Magazine Article | April 17, 2008

Are You Ready For Cross-Channel Retailing?

Source: Innovative Retail Technologies

If you’re selling through multiple channels, cross-channel retailing solutions can help provide your customers with a unified experience.

Integrated Solutions For Retailers, May 2008

Is cross-channel retailing the next wave in retail strategies? Most retailers and vendors of retail solutions agree that 'cross-channel' isn't the same as 'multichannel.' While lots of retailers — from the biggest well-known chains to the one-location specialty store — are jumping on the multichannel bandwagon, few — if any — have yet to achieve true cross-channel retail success. What's the difference? Multichannel is simply the strategy of selling product in more than one channel to different, or sometimes the same, customers, not necessarily having any connection or visibility among these channels. Cross-channel, on the other hand, is the strategy of sharing and selling product across different channels through to the same customer. The hallmark of true cross-channel selling is providing your customers with a consistent and unified experience across multiple channels.

This month, we explore the benefits of true cross-channel retailing — and the means to achieving it — with Heather Dawson, VP of marketing for cross-channel retail solutions provider CrossView Solutions; David Ash, CEO, Sam Ash Music Corporation; and Craig W. Stevenson, global solution leader, Multi-Channel Retail Solutions, IBM.

What are the keys to successful multichannel retailing?
Dawson: The main key to successful multichannel retailing is to run the business holistically, such that all of the sales channels operate in a coordinated fashion to serve the needs of the individual shopper. Shoppers are touching retailers in more than one sales channel, and they expect consistent information, promotions, and customer services across every touchpoint. A cross-channel platform has the ability to support multiple customer touches in a consistent way, while exploiting the uniqueness of each sales channel.

Cross-channel platforms have three main components that help the retailer deliver better customer service:
n Consolidated customer information and analytics to understand their customers' preferences both in terms of brand affinity and shopping patterns so the retailer can reach each customer in a personalized way.
n Integrated channels that enable the retailer to deliver consistent merchandising across each channel.
n Integrated customer services behind every channel so that the retailer can deliver unlimited flexibility in terms of payment, shipping, and fulfillment.

Stevenson: Retailers that want to successfully execute a multichannel retail vision need to concentrate their efforts on several key activities. First, they need to gain deeper insight into their customers' needs and buying patterns. Once they better understand their customers, retailers need to focus on identifying processes that align with their customers' desired shopping experiences. After defining customer needs and processes, retailers can create an 'operational blueprint' that identifies gaps between current and future states. And last, retailers need to prioritize the initiatives that will have the greatest impact and develop a phased multiyear road map.

What benefits can retailers expect from a cross-channel solution?
Dawson: Increased customer satisfaction and conversion rates are the primary benefits of cross-channel retailing. These are achieved with focused personalized merchandising across the sales channels, combined with convenience factors that make it easier for the shopper to complete a sale.

Stevenson: The chief reason for successfully executing a multichannel strategy and implementing a cross-channel solution is greater and more profitable revenue growth. What drives this profitable growth is a greater focus on the customer, leading to increased wallet share, conversion rates, and average order size.

What functionality is included in a typical cross-channel platform?
Dawson: Cross-channel platforms have all the capabilities of each individual sales channel plus the business logic to support typical cross-channel functions. Typical functions include cross-channel services like inventory, fulfillment shipping, and payment options, making it possible for every sales channel to see the inventory across every store, and fulfill from every store. A simple example of this is allowing customers to buy online and pick up in-store. Other examples could include a more complex sale in which someone wants to buy some items in a store, while having other items shipped to a store for pickup, and having yet other items shipped to alternative home addresses. The concept of 'endless aisle' is included in every sales channel of a cross-channel platform. In addition, cross-channel platforms support centralized management of customer and product information and have the capability to deliver merchandising across each channel. They also have the analytics to segment and understand customer preferences. 

What kinds of business insight can a cross-channel solution provide?
Dawson: I think the most common insight for a retailer is the answer to the following question: "Are the shoppers in the close radius of my stores buying and shopping online or in my store, and how can I improve that experience for them?" One of the biggest online buying deterrents is the cost of shipping, but if an item is in a local store or shipped there, the shopper is likely to come in, pick up the item and then look for the rest of the items necessary to complete their basket. Getting the shopper into the store with the promise of the large item and then having the ability to complete the basket by having additional items shipped is a huge convenience factor for the shopper and also has big benefits to the retailer.

Ash: Sam Ash is a multichannel retailer, selling through 45 retail locations, a Web site, and mail-order catalogs, but we are not doing true cross-channel retail. However, we are using CrossView's product information manager to help us assemble, manage, and publish thousands of products and the data associated with each product to our Web site, call center, and in-store signage system. With the solution, we can manage all aspects of all our products across all channels. This includes maintaining detailed product information, such as specifications and descriptions, photos of products, recordings of the sounds the musical instruments make, video of products, and so on. By maintaining all of the information in a single location, an employee can research a product through a single database, and new product information can be uploaded to a single database, saving significant time and labor. The information from the database can be used in all of our channels, whether we need detailed product information for the Web site, pricing information for in-store signage, or photos for catalogs. 

What are some of the latest developments in cross-channel retailing?
There seem to be two main approaches to the challenge of cross-channel retailing. One is to add integrations and data warehouses behind all of the sales channels around customer information and product information and then build in the individual Web services to handle the business flow. The other is to build the sales channels around an operational data store of the customer, product, promotion, inventory, and order information that has the business logic included for the required customer services. In general, simple solutions are easier to expand and grow with, but there are some technical advantages and disadvantages to both. Retailers really need to look for a solution that can grow with their needs. They also need to partner with a vendor that can deliver the function they require and provide them with ongoing support that guarantees all of their sales channels will be operational while they focus on their shoppers.