Multichannel Retailers

The likes of Amazon.com is an important milestone in the evolution of the
B2C Internet retailing (e-tailing) phenomenon, as it seems to be proving the
viability of on-line merchandizing. Amazon.com always comes to mind either
as an example of what potential e-commerce offers, or as an example of how
painful the road to achieving this type of profitability can be. This does
not mean the unconditional endorsement of Amazon's CEO's initial philosophy
of "if we build, they will come"-this has apparently been quite modified
during this process.
Much of the retailer's recent success has come from its ability totremendously improve customer service (order tracking and fulfillment). The
all-but-unacceptable poor delivery record which it had several seasons ago,
has been replaced with improving efficiency. This is partly through the
consolidation and reduction of warehouses and staff members. This combined
with offering reasonably priced quality products across a number of segments
(a wider selection) has paid off for the company.
For example, Amazon is providing mobile telephones, palmtops, household
equipment, and other goods in addition to the usual books, CDs, DVDs,
computer games, and other software. The reasons for its success have been
based on the traditional tenets of business. Seemingly, its nothing
pertinent except it is new to the "new, Internet economy". Amazon.com has
also announced further savings for customers by adding a free delivery
option for qualifying orders over certain amount. That should alleviate much
of customers' resentment towards hidden costs (shipping and sales tax) that
often equal the price of one book or CD. Likewise, it will raise the bar for
Amazon's competitors.
In addition to Amazon as the Internet retailer pioneer, the likes of Best
Buy, Staples, Target, or Lowe's are also carving out niches. They are
capturing growth and profits from multichannel, customer-centric marketing
in a competitive market dominated by Wal-Mart's well-oiled retail machine.
While Wal-Mart can match these retailers growth in absolute numbers just
from opening new stores, it will hardly take more business in the
competitive market of serving multichannel customers with individual,
personalized shopping experiences, and delivering on every complex
customer's requirement.
For example, Target once had a different order management system to support
each of its several direct-to-customer sales channels. Nowadays, Yantra's
distributed order management (DOM) product (now part of Sterling Commerce)
manages orders across all these channels, for orders ranging from standard
pick-pack-ship fulfillment to complex, multistep fulfillment and delivery
processes. Target has also been narrowly focusing on the off-mall retailing,
which crystallized with the divestiture of Marshall Fields and Mervyn's in 2004.
Target also enhances its "fast, fun, and friendly" store experience with
even higher service levels, with new product-focus areas and over 10,000
scanners to speed availability and price checks. Using returns as a new
opportunity to excel, Target's new receipt-lookup system reportedly saves
time while protecting stores against fraud. Younger customers choose Target
for "fashion-forward", chic yet reasonably priced merchandise, which
requires that the store have even faster design-to-delivery cycles. Further,
integrating import warehouses into its supply-chain helps distribution
centers (DC) prioritize high-demand seasonal merchandise, while Web-enabled
tracking delivers inventory visibility from booking through receipt, for
faster response to any delay.
Along similar lines, Best Buy continues to build stores, staff, and services
around its most profitable shoppers via a loyalty program that offers
discounts for preference data. This has so far reportedly attracted 2
million members. Furthermore, technical specialists up-sell customers in
stores and offer home consultations, while many homebuilder partnerships
create thousands of "wired" (i.e., cable, phone, Internet, etc.) homes that
are ready to absorb even more Best Buy goods and services.
There are indications that this multichannel customer focus has resulted in
a market share increase in fiscal 2004, driven by growth in computers,
digital televisions, imaging and entertainment software. These are all the
high-end, configurable, service-rich products that the retailer's new
strategy depends on. Results depend on a supply chain that delivers products
and information as needed, and as promised. Cross-channel promotions, Web
self-service and guided search, integrated sales and service 'touch points'
are all coordinated through Best Buy's DOM solution, again provided by Yantra.
Staples, a $13 billion (USD) stationary retailer also adapts stores and
delivery formats around customers, from multiservice superstores to niche
suppliers like Quill and Staples Express, each offering a particular product
range, services and delivery options that are crafted to customer
requirements. With 45,000 standard items and even more custom products and
services, Staples' supply chain could have been a mess of stock-outs and
duplicate or obsolete inventory. Quite the contrary, the company has opened
back-office accessibility as a competitive differentiator, offering near
real-time, on-line availability, pricing, and line item shipping status to
business partners.
At its end, Lowe's offers custom goods and services for a "market of one".
The "market of one" concept builds on Lowe's in-store design experience with
a recently added special-orders system that allows employees and customers
to track orders from placement through delivery. This service has reportedly
increased customer satisfaction, reduced errors, and raised average ticket
sales. All of that has required a not-too-involving integration of Lowe's IT
systems with key suppliers, to deliver timely supply-chain information
without big investments or delays.


Source : IPOMS