analytics, customer-profile data, campaign-performance metrics, segmentation data, sentiment from social networks and inventory data for an infinite number of ways to gain insight and analyze performance across the enterprise. Close the loop by investing in tools that allow business users to leverage this data to automatically drive products, content spotlighting and merchandising across touchpoints. Competing in the new world of commerce will require a strategic investment to differentiate your brand. As your organization begins to think in terms of experiences instead of channels, invest in flexible technology to get to market quickly, test strategies and scale data across the enterprise and any unpredictable customer experience. Brenna Johnson is the product marketing manager responsible for Endeca’s B2C eCommerce and mobile solutions. In addition to developing multichannel best practices for clients based on retail trends, she also assists customers with analyzing Endeca’s impact post-implementation. Make experiences portable and consistent Consumers want fluid interactions regardless of the combination of touchpoints they choose to engage. Enabling data-sharing across touchpoints is a great way to streamline the customer experience and accelerate sales. Allow research or purchases completed in one touchpoint to be reflected in the experience of another — such as adding an item to a shopping cart on the Web and having it simultaneously populate in the customer’s mobile cart. A unified infrastructure not only delivers consistent customer experiences, but it also reduces costs and demands on IT staff, and it simplifies the expansion of new business models and channels so your organization can scale and grow without being inhibited by technology. When investigating new technologies, be sure you can plug in to existing systems and leverage your legacy data in an efficient, low-cost way. A large-scale integration project will undoubtedly take time and impact your organizational structure, but the reward and growth opportunity is too big to ignore. Put vision into practice, and organize small groups to test different organizational structures and tactical changes. Test organizational structures, such as assigning a cross-functional team around an emerging touchpoint (like social or mobile). Select pilot group participants who may have conflicting channel objectives, different skill sets and different roles within the customer lifecycle. Or, test how a BEST PRACTICES: Multichannel Integration 9
  • Part I: Industry Insights The logistics of inventory sharing in multichannel retail By Chris Allan Chief customer officer, Quantum Retail Selling through multiple channels is nothing new to the retail world; many businesses have been doing it since the invention of the first mail-order catalog. What can be considered new is today’s definition of multichannel retail. From e-commerce on the Web, through mobile devices and in social media to traditional phone, instore and catalog sales, multichannel retailing is taking on a whole new meaning and becoming more important than ever. Consumers have instant access to information, and retailers want to take advantage of that spontaneity to convert browsing into buying. To accommodate consumers’ needs, retailers are restructuring both their online and in-store merchandising, supply-chain and inventory platforms with hopes of creating a more concise and positive experience for their consumers across all channels. Consumers now have higher demands and expect both more flexible multichannel shopping experiences and availability from retailers, on whatever channel and at whatever time they choose to shop. Multichannel fulfillment is considered by most to be the creation of one holistic retail experience. This integration gives consumers the freedom to interact with retailers on their terms, putting them in control of where and when they will spend their money. According to Retail Systems Research, or RSR, “A consumer that shops in a multichannel environment will spend 30 percent more with that retailer.” Providing additional channels for consumers also typically leads to better customer service. This means that implementation of a multichannel strategy is in the best interest of both buyers and sellers. But before retailers can reap the benefits of a multichannel solution, they must first overcome inventory complexities, which require more planning and a different strategy to become effective. Retailers should consider a couple of big-picture questions, starting with how they plan to present a consistent customer experience across all channels. Inconsistencies in pricing, promotions and availability make for an unhappy customer. Retailers also should look at making sure they have a consistent and accurate way of offering BEST PRACTICES: Multichannel Integration shipping, selling and marketing across all sales channels. On top of this, for each newly developed channel or touchpoint, retailers must consider an increased number of specific concerns. From on-point customer service to product ranges, stock availability and potentially different fulfillment, each channel has its own unique list of challenges. It is important that retailers try out different configurations to address each multichannel need. Some channels will have separate supply chains and dedicated stock, which can lead to a duplication of safety stock and excessive waste and carrying costs. These results are not sustainable for grocery retailers in particular, with short-lived fresh product, where the cost is true wastage and not just a markdown. Similarly, for fashion retailers, markdowns not only can reduce profits, but also can lead to direct losses and cause an erosion of brand value as consumers begin to expect discounts and stop buying at full price. To accommodate consumers’ needs, retailers are restructuring both their online and in-store merchandising, supply-chain and inventory platforms with hopes of creating a more concise and positive experience for their consumers across all channels. For those with a single supply chain, managing product availability and balancing service between channels can still be a struggle. It is important that these issues are managed in unison and are closely tied in with local consumers and their shopping habits. Some retailers have a hybrid, where the online business pulls stock from core channels, but this can lead to availability issues and an excess of safety stock. One of the most efficient ways is to hold back stock in order to monitor where the demand resides for the product and where it will have the best 10
  • Part I: Industry Insights performance, whether it is at specific store locations or channels. To create a process that is responsive enough to monitor holdback stock, retailers need quality information to forecast forward performance and sales and to improve transparency and predictability throughout the supply chain. Because of the increased confidence this creates, retailers can wait longer to make decisions that commit inventory to a specific channel or store, which is significant as there is no cheap way to realign that inventory to consumer need at a future date. Another challenge has to do with reverse logistics. When a customer wants to return an item to a retailer, he is not necessarily going to use the same channel he purchased the product through. This can then create a huge problem for any retailer from an inventory-management perspective. Few retailers have been able to implement a solution to respond to this issue in an efficient and consistent way. Having an organized and accurate multichannel strategy is fundamental to supporting a retailer’s brand image by providing the consumer with a consistency in his shopping experience. To optimize the multichannel supply chain and to ensure that the right product is available in the right place without overstocks and resulting markdowns/ wastage, retailers are looking to implement holistic technology solutions, which can help to automatically address many of these issues. At the end of the day, those retailers who are able to master inventory management across multiple channels have a real competitive advantage, while those that fail to do so will experience declining loyalty, sales and overall brand value. Chris Allan, chief customer officer at Quantum Retail, has worked exclusively in the retail industry for the past 17 years. This has allowed Chris to work with a wide variety of leading retailers around the world. Cumulative learning from some of the world’s best apparel, hardlines, grocery and convenience retailers has helped Chris define and shape the next generation of retail software solutions. At Quantum Retail, Chris is responsible for product strategy and innovation with a combination of art and science. BEST PRACTICES: Multichannel Integration 11
  • Part I: Industry Insights The e-commerce ecosystem and online opportunity The greatest opportunity to increase consumer goods sales in the retail environment is not happening instore; it is happening online. The expanding e-commerce channel also is changing how manufacturers, retailers and consumers interact in the buying environment. To capitalize on this opportunity, brands and retailers need to better understand shopper migration, develop new selling strategies to satisfy the range of emerging online/offline shopping behaviors and closely listen to consumers, who are the architects of their online experiences. Advancements in technology — which are increasing consumer control of media consumption, information access and communication — also are increasing consumers’ ability to buy what they want when they want it and how they want it. By Jason Katz EVP and general manager, etailing solutions huge driver of future online buying. Pure-play e-tailers also lead the way in online shopper segmentation and data management. They capture past online-shopping behavior to create a more customized environment. However, they are less familiar with the packaged-goods retail fundamentals, such as the importance of product presentation, merchandising and solution selling. The winning brands and e-tailers will be those that develop solutions based on consumer demand. Packaged-goods marketers Changing retail dynamics The landscape of online retail is changing dramatically. Once dominated by pure-play e-tailers, the landscape now includes hybrid brick-and-mortar/online players as well as packaged-goods companies seeking a more direct connection with consumers. Pure-play and hybrid e-tailers who offer a broad variety of items and an experience that saves the customer time and convenience have a decided advantage. Consequently, players such as Amazon, Peapod and Drugstore.com and brick-and-mortar e-tailers such as Walmart and Target pull far more traffic than brand sites. Pure-play e-tailers Pure-play e-tailers concentrate on driving online traffic to a site, aggregating demand and capturing a significant market share in select categories. This is what drove Amazon to acquire Quidsi (Diapers.com and Soap.com) for more than $500 million in November 2010. Amazon’s acquisition added 1.9 million visitors to its reach and frequency and 1.2 million unique visits and also captured the important “new mom” segment that represents a BEST PRACTICES: Multichannel Integration A handful of packaged-goods marketers are developing sites that sell products directly to consumers. Generally, outside e-commerce providers handle fulfillment and technology functions for which marketers are not equipped. This is creating competition among e-commerce providers to land the largest number of packaged-goods marketing/sales sites to achieve both incremental revenue and data collection. Consumers who buy through a packaged-goods site tend to have greater loyalty, as they have had an opportunity to experience a richer engagement with the brand via the site. Recognizing the richness of these engagements, brands such as Pop Tarts/ Amazon and Nature Valley/Alice.com are building “storewithin-a-store” concepts on their sites. Hybrid retailers Many hybrid online/brick-and-mortar retailers such as CVS are just beginning to determine the balance between offline and online buying. Nielsen Research has shown that consumers who shop a retailer in both the online and offline channels are 30 percent to 60 percent more valuable 12
  • Part I: Industry Insights than consumers who shop only one channel. Hybrid retailers are focusing on digital technology and strategy and determining how best the buying and logistics process will work. Among the important questions are: Do online and offline have separate buying groups? How are buyers best credited for online and offline sales? What is the best model for fulfillment and product assortment? The online opportunity The Web represents an opportunity to gain back a percentage of lost in-store sales over the next 3 to 5 years. This is why more and more packaged-goods players are beginning to embrace e-commerce. However, the majority of brand retail marketers are not approaching this channel of trade strategically, and this will result in lost opportunities. Develop a strategy Developing an e-commerce strategy calls for recognizing the entire online ecosystem that a brand has created and identifying how it will feed into a customized buying solution. Consideration must be given to the manufacturer, brand and e-tailer websites, as well as to customized buying portals and social sites such as Facebook, Twitter and so forth. Each of these assets offers an opportunity to capture an increasing percentage of online sales. Ensure visibility Product visibility is another factor that greatly affects online sales success. Go to Amazon or Drugstore.com and conduct a search for oral health, eye care or disinfecting wipes. If your product does not appear on the first page, chances are you won’t be seen at all. Optimizing visibility is a balance of decoding the descriptor algorithm that drives search-engine rankings and developing a strategic merchandising plan with retailers to spotlight your brands. Merchandising in the digital environment can parallel the retail environment with lobby displays (homepage), end caps (category landing page) and even in-aisle displays (brand-level pages). These displays offer brand value, and online retailers are beginning to maximize brand revenue in this space. Plan for product availability Manufacturers must make sure they have the appropriate products readily available for consumers to buy online. The benefit of the online channel is “virtual shelves” that can hold a limitless number of items. Over the next 12 to 24 months, as manufacturers increase their investment in e-tailing solutions, this focus must include: Sales audits. Develop an understanding of your current product availability, share-of-choice, branding, promotional tracking, ranking and reviews. Establishing a benchmark of current performance will allow the business to measure success and better understand sales drivers. E-tailing strategy. Create a size-of-prize analysis, ranking online retailer importance to the brand, developing a broad-based e-tailing ecosystem and selling strategy. Sales support. Establish a comprehensive sales planning and forecast model, identifying the best sales support structure and route-to-market. Digital shopper marketing. Work collaboratively with online e-tailers to plan annual or semiannual digital shopper-marketing plans. Shopper research. Map out a comprehensive research strategy that provides shopper insights, digital-environment studies, segmentation analysis and loyalty studies. Every category and retailer is shopped uniquely, and one size does not fit all. Understand the unique dynamics between the brand, the shopper and the buying behavior. Marketers who take one step back to survey their digital ecosystem before jumping into e-commerce will save themselves countless hours and dollars redoing their online selling strategy. E-commerce is not necessarily a zero-sum game. Both brand and online e-tailers are reaping the rewards of collaborating in the digital and retail shopper-marketing arenas. To enhance online sales velocity, brands and retailers are already starting to create annual and semiannual plans that capitalize on seasonal selling periods. E-commerce is just emerging in the consumer packagedgoods space and will continue to affect the buying BEST PRACTICES: Multichannel Integration 13
  • Part I: Industry Insights dynamic between brands, consumers and retailers. The winning brands and e-tailers will be those that develop solutions based on consumer demand. They will include customized experiences, broad product availability, continuous replenishment and consistent product delivery. This will propel online sales growth at double-digit rates for the next five years to achieve a 3 to 5 percent share of consumer packaged-goods sales. For a multibillion dollar industry, that is a lot of clicks. Jason Katz has more than 20 years of agency experience in developing promotional, account-specific and digital marketing programs for consumer packaged-goods clients. He joined D. L. Ryan Companies in 1997 with Ryan Partnership, and became EVP, at Catapult Marketing in 2005 when it became an independent subsidiary, where he created specific service offerings for the twin evolving disciplines of digital shopper marketing and mobile marketing. Most recently, Jason’s role is executive vice president, general manager of etailing solutions, a division of D. L. Ryan Companies, Ltd. BEST PRACTICES: Multichannel Integration 14
  • Part I: Industry Insights Key lessons in multichannel integration By Pradeep Goel Senior consultant, MindTree Ltd. Why multichannel integration matters Multichannel integration challenges Retailers are increasingly multiplying their channels, adding Web platforms and call centers to brick-and-mortar stores to reach more and more customers. Interestingly, however, customers do not use one channel exclusively to complete their purchases anymore; as a matter of convenience, many customers use the multiple channels a retailers makes available to complete the purchase process. Consumers also are mixing different channels for different activities. For example, a multichannel customer might research a product at home by visiting a retailer’s online store, doing comparisons and reading reviews about the product. If this user has specific queries that are not answered online, he may then call the retailer’s call center. After completing his research, he may go back to his computer, place an order online and then track the order status or shipping details. Or he may place the order online and then pick up the product from a nearby store instead of having it shipped from a warehouse. The behavior of multichannel consumers outlined in Figure 1 is driving the need for multichannel integration. While many retailers add different channels one-by-one to respond to rapid changes in the marketplace and in customer expectations, disparate channels are no longer able to drive customer satisfaction or revenue. A Gartner survey released in March found that 66 percent of consumers believe consistency across channels is important, and they expect to be provided “one view of the retailer.” Best practices: Key considerations for multichannel integration But integrating multiple channels poses several challenges, due to different systems that work using different technologies, organization structuring that already is established and the need to manage inventory across channels. It is important to identify business needs and align integration road maps to satisfy these needs before embarking on a multichannel integration initiative. Making product and pricing information and inventory visibility uniform across channels poses huge challenges that should be dealt with diligently. 1. Catalog consolidation Catalog consolidation is the first step to integrating channels, since each channel can have its own catalog. While most items may be common to the brick-and-mortar and online stores, some items are sold exclusively at physical stores, and others are exclusively available online, posing a need for different catalogs. Hence, items common to both channels can end up being duplicated across the catalogs. Figure 1: Multichannel customer behavior (Singh, 2010) BEST PRACTICES: Multichannel Integration It is a good step to consolidate all such catalogs into one enterprise-wide catalog. It then enables the catalog to be leveraged across the business units, regardless of which channel had originally carried that item. 15
  • Part I: Industry Insights Business rules should be used to sell items exclusively on the website or in the stores as needed. Consider the following when consolidating catalogs: Once the cross-channel fulfillment solution is implemented, it becomes necessary to search for items across the channels using item classifications such as style, size and color. When an item is being added to the order, validation of that item is performed, and it can be very intensive as each and every catalog is searched until the right match is found. This would be simpler if only one catalog were maintained for the entire solution. 3. In-store — save the sale If an item is not available in a physical store, but the retailer has an integrated order-management system, a store associate can search the inventory of the item, place a special order and ship it from its distribution center. This allows store personnel to save an in-store sale that might have been lost otherwise. Typically, distribution centers are the same facilities that are used for e-commerce and call-center fulfillment, resulting in an extended virtual supply chain. Saving in-store sales increases total revenue, and the virtual supply chain helps keep operating costs down, making for a rapid return on investment and a perfect business case for implementing this functionality. It is recommended that each channel ensures that its item numbers are unique with respect to all channels. 2. Inventory consolidation and visibility across channels A distributed order-management system is an important enabler to achieving multichannel integration. This system can address processes owned and managed by retailers, as well as those owned by the retailer’s suppliers and third-party logistics for the products and services bundled by retailers. The retailer saw one in-store sale saved each day for a year, making for a very high return on investment and a proven business case for implementing the system. All the orders captured through various channels are aggregated in a distributed order-management system, and a real-time complete demand picture is made available.. The system also provides global visibility of inventory, inventory available in fulfillment nodes, intransit inventory and inventory on purchase orders. A distributed order-management system is capable of matching aggregated demand with inventory available at various points in the best possible way. A distributed order-management system also can help retailers manage capabilities offered to its customers, such as store pick-up for products purchased or reserved online. BEST PRACTICES: Multichannel Integration Figure 2: Sequence diagram for inquiring item at distribution center from point of sale 4. Business considerations for multichannel integration After integrating multiple channels, planning for each channel in isolation is no longer recommended. Isolated planning may put pressure on another channel, and may lead to the cannibalization of sales at other channel. Different channels may have different profitability for the same item. If an item is not profitable at one channel, it should not be offered at that channel. A channel’s performance may be impacted due to cross-channel returns. A business should take this impact into account while reviewing channel performance. A tolerance for this effect may be built into the key performance metric of a channel. 16
  • Part I: Industry Insights 5. A case study in multichannel integration A leading specialty retailer of fashionable, attractively priced women’s apparel and accessories sells its merchandise thorough brick-and-mortar stores and its online store in the United States. This company had a separate distribution center to fulfill its Web store orders, while stores were replenished from a different warehouse. If a store ran out of inventory for a particular item, such as a particular size or color of a dress, the sale was lost and the customer was left dissatisfied, despite the availability of the item at the online channel or even in another brick-and-mortar store. When the company embarked on multichannel integration, it achieved inventory integration across channels by implementing an order-management system. The system extended the virtual supply chain, hence directly lowering the operating cost. Inventory available at the company’s e-commerce distribution center was made available to sell at the point of sale in the physical store, thus providing a store associate with the ability to convert an in-store customer sale that might have been lost otherwise. The retailer saw one in-store sale saved each day for a year, making for a very high return on investment and a proven business case for implementing the system. Conclusion Customer behavior is guiding retailers to integrate their multiple channels. It is a good idea to analyze customer behavior to prioritize focus areas of channel consistency before integrating channels. A good multichannel experience is not just an option anymore; given the adoption by customers and retailers alike, it has become imperative to success at retail. Proven increased efficiencies and high return on investment further encourage retailers to invest in this area. BEST PRACTICES: Multichannel Integration 17
  • Part I: Industry Insights Best practices for developing a trading partner community By Jim Frome Chief strategy officer and executive vice president, SPS Commerce The retail industry is facing what many observers call the most difficult economic environment in decades. As consumers scale back on spending, retailers face tremendous pressure to do more with less. At the same time, consumers have become more demanding about getting the specific products they want and getting them faster than ever before. To enhance efficiency and visibility with supply chain partners in this challenging environment, retailers strive for greater supply chain integration through a well-executed effort to develop a community of trading partners. Trading partner community development, which enables retailers to electronically integrate their data and business processes with suppliers and other trading partners, is by no means a new idea. Electronic data integration, or EDI, is the primary technology for achieving this and has been around since the 1970s. Despite its obvious benefits, the risks associated with a poorly executed enablement effort have kept many retailers from moving forward. Trading partner community development, which enables retailers to electronically integrate their data and business processes with suppliers and other trading partners, is by no means a new idea. Here are five best practices that retailers can follow to ensure success in their trading partner communitydevelopment initiatives: 1. Develop a road map that focuses on supplier relationships and not just technology First, retailers need to develop a plan and road map for the trading partner community-development program. This plan should address the following three components: BEST PRACTICES: Multichannel Integration vendor segments, fulfillment models and the data and information to be shared. A successful vendor-enablement initiative must accommodate the retailer’s unique mix of fulfillment models, such as: Shipping to a distribution center Drop shipping (for e-commerce fulfillment) Shipping to stores Vendor-managed inventory, or VMI Direct store delivery, or DSD Multi-party fulfillment Private label fulfillment The retailer also should evaluate what types of information it wants to capture or exchange with its trading partners. Some of the most common transactions include: Purchase orders and purchase order changes Invoices Advance ship notices, or ASNs GS1-128 labels (formerly UCC-128) Too many enablement programs prioritize systems over relationships. While technology is important, managing vendor relationships is absolutely critical. The challenge of any enablement program is convincing hundreds, or even thousands, of suppliers to spend time and money on something that fundamentally changes how they do business. 2. Give merchandising the leading role A retailer’s merchandising department should spearhead all trading partner community-development programs. To appreciate why merchandising has to take the lead, retailers need to understand how vendors will react. Be prepared for the responses from suppliers to break down as follows: 18
  • Part I: Industry Insights Thirty percent will enthusiastically adopt the program with no questions asked. Forty percent are willing but will “challenge” your business case and may need validation of your commitment to doing business with them. Twenty percent are vocal resisters. Ten percent are hard to predict and may not belong on the target list. In this critical step, the retailer’s merchandising department must set a targeted adoption rate that represents an appropriate equilibrium point between adoption rates and disruption to vendors. The adoption-rate goal will drive the whole program, including its message, tone and timeframe. 3. Be accommodating to suppliers’ needs As long as retailers can get the data they need, suppliers should be free to choose the solution that works best for them. Some suppliers have been doing EDI for a long time with many other retailers and will want to extend the system they already have and use a one-time testing effort. Others who don’t have an EDI system in place or don’t want to use their existing system need a quick and easy way to get up-and-running. Software-as-a-Service, or SaaS-based, programs that have been certified with the retailer are the best choice. Using SaaS EDI, vendors can start doing transactions almost immediately without investing in special hardware, software or staff. These services can be accessed via a Web form for suppliers with low-to-medium transaction volumes, or they can be directly integrated with an accounting, enterprise resource planning (ERP), packing/shipping or warehouse-management system for organizations with higher transaction volumes. In addition to getting suppliers up-and-running quickly, SaaS EDI services do not require staff to handle each vendor test cycle separately and offer predictable monthly fees. 4. Make testing real, and staff accordingly Often it’s easier to test vendors up front with a generic test order. However, this creates more work down the road and can lead to problems with the production effort. It’s better to spend time at the outset of the program testing real data using real transactions that are meaningful to the vendor. If multiple transaction types or fulfillment models are being implemented, multiple test scenarios using real data are needed. BEST PRACTICES: Multichannel Integration In the long run, using actual syntax and actual content is time well spent and can eliminate many potential issues associated with a real order. It is also important to staff the implementation properly. The enablement campaign (whether staffed internally or outsourced to a third-party provider) is responsible for: Developing messaging Analyzing the supplier community Developing a rollout plan Executing the supplier campaign Certifying suppliers Providing ongoing support Each of these steps can be extremely time-consuming. Due to the magnitude of the effort required for a successful campaign, retailers (or their third party providers) usually need a 20- to 30-person team to get through a six-month spike of activity. 5. Score data quality, and think long term Finally, once the EDI system is in production, retailers need to remain focused to ensure that vendors continue to complete all the required transactions and send all necessary data. Merchandisers can be equipped for improved vendor discussions using dynamic scorecards that leverage data directly from their EDI environment. This phase offers an excellent opportunity to monitor and score vendors. If suppliers fail to comply with the enablement effort, it’s important to inform them of their status and ensure there is a consequence for non-compliance. Managing an active trading partner community should be seen as an ongoing journey, not a one-time event. Successful retailers never believe their first trading partner community-development program is their last. Once the EDI system is in production, it should be closely monitored to ensure vendors are complying with the program. After the initial campaign is completed, retailers might want to expand their trading partner communitydevelopment efforts to include more suppliers, more types of transactions or more fulfillment models. You can reach Jim Frome and learn more about trading partner community enablement by contacting SPS Commerce. 19
  • Part I: Industry Insights Multichannel is not enough — welcome in channel On a global scale, the idea of  creating multichannel integration and getting a 360-degree view of the customer, which leads to better service, has been a decade-old, elusive dream. This dream has several connotations, including how consumers can seamlessly move from one channel to another and how customer data is made available between channels. Meanwhile, channels continue to grow and fragment, as can be seen with social media or texting. Technologies within a channel continue to mature or die (for instance, customers do not have the patience to resolve issues on e-mail today, yet many companies still provide this as a primary contact), but the obsession with multichannel integration persists. The real concern from a consumer standpoint is “solve my problem, where I am, in channel.”   This can be illustrated through my own experience as a consumer. Recently, I was online with my cable services provider, trying to seek help with my username and password, which I had forgotten. I went to their website from my iPad and started with a simple Web form that asked for my phone number, gave a “CAPTCHA” code that I filled twice and finally showed a link to chat. I filled out the new form and went through the next 25 minutes trying to get my username and password, with the last action of physically crawling to my modem to find out the Mac address … and there were four of them! I just stopped the chat. Next, I tried to reach the customer service department through social media and, lastly, via telephone. After 35 minutes of trying to solve my issue through various channels, I gave up.   As a consumer in the “second Internet” of Twitter, Facebook, smartphones and tablets I find this to be a frustrating experience. The question is, “if companies can actively track consumer behavior to micro target and sell to them, why can’t the same be done in service?” When it comes to service, it is still the old world and 1-800 rules.     What does multichannel do? It provides better frequently asked questions, or FAQs, with click-to-call or click-to- BEST PRACTICES: Multichannel Integration By V. Bharathwaj CMO, 24/7 Customer chat. Unfortunately, it does not resolve issues. In fact, published research shows that the majority of consumers go online to get their problems solved, but less than 15 percent actually find a resolution. Web sites are clearly not leveraging all the available intelligence to its fullest extent. That is, they do not attempt to predict what the consumer is trying to do — instead, they wait for consumers, just like an old-fashioned phone agent. The phone channel cannot recognize that a customer has had a frustrating experience online. In essence, multichannel integration does not solve the frustration that a customer faces when his problem is not solved in the channel, but being in channel and solving it in the device will. The real concern from a consumer standpoint is “solve my problem, where I am, in channel.” So how can in channel solve problems? Through predictive customer experiences. They are all around us — Google does predictive search, Amazon personalizes and predicts what you may want to buy and Facebook predicts who may be your friends. Now, the same predictive experience is extending to customer interactions. Predictive customer experiences are stickier than reactive or proactive customer experiences because they are personalized, they make predictions and they resolve the issue. The result is that consumers do not need to switch channels to get service; instead, they can do it in the channel and device they are in. The real key is to constantly learn, apply and improve predictive service within interactions and not the way traditional predictive analytics is applied, which is offline and not at the “moment of truth” for consumers. There is a great deal of structured (CRM feeds) and 20
  • Part I: Industry Insights unstructured data (social media feeds) about consumers as they use different channels. By fusing these feeds and understanding customer behavior in different channels, such as the Web and the telephone, one can predict what consumers want when they are in a channel and can specifically resolve their issues in the channel through predictive service — no generic FAQs are employed. The prediction in a channel such as the Web can extend from who has a problem, what the issue is and when they need assistance to what they are looking forward to and how to resolve it step-by-step during an interaction. If we step back to my previous example, if I was online trying to retrieve my username and password, I would have encountered an interactive application that would have specifically identified me, predicted my problem and guided me to resolve it — all within a few minutes. I would not have needed to scramble around looking to the 1-800 numbers, fully expecting that I have to start all over again with the next agent on the phone. Welcome to predictive customer experiences. Welcome to the world of in channel. BEST PRACTICES: Multichannel Integration 21
  • Part II: Case Studies Newey & Eyre successfully evolves from in-store to multichannel Newey & Eyre, based in the United Kingdom, is a leading distributor of quality electrical products. It is part of Rexel UK Ltd., a division of one of the world’s largest businessto-business distributors of electrical materials; safety supplies; and other maintenance, repair, operations or MRO products. Newey & Eyre is committed to helping its customers select the best products for each project and supporting them in the planning and management of major projects via its network of more than 150 branches across the U.K. Renowned for its highly personalized branch counter service, the company was determined to continue providing the best customer support possible during the tough economic conditions in the construction industry and wanted to help this very traditional market sector embrace new ways of working. To help contractors improve efficiency and reduce project-completion times, Newey & Eyre would need to offer a complementary alternative to the traditional in-store model without compromising customer service. The company wanted to develop a functionally rich “onestop shop” on the Web that would provide the electrical wholesale market an online channel that offered the capabilities found in the general retail sector but rarely provided in the B-to-B sector. The Web platform also needed to be integrated with the traditional branch operations and personalized service Newey & Eyre’s customers had come to expect. More specifically, Newey & Eyre’s multichannel commerce platform needed to deliver real-time customer-specific pricing, incorporate the B-to-B functionality expected by the electrical sector and offer next-generation merchandising of products and contents pages on the Web. In addition, the multichannel platform had to integrate the company’s current enterprise resource planning (ERP) system and business-reporting solution. Lastly, the platform needed to be flexible, scalable and able to integrate with existing workflows. BEST PRACTICES: Multichannel Integration By Carsten Thoma President, hybris US Newey & Eyre accomplished this tall order by selecting the hybris Commerce platform as the foundation of its new “one-stop shop,” and the companies worked with e-commerce consultancy and systems integrator Javelin Group to launch Newey & Eyre’s online store in June 2009. The site offers customers the first truly multichannel B-to-B experience in the electrical wholesale market. The company wanted to develop a functionally rich “one-stop shop” on the Web that would provide the electrical wholesale market an online channel that offered the capabilities found in the general retail sector but rarely provided in the B-to-B sector. The hybris Commerce solution is fully integrated with Newey & Eyre’s Cognos business-reporting solution, Omniture Merchandising solutions, Movex ERP system and Yahoo! Analytics. Omniture Merchandising drives the website search engine and manages the content of the pages, including displaying promotional banners. Data is fed into Cognos from hybris and Movex to provide Newey & Eyre with clear business reporting across the entire organization wherever a customer places an order. In January 2010, Newey & Eyre implemented hybris’ PCM platform as part of the second phase of its multichannel integration , enhancing product information-management capabilities for the brand’s expanding product portfolio and supporting additional customer channels. NeweysOnline.co.uk integrates the traditional in-branch service that electrical contractors expect, with a new Web channel that dramatically enhances the after-hours support for Newey & Eyre’s customers. 22
  • Part II: Case Studies It provides online capabilities not previously experienced in this sector, including: Online/offline order history — This is set at an individual user level, allowing customers to view what they have purchased not only online but also offline at the branch. This is a useful tool for accounts departments, managers overseeing what employees are purchasing and smaller contractors viewing what they have previously used on other jobs. Out-of-hours ordering — This allows contractors to place orders for next-day delivery or collection up to 8 p.m. Trade accounts and individual price lists — Customers who hold trade accounts have a personalized price list that is specific to them. The website allows them to view and place orders at their own prices. There is also a Web price for those customers who do not hold a Newey & Eyre account. Single checkout process — Combining “click & collect” with delivery confirms that neweysonline. co.uk is a true “one-stop shop.” Customers who wish to place an order and have some items delivered (perhaps to site) but also require some items first thing for another job can place one order online without having to check out twice. The ability to select items and the optimum fulfillment service for jobs today, tomorrow and the rest of the week is a capability that is not yet available in the retail sector and a true innovation for the B2B market. Job lists — Customers can create lists of products for specific jobs that they regularly execute so they can simply re-order from an existing list, instead of searching for the same products on each occasion. Each user can have unlimited job lists. Live stock checks — Customers can place orders for next-day delivery or collection with the reassurance that the items are in stock when they place their orders. Datasheets — Contractors can now download their own datasheets from more than 3,000 stored online. From the branch side, neweysonline.co.uk has enabled branch managers to manage new business much more effectively. All customers who register online register against a branch where they wish to manage their account. The branch manager is updated each week about new contractors registering online and can decide whether to contact them by phone or email or arrange BEST PRACTICES: Multichannel Integration a visit. It reinforces the face behind neweysonline.co.uk and provides the customer with a local point of contact — and not a national call center. This helps the branch gather direct contact details for local businesses but more importantly helps to facilitate relationships with online customers, where they had not been able to before. Revenue for an online order is allocated back to the branch where the relationship is established, and a consolidated view of customer orders in the integrated ERP system enables the branch to view all orders and manage the customer’s orders regardless of the channel used to make the purchase. In addition to the above benefits, the new site has enhanced ROBO (research online buy offline) rates and is driving traffic directly to branches, with large numbers of visitors now searching for a product online but immediately using the branch locator to find their local branch and then making their purchase in store. With regard to specific ROI, neweysonline.co.uk has produced significant increases in online traffic, sales, return rates and out-of-hours ordering following its launch, including: 13 percent of orders are collected at branch via “click and collect.” 26 percent of the online business is now completed outside of normal branch hours. The fastest order placed to date was completed in 2 minutes 47 seconds with only seven page views, including logging in, locating the right products and checking out. Approximately 15 percent of new account forms are now being completed online, assisting new business development. With the success Newey & Eyre has realized, Rexel hopes to extend its use of hybris’ platform by investigating potential additional Web channels for new markets within the electrical industry. Carsten Thoma, president of hybris US and COO of hybris Group, co-founded the multichannel commerce software provider in 1997. He began his career at Hewlett-Packard, where he first developed his ideas for standardized yet highly innovative and flexible e-commerce software. For more information on hybris, visit www.hybris.com. 23
  • Part II: Case Studies Golfsmith’s multichannel integration with GMT Planet By John Ellis Senior director of professional services, GMT Corp. Challenge Since 1967, the goal of Golfsmith International Inc. has been to be “Your Caddy for Life.” With more than 60 golf superstores from New York to Los Angeles, Golfsmith has grown to become the only true national golf retailer. That growth has been powered by the company’s multichannel retail strategy, which combines brick-and-mortar stores with a strong online presence and contact center operations for the ultimate golf shopping experience. In the end, the GMT Planet workforcemanagement solution provided the best fit for Golfsmith’s specific multichannel retail challenges. As the company’s physical stores, product and service lines and sales figures continued to grow, so did Golfsmith’s operational sophistication and complexity — particularly in the brand’s contact center operations. The company continued increasing the volume of catalogs mailed to its customer base — up to 30 different catalog drops a year, ,along with offers and promotions through online and e-mail channels — the volume and types of calls flooding into the contact center grew in both raw numbers and sheer unpredictability. Each catalog or promotion generated its own demand curve, and as the number of offers grew and overlapped, it became increasingly challenging for contact center managers to plan their workforcemanagement forecasts and schedules. Compounding the scheduling challenge, contact center staff comprised a large percentage of part-time students and senior citizens with limited scheduling availability. As a result, contact center managers found they had overscheduled the number of agents at any given time, resulting in overcapacity and unnecessary labor costs, despite dedicating more than 30 man-hours each week BEST PRACTICES: Multichannel Integration to forecasting and scheduling on a Excel-based system. Worse, without the ability to accurately forecast call volume on a day-to-day basis, they often were understaffed. The inadequate staffing led to a spike in time-to-answer rates and call-abandon rates, ultimately translating to a degraded customer experience, lower brand loyalty and lost revenues. “We at Golfsmith pride ourselves not only on providing our customers with the most innovative golf products and the greatest value in the golf retail industry, but also on delivering the most reliable and responsive customer service in the industry,” said Kody Sweet, director of guest experience for Golfsmith. “And as our sales and call volumes continued to grow, it became clear to us that we had outgrown our old workforce-management systems and processes in our call center and needed to upgrade to a more sophisticated and cost-effective way of accurately forecasting calls and scheduling agents.” Solution During the due diligence process of understanding workforce-management solutions and evaluating leading vendors, Golfsmith narrowed down its evaluation to three vendors: GMT, IEX and Blue Pumpkin. In the end, the GMT Planet workforce-management solution provided the best fit for Golfsmith’s specific multichannel retail challenges. Specifically, Golfsmith highlighted GMT’s capability to precisely forecast call volume by digesting and analyzing the demand and timing of calls generated by the brand’s complete array of catalog drops and other marketing campaigns. As the only solution provider with these “campaign forecasting” capabilities, GMT helped Golfsmith address the challenge of matching supply of agents with the ever-changing stream of calls. The GMT solution gave Golfsmith the ability to forecast call volume and create detailed staffing schedules with a greater degree of accuracy. GMT Planet achieved this 24
  • Part II: Case Studies degree of accuracy by capturing Golfsmith’s historical data, such as expected conversion rates and other key data points. By walking users step-by-step through a series of questions such as, “How many orders are you expecting this week from X campaign?” and analyzing past catalog drop and resulting call patterns, Golfsmith generated its first GMT-enabled forecast based on discrete 15-minute scheduling intervals. In fact, the schedule was so detailed that managers were skeptical that the forecast was accurate, believing that the staffing would be “too lean” and would result in unacceptably high hold time and abandonment rates. After much discussion, they decided to go with their manually created staffing plan, based on years of experience using their previous planning system. At the end of the period, management compared the two forecasts with their actual call logs and was surprised to discover that GMT’s projected forecast was more accurate than their experience-based forecasts, providing the first piece of support for the GMT-powered workforcemanagement solution. GMT Corp. is a leading provider of workforce-management and performance-optimization solutions that enable companies to improve customer service and sales while decreasing labor expenses. Deployed in contact centers, branch offices or back office departments, GMT’s products combine precision forecasting and intelligent scheduling with analytics and performancemanagement tools to deliver a rapid return on investment. Products include GMT Planet, the company’s flagship workforceoptimization solution; GMT On-Demand, its SaaS workforceoptimization solution; and SureServices, an award-winning client care methodology. Enterprise clients benefitting from GMT’s solutions include BB&T, PRC, Alpine Access, Golfsmith, AirTran Airways, World Travel Holdings, Bank of the West, Zions Bancorporation, Ingenico, West Midlands Police, Contact 1-2-1 and Yarra Valley Water. The company is privately held with headquarters in Atlanta and offices in the U.K. and Australia. For more information, visit www.gmt.com. Follow GMT on Twitter: www.twitter.com/gmtcorporation. Soon, GMT Planet was at the core of Golfsmith’sr contact center forecasting and scheduling — driving the creation of precise staffing schedules based on factors such as predicted call volume by 15-minute intervals, agent schedule availability and skill sets). Furthermore, Golfsmith reports that GMT Planet’s forecasts and reports have grown more and more accurate as the system captures additional data points from which to calculate forecasts and staffing models with even greater precision. Building on the success and high degree of control over its forecasting and scheduling processes enabled by GMT Planet, Golfsmith also decided to add teleworkers) — a new category of agents in addition to full-and part-time staff — as its expands operations. The company also has deployed the solution in its nationwide network of retail superstores and back office operations. “As we ramped up the learning curve, we became more and more impressed with GMT Planet’s powerful range of capabilities and found ourselves continually asking, ‘What else can this system do for us?’” Sweet said. “I simply can’t imagine going back to our old system.” BEST PRACTICES: Multichannel Integration 25