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HCLT Whitepaper: Winning E-Commerce Strategies


Published on More on Retail and Consumers

Online sales have seen exponential growth in the last few years. As this channel finally achieves a significant percent of sales of many retailers, most of them are re-evaluating their overall Cross Channel strategy and deciding how best to align the marketing; sales processes and support systems across the traditional store front and the online channel. Getting the e-commerce end of your business off the ground isn't a walk in the park, but it's also not as difficult as you may think — as long as you strategize. This white paper attempts to lay out an appropriate roadmap for the implementation and customization process.

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HCLT Whitepaper: Winning E-Commerce Strategies

  1. 1. Winning e-Commerce Strategies The critical factors that can make or break a successful e-commerce implementationABSTRACTOnline sales have seen exponential growth in the last few years. As this channel finally achieves a significant percent ofsales of many retailers, most of them are re-evaluating their overall Cross Channel strategy and deciding how best to alignthe marketing; sales processes and support systems across the traditional store front and the online channel.Getting the e-commerce end of your business off the ground isnt a walk in the park, but its also not as difficult as you maythink — as long as you strategizeThis white paper attempts to lay out an appropriate roadmap for the implementation and customization process.
  2. 2. Table of contentCross Channel Background and overview- The Stateof Cross Channel Operations ................................................3Options in your Cross Channel Strategy .......................................3eCommerce Industry Dynamics & Challenges..................................4eCommerce Implementation Pitfalls .............................................5eCommerce Best Practices & Future Trends ....................................6eCommerce Transformation in action: Case Studies .........................8 2
  3. 3. Cross Channel Background and overview The State of Cross Channel Operations In the last few years we have seen online sales grow very rapidly as a percent of overall retail sales U.S. online retail sales will more than double over the next six years, reaching $316 billion by 2010. According to a new report from Forrester Research, the growing population of online shopping households, combined with effective multichannel integration and site improvements from retailers, will drive e-commerce growth to account for 12 percent of total retail sales in 2010, up from nearly 7 percent in 2004. As multichannel sales achieve a significant percent of sales, many retailers need to re-evaluate their overall Cross Channel strategy and determine how to align the marketing; sales processes and support systems. They need to continue to integrate e-commerce with their more traditional brick and mortar operations During the Internet Boom retailers rushed to build their online channels in the quickest possible manner to meet growing consumer demand. In their speed to market, the long-term cross-channel implications were often not part of the initial design. In fact, in many cases the new kid on the block was deliberately separated from the traditional channels so that the outcome was not tainted by the “old world” thinking. Many of these entities were set up as independent online business units and were managed by a conflicting set of performance metrics, incentives, and operating models. Another option for retailers was to establish a web presence by using basic, standalone, first-generation e-commerce software that in many cases had various aspects of the operation not just outsourced but completely separated form their regular operations. As retailers now attempt to integrate these multichannel experiences, existing software and operating structures are proving to be an obstacle and retailers are discovering the need to significantly rethink their Web presence and strategy According to Robert Garf of AMR Research “consumer expectations for seamless cross-channel shopping have increased. However, retailers are facing two major obstacles—a lack of cross-channel operational efficiencies and lingering technical shortfalls” Retailers see an opportunity in challenging times: “During the first quarter, on top of a 40% or 41% increase for all of 2007 versus all of 2006, was up 45%, Clearly electronics dominates, whether it is electronic games or game consoles” Costco chief financial officer Richard Galanti “Circuit City Stores will work toward a U.S. turnaround after several quarters of losses, CEO Philip Schoonover said during a presentation at NRFs annual conference”Options in your Cross Channel Strategy Retailers have are a number of options today to implement their new cross channel strategy including either new packages or custom build implementations which essentially are replacing their current legacy eCommerce platform and upgrading their current systems . Predominantly most Retailers had invested in first-generation e-commerce applications during the last decade to meet the growing consumer demand. These standalone systems (quite often highly customized) are now becoming a barrier preventing retailers from satisfying the evolving cross channel consumer expectation. Thus most of them are in a process of a complete revamp 3
  4. 4. Following chart shows an estimated split of various options available: Packaged Software with Mini Customization 19% Packaged Software with Major Customization 38% In- house / Custom Application 43% Source: HCL Strategic Intelligence Wing 2007 Whereas some retailers choose to outsource the system and the process at one extreme, others are outsourcing just the system and in some cases they are outsourcing just the hosting of the system.eCommerce Industry Dynamics & Challenges = Building Sustained Competitive Advantage ! Leading companies are looking for next-generation capabilities to maintain competitive advantage by being early adopters of new functionalities. ! Organizations are re-thinking e-commerce for potential growth opportunities for their overall business = to integrate or leverage the Web 2.0 imperatives Need ! Need to use consumer networks (like gen net etc) ! Comprehensive Search Capabilities including Comparative Shopping and Advanced Search functions = Increased Quantum of Online User Base ! Need to leverage e-commerce for compelling business reasons = Integration of E-Commerce Systems with Enterprise systems ! Seamless integration of E-commerce systems with legacy/ non-legacy Enterprise systems ! Growing interest in allowing better integration across all customer points of interactions = Increased Security Requirements ! Need to address consumer concerns about privacy ! Concerns about security of credit card and other information = Technology and Platform Integration – Consolidation of Multiple web sites built on varied technology platforms ! Inorganic growth through M&A’s ! High cost of maintenance = for Enhanced Development Capability Need ! Quicker turnaround time for critical skills and capabilities 4
  5. 5. = Offshoring Mission Critical E-commerce Applications ! Meeting end-user satisfaction = Critical Applications with poor Architectural evolution Many enterprise homegrown e-commerce platforms and commercial platforms need an overhaul ! This market is entering a replacement/upgrade phase in which users wish to add new capabilities, and update and integrate their current "siloed" multichannel e-commerce projections. = initial technology ownership costs Huge ! Need tech. partnerships to avoid tech obsolescence = an “Always On” facility to maintain the business critical apps NeedMajor issues & pitfalls with eCommerce implementation Ecommerce implementations programs are complex and challenging. Not all retailers have the internal capabilities or scale to execute on them successfully. So what are the challenges that we need to be aware of before embarking on ecommerce implementation programs? There are several challenges that retailers need to consider when they embark on their ecommerce programs: Most Retailers underestimate the organization change impact and what it means to people roles and responsibilities. The merchandizing drivers and parameters and key performance indicators are very different for online business versus for the traditional store fronts. Should the organization market and brand itself differently for the online customer versus the regular customer. Should the IT organization for the online business coordinate and engage with the Corporate IT organization? What is the change readiness and training impact to people as they implement the new processes and technology? In several cases, the effort impact to legacy and backend systems has also been underestimated. There is often insufficient knowledge and documentation of the incumbent systems and adding a channel that behaves quite differently may need modifications in many fundamental processes, and workflows of the existing legacy applications. It is also easy to overlook the complexity associated with the customization and integration of the ecommerce platform with existing systems Another issue is the elaborate definition of the content management and workflow processes and the retraining of merchant teams so that they can effectively use the new content management systems. Performance tuning is another area that gets pushed to the backburner and sufficient importance needs to be attached to the architectural implications of scalability, availability and performance. The latest twist to the ecommerce requirements is the need to include social networking and the usage of Web2.0 The concerns here are whether to create your own social networks and associated services or piggy back on existing social networks and associated tools the other major strategic concern is how to control. Monitor and filter content in a medium whose purpose is to smash existing paradigms about the ownership of content. And allow free wheeling discussions and self expression. 5
  6. 6. eCommerce Best Practices & Future Trends Following strategies should be incorporated in your Retail eCommerce plans: = performance - This is one of the most important factors which enhances customer experience & has to be Site maintained at a high performance and high availability. Since web users can sign up and visit at any time it is extremely important that the site is up 24/7/365. Performance needs to be very fast and the site should have the ability to scale for sudden surges in user and transaction volume. = interaction is of prime importance - Retailer need to analyze and study those Web sites that consumers User identify with and improve site organization and model their purchase process on that of the leaders in customer satisfaction. The good news here is that there is a lot of learning possible from leaders in the Internet business even though they may not be direct competitor. Customer feedback - In order to ensure a good customer experience, Retailers must evaluate the experience of = real live customers shopping on their Web site, capturing the customers behavior and feedback along the way. Armed with customer insights, companies can put their efforts into improving what matters most. Following trends should be kept in mind while executing your Retail eCommerce strategies: = Identity for Universal Single Sign-On System - For effective user id authorization and management its Open better to go for Universal solution - the OpenID which is the decentralized Single Sign-On System. OpenId enable Open Reputation, roaming portable identity and personal data for the users of the site. Using OpenId enable sites and web user do not need to remember the traditional authentication tokens separately for each site. OpenID eliminates the need for multiple usernames across different websites, simplifying your online experience. It is in the adoption phase and is becoming more and more popular, as large organizations like AOL, Microsoft, Sun, Novell, etc. begin to accept and provide OpenIDs. It is free to use and is easy to integrate with the exiting Id Providers. = Mobile Internet Devices access rises as Common Shopping Strategy – It is expected that worldwide market for Internet Services is increasing multifold in coming years. That increased consumer reliance on popular online services can be seen in strong and growing demand for Internet-accessible cell phones, PDAs, two-way pagers, small kitchen devices, and TV set top boxes. Forrester believes that a new category — mobile Internet devices (MIDs) — will deliver on the promise of the mobile Internet. Take the mobile phone, now nearly ubiquitous among consumers. It is emerging as both a retail payment device and a tool for shopping online, but consumers will undoubtedly find additional shopping uses for it, experts say. The photography done by mobile phones can be used with online price comparison engine as the Common Shopping Strategy. = Ubiquitous connectivity, broadband adoption and multi–channel delivery - There’s a convergence of broadband Internet access, mobile commerce, online video, consumer reviews, web TV, social networks and blogs—all wrapped up in web community and commerce. The onset of web TV alone offers so much promise. Online research is now a standard part of the buying process with 80 percent of online users saying they research products online before they make a purchase. Most of them rely on the ratings / comments made by the other common users. It is the need of hour to determine a long-term strategy to allow customers to access the web from numerous devices and target for the multi-channel delivery model. The mobile companies have already unveiled new Web-based services and gadgets to help customer download music and play games on handsets. = Evolving Open Source in Solution Development - Open source promotes software reliability and quality by supporting independent peer review and rapid evolution of technology through community process. It provides a stage to make key technologies ubiquitous. There by bringing value, lending credence, compatibility etc. to stacked products and feature packs, e.g. Java, Apache, LAMP. We can use components that are already in open source (e.g. Apache) rather than developing or enhancing our existing closed source components. It gives the community tested solution and provides the opportunity to collaborate with other companies or individuals with common objectives. 6
  7. 7. It provides the added benefit of increase choice and flexibility and adoption / use of Open Source reduce time to market along with enhanced affordability with perceived zero to low cost.Websites with Rich Internet Application (RIA) Experience – With the increased bandwidth and media= availability customers are expecting highly visual content and the freedom to shop however they want—online, in stores or through call centers. Such an application might look like a kind of mini-browser within a browser, into which shoppers could drag products, pictures and other online content. Design the applications which could call back to any store to check on inventory status, interact with a master checkout and transaction processor so as to allow shoppers to check out centrally instead of at each retailer site. It could be let users create and display their own favorite product catalogs on a site. There is need for the applications which would reside on consumers’ desktops rather than depending on a live Internet connection to serve content from the retailer.= Analytics for Forecasting Trends – With the Web 2.0 we are collecting lot of data. It is important to involveWeb collected data into the analysis of the trends. New game in content is to push out concierge-like services that analyze Web content to discern much deeper patterns of meaning and more intuitive results for answer-seekers and demanding customers. Increased sales can come from harnessing techniques based on personal preferences such as collaborative filtering along with developing tools that divine the real influencers of opinion in social media outlets. Content providers have been recognizing the value of online content analysis services since the beginning of electronic publishing.=Social Connections New Trend in Shopping – Connections will also fold into other so-called Web 2.0 capabilities, including Web page bookmark sharing tools, or tagging, and a blog search function. Connections can unlock a businesss collective knowledge base by letting workers share their experience with others. It is already gaining popularity within business settings and flourishing as vehicles for professionals to cultivate job opportunities, sales leads and other connections. The rise of social networks is having a positive impact on ecommerce in the US. Along with demographic changes and growing broadband penetration, it is one of the key factors that drove online shopping spending up by 25 percent year-on-year since 2005. Brands are realizing they have to do a lot more than making something that tastes good and have start realizing that connecting on a personal level with people makes the life better. These days consumers are the source of feedback (similar to a focus group) on product design and features, marketing and advertising campaigns. Word of mouth (i.e., viral marketing) is free advertising and increases the visibility of niche retailers and products.=Optimization and Semantic Search Strategy – For last couple years the buzz in retail and e-commerce is all about optimization -- everything from optimizing Web site for natural search, to pricing and inventory optimization, and even getting optimized motion-control shoes for running. Along with the Optimization there is need to explore the fast-evolving power of targeted, semantic-oriented business search and marketing. Web sites with Natural Search (Keyword Search) are not enough. We also need to create the knowledge by sharing our search experience. Semantic Search has added Keyword Search with Faceted Navigation and Collaborative Filtering. B2B search provides a way for small, local retailers to find the potential customers and other businesses that are actually looking for the services and products they provide. With the semantic search any business can refine their procurement processes and expand their distribution opportunities by better exploiting the new breeds of semantic based business search and associated advertising.= the definite advantage of On-Demand Services - The e-commerce channel continues to grow at aSAAS staggering pace (up to 30 percent annually) and consumers, influenced by the latest Web 2.0 capabilities, continue to expect a better shopping experience from e-commerce sites. According to a September 2006 Forrester Research report, 34 percent of North American retailers planned to purchase and/or upgrade sell-side e-commerce capabilities. In the niche demand for the competing priorities SAAS is giving merchandising control, automatic seasonal upgrades and on-demand scalability. It helps merchants and Web designers to manage the merchandising and design of a best-in-class e-commerce site, improving the timeliness and relevance. It helps retailers consistently improve the user experience, stay current with e-commerce best practices and focus a greater portion of time and resources on creating brand differentiation rather than building and maintaining commodity functionality. True on-demand must include a grid architecture that delivers capacity when a retailer needs it. 7
  8. 8. This function automatically provisions additional server capacity as needed to handle increased traffic loads, all thewhile maintaining seamless, optimal performance. The major attraction of on-demand e-commerce model is thatthe platform is continually living, kept current and maintained by the software vendor and runs on hardwareoptimized for serving e-commerce.= as Business Oriented IT development – The business environment is undergoing a dramatic change.SOA Competition from traditional and nontraditional players, emergence of a multitude of delivery channels, a plethora of regulatory and governmental compliance requirements, and demands for more flexibility and agility, to name a few, influence business design and execution. In such a scenario SOA is an overarching architectural philosophy that has gained widespread adoption in the enterprise by helping enterprise IT to quickly respond to the agile needs of the business. It is a paradigm for the realization and maintenance of business processes that span large distributed and complex systems. SOA is a technology which brings together the two major enterprise stakeholders IT and the business unit to make the business processes flexible and adaptable. IT is responsible for designing, implementing and deploying the IT infrastructure and applications, while the business unit is responsible for delivering value to its customers and end users. The SOA enables retailers to extend the lifecycles of older IT assets by exposing data and functionality in those systems to consumers via Web applications. As per Gartner By 2008, SOA will provide the basis for 80% of new development projects. It will enable organizations to increase code reuse by more than 100%. Today the SOA scenario is broad with many vendors and standards. SOA represents a model in which functionality is decomposed into small, distinct units (services), which can be distributed over a network and can be combined together and reused to create business applications. These services communicate with each other by passing data from one service to another, or by coordinating an activity between two or more services. The deconstruction transforms the enterprise into a collection of smaller and autonomous business components, which is interacting with each other coherently to serve each other and fulfilling the business needs.= as front runner technology for Extended User Experience – AJAX (Asynchronous JavaScript and XML),Ajax is a group of inter-related Web development techniques used for creating interactive Web applications. A primary characteristic is the increased responsiveness and interactiveness of Web pages achieved by exchanging small amounts of data with the server "behind the scenes" so that the entire Web page does not have to be reloaded each time the user performs an action. This is intended to increase the Web pages interactivity, speed, functionality, and usability. Users are now demanding more richness from enterprise Web applications. It is creating considerable pressure on the enterprise to create new RIAs and to modernize existing Web applications with RIA technology, most notably Ajax. The leading technologies for Ajax are Dojo and DWR. Dojo is the leading JavaScript widget toolkit for creating AJAX applications from reusable and extendable widgets which can easily being added to the existing web pages. DWR (Direct Web Remoting) is an AJAX remoting framework for Java which is easier to use than raw XMLHTTPRequest object.= tool for Managing Online Content – With the evolution of Online Collaboration, the consumers are usedWCM to using Google Maps, Blogger, Flickr, and Wikipedia. It leads to new Web World – Web 2.0 which has reset expectation of user; creating a fundamental shift in both technology requirement and business requirement. Ever-increasing number of users and online business leads to content bottleneck and raised the urgent need to manage accelerating demand for on-line collateral and e-commerce enablement. Online consumers are expecting Rich User Interface, Participation, Categorization, Personalization and Trust. Leading WCM has come with the solutions of combining Content Management with Web 2.0 services. WCM servers provides embeddable content services for community participation along with content access to Multi-Channel, Collating Client Details, Storing and Displaying Product Information, Changing Web Site Content, Managed Workflow for Web Content Authoring, Displaying Seasonal Media, Changing Images on web pages giving a different feel each time it is visited and effective Online Promotion Management. These tools also provide the benefits of Integrated Snap-shotting, Auditing, Archive Management as well as enhanced High-Availability, Fault-Tolerance and Scalability. The effective usage of online tools leads to reducing managing content from Weeks to Hours, Service Oriented Auditing hence saving cost and fool-proofing online business with increased functionalities 8
  9. 9. HCL Case Studies HCL Case Study 1 Client Overview: A Leading provider who creates and operates Web sites for about 60 retailers and consumer goods manufacturers in addition to its own sporting goods retail operations Business Objective: = client wanted a highly scalable, customizable and maintainable B2C e-commerce solution with low The turnaround time = wanted to enhance the branding of their customers on the web and generate revenues from these web stores They = required integrated development of a web store, order management and order fulfillment / tracking system They Solution =Development & Maintenance for Online WebStores (API, JSP Pages) =Customer Service tool (Dashboard), Campaign Management tool (Epiphany) =Implementation of Web 2.0 features =Parametric search and navigation =Integration of client systems with third party systems using feeds =Supply Chain Management, CRM = analytics and Business Analytics Web =Production Support – 2nd Tier on all priority defects =Supply Chain Management – JDA (Inventory, Orders Management and Fulfillment) = if AJAX technologies for creating interactive web applications Use = SOA as an overarching architectural philosophy Using Value Delivered = Category based Catalogues = Seamless integration of JDA MMS, Catalogue Management System, WebStore and Epiphany (CRM) = Application availability 99.5% = Enhanced user experience = Availability of customer data and information for business analytics = Effective price and promotion handling HCL Case Study 2 Client Overview: The worlds largest apparel company with a history of over 100 years and brands that reach a variety of consumer segments across various retail channels Business Objective: = client had Multiple Order Management Systems The = wanted single order management system Their Solution = project is a single order management system by using J2EE for all the client companies & can be primarily The divided into following: =End-to-end solutions development and implementation = implementation maintenance support & Customizations of user interface Post =Catalog Management, Content Management & E-Commerce framework 9
  10. 10. Value Delivered = Reducing committed and overall inventories = Providing better planning information to manufacturing = Offering the flexibility to obtain and support new customers = Providing much more detailed, consistent, and reliable available-to-promise information = Growing the business with more competitive services & Helping in meeting its full potential in cross-sales to existing customersAbout the Author Ravi Sankar is the Practice Lead for Retail and CPG at HCL America. Prior to this he was AVP of Domain Consulting in the Retail and Consumer Goods Practice of Satyam Computer Services. He has over 23 years of experience in the US improving the performance of organizations by developing and implementing innovative process and technology solutions to meet the business and supply chain needs of Global 1000 corporations as well as small and medium enterprises. Prior to joining the information services industry, Ravi worked in operations area of companies in the US for 18 years. Most recently he was VP of Supply Chain for David’s Bridal (a Division of May Department Stores). Previously, he worked as VP of Corporate Planning and Information Systems for Sumitrans, a 3rd Party Logistics Company and subsidiary of Sumitomo Corp. He has held management roles with KPMG Consulting, Melville Corp (parent of CVS Drugs, Marshalls, Linens, KB toys etc), Leaseway Transportation (now Penske Logistics) and CSX/Sealand Logistics. Ravi has developed extensive business solutions in the areas of Just-In-Time transportation, Network Optimization, Inventory Management, Replenishment and Allocation as well as technology innovations in eCommerce, IT Project management and Systems Implementation Anupam Bhatnagar is the Category Manager for Retail & CPG at HCL Technologies. He has over five years of experience in IT Services marketing in areas including ERP, SCM, Retail & CPG Industry Solutions. He has a strategic focus on E-Commerce, having done comprehensive research projects in future trends & challenges Retailers are facing in this area and also have managed execution of end to end campaigns in E-Commerce. Prior to this he has worked in Enterprise Solutions Group at Birlasoft where his focus was blue ocean initiatives and business development in the US for various lines of businesses Naveen Grover is a consultant in the Retail & CPG Practice with HCL Technologies. He has more than Eight Years of experience in the areas of Web Technology, using J2EE / Web Services and Many Open Source Technologies. He has previously worked with, a leading eCommerce service provider, other leading F500 Companies and IIT Delhi to name a few. Currently he is leading Retail E-Commerce Vertical Solutions Group initiatives HCL. He is having good understanding of the E-Commerce and leading future trends in online Retail Business. Naveen’s present focus is on designing SOA and ESB Workflow backbone layer for Retail business The authors can be reached at 10
  11. 11. HCL e-Commerce Hightlights eCommerce Functional components: Order Management, Catalog, = Transaction Reporting, Business Intelligence B2C: Personalization, Live Chat, Community, email Marketing, Social = Mature Processes (CMM5) = Networking Integrated Global Delivery = = Compliant Processes ITIL B2B: Collaboration, Product Information Management, Customer Web = Store, Promotions Management COPC CSP 2000 Process Certification = = 9001, Bs799 ISO Delivery Application Development & Integration, Application Management, = Automation & Performance Testing, Application Deployment, Application Efficiency Service Porting & Migration & Quality Range = Interface & Web Site Response time optimization Infrastructure: 24x7 User = B2C B2B, support, Managed Hosting services PCI compliance Portals, Content Management = Business Consulting, Technology = Diverse Consulting Exposure Internationalization, Data Warehousing = 7,000 + person years of Retail experience = Domain = + dedicated eCommerce consultants 1400 Expertise IP & Frameworks CONNECT: Loyalty Management System = Memberships E-store : A Framework for Online web stores = Reusable Components = Security Frameworks = Leverage Web 2.0 = AMR Research ranks HCL higher than the other Indian offshorers in Retail capability scope with leadership status in eCommerce. Hello there. I am from HCL Technologies. We work behind the scenes, helping our customers to shift paradigms and start revolutions. We use digital engineering to build superhuman capabilities. We make sure that the rate of progress far exceeds the price. And right now, 51000 of us bright sparks are busy developing solutions for 500 customers in 17 countries across the world. How can I help you? 11