October 17, 2007
Retailers Seek Seamless Transition from Stores to Web
Consumers can order a product online and pick it up in a store. They can order an item online at a kiosk located in a store. Today, retailers are looking for ways to integrate the virtual and brick and mortar shopping worlds to better serve consumers’ needs and drive sales in the process.
“You might start hearing the word ‘seamlessness’ more often,” Venky Shankar, a marketing professor at Texas A&M University, told the Fort Worth Star-Telegram. “Customers are using more multiple channels for searching, for browsing, for buying. You need to have an integrated experience for customers. Kiosks at stores are a step in that direction.”
Online sales continue to grow at double-digit rates and stores are looking to kiosks to help build add-on sales, especially now that the crucial Christmas holiday shopping season is nearing. Recently, the National Retail Federation (NRF) predicted sales for the holiday will grow four percent, although it won’t be easy.
“Retailers are in for a somewhat challenging holiday season as consumers are faced with numerous economic obstacles,” Rosalind Wells, chief economist for the NRF, said in a press release. “With the weak housing market and current credit crunch, consumers will be forced to be more prudent with their holiday spending.”
A number of retailers are testing in-store kiosks to address out-of-stock situations, offer merchandise not carried in stores and even help shoppers get their shopping lists in order.
“It’s kind of something you have to do,” Sucharita Mulpuru, a senior analyst for Forrester Research, told the Star-Telegram. “Consumers are cross-channel shoppers. No one stays within one channel. If you as a retailer don’t make that a seamless experience, you risk losing that customer.”
Barnes & Noble is among those retailers that are taking steps to blend the best of online and in-store in the other’s environment. Currently, the chain has kiosks in approximately one-fourth of its stores, with plans to have them in all locations. Online, the company is offering webcasts to allow customers to hear author readings as they might in stores.
Discussion Question: Will the “seamlessness” discussed in the Star-Telegram piece become a requirement for retailers in the future? What are the keys for retailers looking to offer such a seamless experience and do it effectively from the shopper’s point of view?
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Once consumers realize that they can order products from the internet, over the phone, at a kiosk and from their cell phone and either have them delivered or pick them up at a local store, they will expect EVERY retailer to offer the same service. Consumer expectations always rise for everyone once they find a service that is convenient and offered by retailer. The consumers assume that if one retailer can do it, everyone else can do it.
The problem for companies is that it requires a major shift in emphasis in their business model–from product oriented to consumer oriented. It requires a well integrated IS system that integrates front and back office activities. Without it, the seamless process won’t work. Yes, consumers do expect seamless service.
It’s nice to be seamless, but only if it’s profitable. In-store pickup for online, telephone, and catalog orders may seem like a customer-driven service, but it’s also profit-driven since it encourages impulse buying. Impulse buying also increases when shoppers can make returns back to bricks and mortar locations, even if the purchases were made online, by telephone, or mail order. The tough situations: when seamlessness would cut margins, not increase them. Any retailer that uses zone pricing, like Staples, isn’t 100% seamless. They adjust the assortment and pricing appropriately, so the web site doesn’t always match the local store. Banks, hotels, rental cars, and airlines all run web-only specials.
“Seamlessness” is the wave of the future and if a retailer has not already begun to prepare, they are a couple of years behind the times. Software technology is the number one attribute to making the experience seamless. Unfortunately, many retailers have several disparate systems and they don’t “talk” to each other, making their business processes and thus service to the customer antiquated. What can you do? A complete analysis of your company’s supply chain from purchase/manufacturing to the kitchen table. How many systems does the information have to flow through? Is there one visibility tool that will show me all the information? Unfortunately, stores today cannot even identify if they have the product missing from the shelf in the back room. The back room is a mini-warehouse and needs technology to drive the efficiency of it.
Once you have the technology in place, it is essential to train and validate on “true” customer service. Are your processes customer friendly? Get ready, it’s time to move into the tech age!
“Seamlessness” is a buzzword but is absolutely necessary to ensure that your customer has the same experience on your website as in your bricks-and-mortar store…and hopefully a positive one. Here are a few issues to focus on:
1. If your store is known for ease of navigation and checkout, you need to make sure that your site is designed likewise.
2. You need to develop in-store tools such as kiosks to provide customers with a way to order online if a stockout happens. Don’t let them leave without spending something!
3. The return process between bricks-and-mortar and website purchases needs to be transparent. In other words, somebody returning a web purchase to your store needs to do so as easily as if she bought the goods onsite. It’s surprising how far some stores need to progress here.
4. Is the branding of your website, including visual elements, consistent with what the customer finds in the store? Many websites are over-designed and do not align with the rest of the retailer’s marketing effort.
These are just a few ideas, I’m sure other panelists have plenty more!
How on earth do you measure sales and inventory performance in a seamless world? Online drives traffic to the store. Stores drive traffic to the online store. More and more, each compliments the other.
In this world, does COMP STORE make any sense? I know stores that are consciously removing end sizes from their assortments, trusting their kiosks and web sites to fulfill end size demand. If 5% of the customers are huge or tiny, that means the store is going to be 5% down. Yet throughout retail organizations, managers and buyers are compensated on comp store.
What is cost of sale in the seamless world? Retailers must bear a unique set of costs for each channel. Should online orders that are picked up in store bare a surcharge on the P&L?
Traditional retailers are working toward a seamless world. But their accounting, information, and human resources systems need to keep pace.
If by the future, we mean today, then yes, seamlessness is something that will be necessary in the future. Consumers are looking for a buying experience which presents the least amount of friction. Why shop those retailers who make life difficult for you? Or, in the seamless world, do shop those retailers who make things easiest for you. Put another way: those who provide the best customer service are more likely to win. Are there many barriers to seamlessness? You bet. Most retailers started down the multi-channel path with multiple systems, teams, etc. Integrating those environments can be costly and challenging. By the way, your customer doesn’t care. The Internet will not go away so retailers must find ways to leverage the Internet with their brick and mortar and catalog operations so that their customers find the experience easy and enjoyable. One significant challenge is pricing across these channels. But then again, if it was easy, it wouldn’t be retail.
As we know, the X and Yers, plus future generations, are and will drive this seamless channel.
Interestingly, a few keys still lie in the retailer’s sales associate knowledge and support and the need for consumer-to-retailer communication!
The seamless channel still needs, to some degree (depending on the generation and its segments’ buying importance level), give ‘face to face’ and/or human ‘voice to voice’ contact, and importantly, communications with a higher up when appropriate!
The seamless channel can augment the business but the personnel and level of knowledge factor doesn’t go away…as some retailers would wish!
Hmmmmmmmmm
The chief change in mindset that retailers have to make when looking to participate in the “virtual world” is that shopping becomes no longer an “event” but rather an activity. Consumers will no longer “go shopping,” they will now “shop while doing something else.” As they browse the news, participate in online games, or swing at virtual tennis balls while competing with an opponent (real or virtual) thousands of miles away they will “take a break” to purchase something that has been promoted. An interesting “pop up,” or a joint conversation will lead to mutual exploration by the participants and the desire to buy.
So how does the retailer satisfy these “ad hoc purchases”? Google has been the popular way to get yourself associated with content oriented websites. But as the virtual world stabilizes and the popular sites become known, direct marketing by building affiliations with site owners will be possible. When the consumer goes to purchase an item, they will be directed to the preferred retailer’s site. (Look out Google, it’s called “disintermediation” or eliminating the middleman.) Now the retailer is back in their familiar role as the last step between supplier and consumer. The challenge is that the transfer may occur in many different ways. Direct delivery to the consumer is one option, accumulating multiple purchases over time into a single delivery is possible (the groceries arrive every Wednesday), pick up at the store is another option. The preferred method will depend on the circumstance, consumer, and product. If the consumer is out of detergent with dirty laundry to be washed, they need it now. Some consumers will only be comfortable with one method or another. Finally, some product are best bought as the result of physical examination.
One of the other topics in today’s discussion is about the rebirth of old retail names as purely internet and catalog stores. The mere fact that this is possible and we are discussing it proves that the brick and mortar retailers have to embrace the online channel as an integral part of their strategy. As people move more towards the internet for entertainment, the retailer has to be there to meet their physical needs.
Is seamlessness a requirement for retailers today and in the future? Yes. I would go so far as to say that retail winners are moving from a multi-channel model to a merged-channel model.
What are the keys for retailers looking to offer such a seamless experience and do it effectively from the shopper’s point of view? To present a seamless experience to the shopper you must be seamless in your back office operations. That means, according to a Datavantage/Commercialware report:
— Integration of customer history, inventory and transactions
— Real-time transaction processing from any channel
— Access to customer activity from any channel about all channels
— Ability to view and locate inventory in and from any channel
— Order fulfillment from anywhere
— Upsell, cross-sell and personalize the shopping experience across all channels
— Share common loyalty and incentive programs
— Support for in-store returns of online and catalog purchases
— Robust point-of-sale and back-office technologies
— Real-time analytics to enhance operational efficiency.
With the right technology any retailer can make the customer’s experience seamless. The real payoff is when you can make the customer’s experience painless. A consumer who buys online and goes to a store and picks up a product has different expectations of the in-store experience than the customer who is there to decide on and purchase a product. Too often the “seamless” shopping experience is painful as the consumer moves in and out of the retailer’s channel.
As a consumer, I love the ability to look online to see if a store has a product in stock and then be able to order online and pick it up in the store. That’s the easy part. The hard part is picking it up. If I show up at a store and I can’t get my product quickly and pain free, then chances are I won’t continue to shop with that retailer. I’ll just order it online and stay within a company’s single channel.
The only way to be truly seamless and painless is to continue to adapt in store processes and policies based upon the customer’s expectations, and not the needs of the company or the channel.
Integration of web and bricks and mortar is an excellent way to improve sales and customer service. The two major issues with online retailing is ease of the transaction and ship/wait times. If a retailer can save a few dollars by having sales completed by the customer at home or at an in store kiosk and then allow the customer to pickup at a location, then retailers need to seriously offer that as an option. Obviously, offering a complex or inefficient ordering process will defeat the purpose. As well, information about products needs to be readily available as if the kiosk or computer would become the sales associate. In a thorough examination of big e-commerce sites, I don’t think companies are there yet. We need to develop systems that are easy to use by anyone, not just customers who have basic computer knowledge.
To Mark Lilien’s point about profitability: I predict that within 10 years retailers who don’t offer self-service kiosks or allow customers to connect to back office systems like inventory via a mobile device will see a real impact on their bottom line.
Barnes & Noble is a great example, since I really like going to bookstores and trying out the merchandise before purchasing. However, if I can’t find a book on the shelf, or an associate helps me to determine that it’s out of stock, my choices are to either go to another store or have the book shipped (to the store or directly to me). I’m lazy, so in most cases the former isn’t a viable option. As for the latter though, if the store *doesn’t* have an easy way to order and ship it to me, I’ll just go home and buy the item from Amazon, since either way I have to wait for it. Worse, I might just pull out my web-enabled phone and make the purchase from another vendor while I’m still in the store. Only by making access to inventory and alternative purchase processes as simple as possible does the brick-and-mortar retailer have any hope of securing that sale from me.
While I might be atypical in this regard right now (though I doubt it), I certainly won’t be in the not-too-distant future.
My time and my checkbook are two resources that I guard jealously. Shopping online helps me conserve both. However, as a part of that experience, I want the option to hop in my car and drive to the nearest store to pickup from a “will call” the item I just selected and paid for online. It is not good enough to tell me which stores may handle the item I want. I want to know, with certainty that store A, has my selection in stock, in my style, in my size, in my color, etc., and by electronically clicking on that button, I can send an alert to the store to pull it from the rack and set it aside for my pickup later that day or week.
That is an element of Seeonic’s vision driving us into item level RFID tagging on a smart display in retail stores. Our customers can know, down to the specific serial number if desired, whether an item is available, at a specific location, right now. That level of service is what I want to see in the near future.
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Once consumers realize that they can order products from the internet, over the phone, at a kiosk and from their cell phone and either have them delivered or pick them up at a local store, they will expect EVERY retailer to offer the same service. Consumer expectations always rise for everyone once they find a service that is convenient and offered by retailer. The consumers assume that if one retailer can do it, everyone else can do it.
The problem for companies is that it requires a major shift in emphasis in their business model–from product oriented to consumer oriented. It requires a well integrated IS system that integrates front and back office activities. Without it, the seamless process won’t work. Yes, consumers do expect seamless service.
It’s nice to be seamless, but only if it’s profitable. In-store pickup for online, telephone, and catalog orders may seem like a customer-driven service, but it’s also profit-driven since it encourages impulse buying. Impulse buying also increases when shoppers can make returns back to bricks and mortar locations, even if the purchases were made online, by telephone, or mail order. The tough situations: when seamlessness would cut margins, not increase them. Any retailer that uses zone pricing, like Staples, isn’t 100% seamless. They adjust the assortment and pricing appropriately, so the web site doesn’t always match the local store. Banks, hotels, rental cars, and airlines all run web-only specials.
“Seamlessness” is the wave of the future and if a retailer has not already begun to prepare, they are a couple of years behind the times. Software technology is the number one attribute to making the experience seamless. Unfortunately, many retailers have several disparate systems and they don’t “talk” to each other, making their business processes and thus service to the customer antiquated. What can you do? A complete analysis of your company’s supply chain from purchase/manufacturing to the kitchen table. How many systems does the information have to flow through? Is there one visibility tool that will show me all the information? Unfortunately, stores today cannot even identify if they have the product missing from the shelf in the back room. The back room is a mini-warehouse and needs technology to drive the efficiency of it.
Once you have the technology in place, it is essential to train and validate on “true” customer service. Are your processes customer friendly? Get ready, it’s time to move into the tech age!
“Seamlessness” is a buzzword but is absolutely necessary to ensure that your customer has the same experience on your website as in your bricks-and-mortar store…and hopefully a positive one. Here are a few issues to focus on:
1. If your store is known for ease of navigation and checkout, you need to make sure that your site is designed likewise.
2. You need to develop in-store tools such as kiosks to provide customers with a way to order online if a stockout happens. Don’t let them leave without spending something!
3. The return process between bricks-and-mortar and website purchases needs to be transparent. In other words, somebody returning a web purchase to your store needs to do so as easily as if she bought the goods onsite. It’s surprising how far some stores need to progress here.
4. Is the branding of your website, including visual elements, consistent with what the customer finds in the store? Many websites are over-designed and do not align with the rest of the retailer’s marketing effort.
These are just a few ideas, I’m sure other panelists have plenty more!
How on earth do you measure sales and inventory performance in a seamless world? Online drives traffic to the store. Stores drive traffic to the online store. More and more, each compliments the other.
In this world, does COMP STORE make any sense? I know stores that are consciously removing end sizes from their assortments, trusting their kiosks and web sites to fulfill end size demand. If 5% of the customers are huge or tiny, that means the store is going to be 5% down. Yet throughout retail organizations, managers and buyers are compensated on comp store.
What is cost of sale in the seamless world? Retailers must bear a unique set of costs for each channel. Should online orders that are picked up in store bare a surcharge on the P&L?
Traditional retailers are working toward a seamless world. But their accounting, information, and human resources systems need to keep pace.
If by the future, we mean today, then yes, seamlessness is something that will be necessary in the future. Consumers are looking for a buying experience which presents the least amount of friction. Why shop those retailers who make life difficult for you? Or, in the seamless world, do shop those retailers who make things easiest for you. Put another way: those who provide the best customer service are more likely to win. Are there many barriers to seamlessness? You bet. Most retailers started down the multi-channel path with multiple systems, teams, etc. Integrating those environments can be costly and challenging. By the way, your customer doesn’t care. The Internet will not go away so retailers must find ways to leverage the Internet with their brick and mortar and catalog operations so that their customers find the experience easy and enjoyable. One significant challenge is pricing across these channels. But then again, if it was easy, it wouldn’t be retail.
As we know, the X and Yers, plus future generations, are and will drive this seamless channel.
Interestingly, a few keys still lie in the retailer’s sales associate knowledge and support and the need for consumer-to-retailer communication!
The seamless channel still needs, to some degree (depending on the generation and its segments’ buying importance level), give ‘face to face’ and/or human ‘voice to voice’ contact, and importantly, communications with a higher up when appropriate!
The seamless channel can augment the business but the personnel and level of knowledge factor doesn’t go away…as some retailers would wish!
Hmmmmmmmmm
The chief change in mindset that retailers have to make when looking to participate in the “virtual world” is that shopping becomes no longer an “event” but rather an activity. Consumers will no longer “go shopping,” they will now “shop while doing something else.” As they browse the news, participate in online games, or swing at virtual tennis balls while competing with an opponent (real or virtual) thousands of miles away they will “take a break” to purchase something that has been promoted. An interesting “pop up,” or a joint conversation will lead to mutual exploration by the participants and the desire to buy.
So how does the retailer satisfy these “ad hoc purchases”? Google has been the popular way to get yourself associated with content oriented websites. But as the virtual world stabilizes and the popular sites become known, direct marketing by building affiliations with site owners will be possible. When the consumer goes to purchase an item, they will be directed to the preferred retailer’s site. (Look out Google, it’s called “disintermediation” or eliminating the middleman.) Now the retailer is back in their familiar role as the last step between supplier and consumer. The challenge is that the transfer may occur in many different ways. Direct delivery to the consumer is one option, accumulating multiple purchases over time into a single delivery is possible (the groceries arrive every Wednesday), pick up at the store is another option. The preferred method will depend on the circumstance, consumer, and product. If the consumer is out of detergent with dirty laundry to be washed, they need it now. Some consumers will only be comfortable with one method or another. Finally, some product are best bought as the result of physical examination.
One of the other topics in today’s discussion is about the rebirth of old retail names as purely internet and catalog stores. The mere fact that this is possible and we are discussing it proves that the brick and mortar retailers have to embrace the online channel as an integral part of their strategy. As people move more towards the internet for entertainment, the retailer has to be there to meet their physical needs.
Is seamlessness a requirement for retailers today and in the future? Yes. I would go so far as to say that retail winners are moving from a multi-channel model to a merged-channel model.
What are the keys for retailers looking to offer such a seamless experience and do it effectively from the shopper’s point of view? To present a seamless experience to the shopper you must be seamless in your back office operations. That means, according to a Datavantage/Commercialware report:
— Integration of customer history, inventory and transactions
— Real-time transaction processing from any channel
— Access to customer activity from any channel about all channels
— Ability to view and locate inventory in and from any channel
— Order fulfillment from anywhere
— Upsell, cross-sell and personalize the shopping experience across all channels
— Share common loyalty and incentive programs
— Support for in-store returns of online and catalog purchases
— Robust point-of-sale and back-office technologies
— Real-time analytics to enhance operational efficiency.
With the right technology any retailer can make the customer’s experience seamless. The real payoff is when you can make the customer’s experience painless. A consumer who buys online and goes to a store and picks up a product has different expectations of the in-store experience than the customer who is there to decide on and purchase a product. Too often the “seamless” shopping experience is painful as the consumer moves in and out of the retailer’s channel.
As a consumer, I love the ability to look online to see if a store has a product in stock and then be able to order online and pick it up in the store. That’s the easy part. The hard part is picking it up. If I show up at a store and I can’t get my product quickly and pain free, then chances are I won’t continue to shop with that retailer. I’ll just order it online and stay within a company’s single channel.
The only way to be truly seamless and painless is to continue to adapt in store processes and policies based upon the customer’s expectations, and not the needs of the company or the channel.
Integration of web and bricks and mortar is an excellent way to improve sales and customer service. The two major issues with online retailing is ease of the transaction and ship/wait times. If a retailer can save a few dollars by having sales completed by the customer at home or at an in store kiosk and then allow the customer to pickup at a location, then retailers need to seriously offer that as an option. Obviously, offering a complex or inefficient ordering process will defeat the purpose. As well, information about products needs to be readily available as if the kiosk or computer would become the sales associate. In a thorough examination of big e-commerce sites, I don’t think companies are there yet. We need to develop systems that are easy to use by anyone, not just customers who have basic computer knowledge.
To Mark Lilien’s point about profitability: I predict that within 10 years retailers who don’t offer self-service kiosks or allow customers to connect to back office systems like inventory via a mobile device will see a real impact on their bottom line.
Barnes & Noble is a great example, since I really like going to bookstores and trying out the merchandise before purchasing. However, if I can’t find a book on the shelf, or an associate helps me to determine that it’s out of stock, my choices are to either go to another store or have the book shipped (to the store or directly to me). I’m lazy, so in most cases the former isn’t a viable option. As for the latter though, if the store *doesn’t* have an easy way to order and ship it to me, I’ll just go home and buy the item from Amazon, since either way I have to wait for it. Worse, I might just pull out my web-enabled phone and make the purchase from another vendor while I’m still in the store. Only by making access to inventory and alternative purchase processes as simple as possible does the brick-and-mortar retailer have any hope of securing that sale from me.
While I might be atypical in this regard right now (though I doubt it), I certainly won’t be in the not-too-distant future.
My time and my checkbook are two resources that I guard jealously. Shopping online helps me conserve both. However, as a part of that experience, I want the option to hop in my car and drive to the nearest store to pickup from a “will call” the item I just selected and paid for online. It is not good enough to tell me which stores may handle the item I want. I want to know, with certainty that store A, has my selection in stock, in my style, in my size, in my color, etc., and by electronically clicking on that button, I can send an alert to the store to pull it from the rack and set it aside for my pickup later that day or week.
That is an element of Seeonic’s vision driving us into item level RFID tagging on a smart display in retail stores. Our customers can know, down to the specific serial number if desired, whether an item is available, at a specific location, right now. That level of service is what I want to see in the near future.