Magazine Article | July 1, 2005

VoIP Stakes Its Claim

Source: Innovative Retail Technologies

Retail finally adopts a long-in-the-making technology.

Integrated Solutions For Retailers, July 2005
Matt Pillar

This annual resource guide to retail solutions highlights some of the vendor community's latest and greatest offerings. One technology that's been around for quite some time but is just now seeing considerable adoption in retail is VoIP (voice over Internet Protocol). Broadband networks enable the quality end users have been seeking for years now, and VoIP's benefits (not to mention audio quality) are becoming clearer.

VoIP Saves Communication Cash
In conducting research to make the case for VoIP in stores, headquarters, and back offices in the retail industry, Mitel's Retail Vertical Director Sandy Janes uncovered some startling statistics. For instance, Janes says tier-one retail enterprises carry on an average of 9,000 conference calls per month. Let's assume a minimum of three people are on a short 10-minute conference call and the retailer is getting a great rate of 12 cents per minute per caller using a standard dial-up service. That's a $3.60 10-minute call. Multiply that by 9,000 and you're looking at $32,400 per month. These are very conservative figures. The actual average cost of corporate conference calls is closer to 20 cents per leg per minute, and it's safe to assume calls usually last much longer than ten minutes. A conservative estimate of $30K to $60K per month for conference call services is realistic, and it's only one of several hefty line items on a retailer's phone bill. That's a strong argument for VoIP, a solution that enables Internet telephony and eliminates tolls.

VoIP allows retailers to eliminate their PBX (private branch exchange) in favor of IP-addressable digital phones, which are essentially network-attached devices just like computers. While the technology has been around for some time, poor voice quality and dropped conversations associated with packet data loss, which often occurs with inferior networks, turned retailers off. But the recent onslaught of quality broadband network providers, the ensuing drop in broadband pricing, and improved VoIP technologies have changed that.

The capital outlay rivals that of traditional phone systems, but the operating costs are significantly lower. Once the hardware is in place, IP-addressed units can be managed remotely. What's more, certain VoIP-enabled devices can carry multiple applications due to the digital nature of the technology. E-mail and time clock applications, for instance, can be facilitated through VoIP phones that sport displays.

Mitel's Janes says VoIP benefits multichannel retailers running call centers. Her research shows that people who call for information before placing a Web or catalog order or going to a store to shop spend three to five times as much as those who don't. That makes telephony integrity key. Another important point for multichannel retailers is data sharing. Digitization of voice data makes integration of order entry and fulfillment applications easier, giving insight into peak traffic times and product demand. The ability to digitally route calls to subject matter experts can have a profound impact on conversion rates, too.

Broadband networks are growing rapidly due to the efficiency gains associated with the centralization of core systems. The key to maximizing payback on your broadband network deployment is to find additional applications that, centralized and distributed, save you money. VoIP is one such application.