Magazine Article | November 1, 2001

Network Connectivity Is Key

Source: Innovative Retail Technologies

Network connectivity options are growing for medium- to small-sized retailers who need to be aware of what each entails.

Integrated Solutions For Retailers, November 2001

In the childhood game "Telephone," a whispered message goes through the ears of giggling players, but the connection depends solely on their memories and communication skills. Usually the message is garbled by the time the last person repeats the sentence, if it gets there at all. If the originator of the message had a high-speed, dedicated connection to each player, the game might lose its fun factor, but the children would exchange more accurate information. The same applies to the IT networking game.

Retailers face many challenges in the game of network connectivity where the object is to keep stores, headquarters, and remote employees connected in real time. The company that quickly and accurately sends the message wins, in the form of increased productivity and reduced cost. But many retailers still use a dial-up connection to poll their stores or send out their payment authorizations. For the networking game to run smoothly, retailers need to consider many things: the expense of building and operating nationwide network infrastructures, the integration of distribution channels, staying current with changing technology, and the scalability of the structure. In the past, network solutions have been available to only large retail operations that have the in-house staff and mainframe systems to handle an extensive network. Now, with more software and connectivity options, as well as lower networking infrastructure costs, small- and medium-sized retailers can better compete in the networking game.

Connection Leads To More Applications
Retailers might have one process in mind when looking to implement a new network, but once a pipeline is in place, it can deliver multiple functions between stores and headquarters. "With the right network solutions, retailers can use their high-speed connectivity to deploy applications for enhancing the customer shopping experience, in addition to improving store and back office operations," said Craig Potts, executive VP of sales and marketing at MerchantWired. "For example, retailers can reduce credit card transaction times from 45 seconds to less than 5 seconds with a combination of payment processing software and a dedicated high-speed connection instead of dial-up." This can reduce the time customers spend in the checkout line and allow the retailer to handle more transactions. The same network can also give the stores real-time access to databases such as loyalty programs and employee discounts.

"Once retailers have this persistent connection in place they find unexpected functionality, and suddenly the reason they implemented the network in the first place becomes a minor one," said Gino Puzzuoli, VP of sales and marketing at AJB Software Design Inc. "They might initially implement the solution for faster payment authorization, but then realize the same infrastructure allows for other applications." For example, the main office can track inventory throughout the day, rather than dialing and polling each store at night. Puzzuoli also mentioned a retailer that saved $25,000 per year in mailing charges when it used its new network connection to send its store layouts over the network rather than through FedEx. This decrease in monthly costs for 1,000 stores was an unexpected benefit of the persistent connection for the retail operation.

Sorting Through The Options
Another option for retailers to access a shared and managed network infrastructure is to work over a VPN (virtual private network). A VPN is a private data network that uses a public telecommunication infrastructure while still maintaining necessary security levels. Retailers can build this system instead of owning or leasing lines and can reduce cost by eliminating long-distance charges for dialing directly into the corporate network. "At first DSL (digital subscriber line) was the initial hope for inexpensive, high-speed WAN (wide area network) connectivity, but the inability of DSL to reliably reach every store has made it a niche solution," Potts said. Frame relay tends to be the predominant high-speed option among retailers, but companies like MerchantWired have developed mall properties with internal VPNs. The company brings high-bandwidth data lines (T1 or greater) into the malls, so any mall retailer can access the network for less than the cost of national frame relay.

No matter what option retailers decide to pursue in the fast-paced and intricate game of network connectivity, it is critical the system include some main features. Any network requires continuous uptime, 24/7 network management, redundant backup capabilities, and scalability to grow with the retail operation in terms of bandwidth and integration. Also be careful of whom you choose to play on your team. The network provider needs to have experience with deployment and installation of retail networks as well as company stability. Puzzuoli suggests asking for and checking up on company references before settling on one network vendor and payment system provider.

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