Back to Basics
The build-it-and-they-will-come mentality of e-commerce has diminished thanks to retailers who look at e-commerce as a fundamental part of their overall business model. Successful retailers recognize the Web as an important channel--one that complements existing channels, such as brick-and-mortar stores and mail-order catalogs.
Savvy retailers like REI, L.L. Bean, and Lillian Vernon, have adopted this multichannel approach by creating an online store that is tightly linked to their brick-and-mortar stores and catalogs. This enables them to deliver a consistent, personalized customer experience while maintaining the value and recognition of their brand.
REI, a national retailer and online merchant of quality outdoor gear and clothing, provides an excellent example of how a multichannel approach to e-commerce can benefit a bottom line, while making the shopping experience for customers easy and fun. REI boasts more than 59 brick-and-mortar stores in 24 states, an extensive online store with approximately 78,000 items, seasonal product catalogs, in-store kiosks, additional value-priced outlet stores, and a toll-free call center.
Integrating these shopping experiences brings together all the pieces of the retail puzzle and gives REI customers more choice, convenience, and flexibility when they shop. For example, while in the store if an item is out-of-stock, customers have the option to order it online through in-store kiosks that are linked to the Web, or a salesperson can place the order directly from the point-of-sale terminal, which is also linked to the Web.
Another example of how REI is leveraging its online presence to increase sales across all channels is this: A customer browses the Web site and stops to read an REI "Learn and Share" article on backpacking. While reading the article the site may highlight an in-store promotion on hiking boots or refer a new Web customer to nearby stores running a promotion on an item that needs to be tested in the store (it's safe to say customers need to test rock-climbing gear in the store--not online).
Linking all these channels produces tangible results. In a 24-month period, REI found that dual-channel shoppers spent 114 per cent more than single-channel shoppers, and trichannel customers spent 48 per cent more than dual-channel customers.
To truly extend a retail brand to the Internet and create a multichannel strategy that customers will appreciate, retailers need to examine three key areas to take full advantage of each channel:
1. Understand your customers:
Shopping patterns can vary depending on the item; different channels fulfill different needs for different consumers depending on their needs. Internet-savvy consumers make many book and CD purchases online, bypassing the store altogether. For more sophisticated products, like high-tech gadgets, consumers typically prefer the in-store experience, while using the Web to learn about a product. In this case, to make the shopping experience more convenient for customers, retailers must ensure that detailed product descriptions are available online, making sure the Web channel meets the needs of customers.
Panasonic's Web site, for example, features very detailed information about each product, as well as competitive information. When customers are ready to make a purchase they have an easy-to-use store locator on the site, showing the customer exactly where to go to get the electronic gadget of their dreams. Once in the store, live product demonstrations and information on warranties and service options can help close the sale.
2. Make shopping convenient and easy:
In today's busy world customers demand flexibility. They want to purchase an item online and exchange it in the store, or buy online and ship to their local store. By having retail channels connected, retailers can make the overall shopping experience easy for their customers, increasing customer satisfaction.
Payless Shoe Source is a great example of a multichannel retailer that understands the importance of flexibility. While its Web customers have the option to purchase a pair of shoes online, the cost of shipping may exceed the cost of sneakers. To make it easier and less expensive for their customers, Payless ships the shoes to the store that is most convenient to the shopper and includes the shoes in the regular inventory delivery to the store to avoid shipping charges for the customer. Payless will also provide these customers with a coupon to use towards additional purchases, increasing in-store sales at the same time. These promotions reward customers for using the Web site, while giving in-store sales agents an opportunity to upsell and cross-sell. Payless is able to extend their product reach, while cleverly solving the key online problem of shipping costs.
3. Understand and use channels to increase sales:
Retailers can use multichannel promotions and marketing to drive new business to any one channel, or across several channels. For example, REI will highlight in-store promotions on the Web site, or if a customer purchases a bike in the store, may choose to offer discounts online on related items like helmets and bike shorts. This gives customers the flexibility to make purchases where they are most comfortable, while helping the business drive results.
Like any other industry, e-commerce is evolving. The days ahead are bright for those retailers who understand the basic business fundamentals: know your Web site, leverage your channels, learn about what your customers want, and combine this knowledge to create the next evolution of e-commerce success for your business.
About the Author
Martin Wildberger is vice president, WebSphere Commerce, IBM Software. Wildberger leads IBM's strategic and development efforts surrounding a broad portfolio of sell-side commerce technologies and products. He previously held the position of director of the e-commerce organization, responsible for the worldwide development of IBM's WebSphere Commerce products. Wildberger started the electronic commerce organization in 1996, and the team has now grown to more than 450 software developers. Prior to that he spent three years at the IBM Almaden Research center in California, responsible for delivering key research technology into the DB2 database product line. Wildberger has spent his career with IBM and has held numerous technical positions in the Toronto laboratory, working on communications and database technology before starting the internet/commerce organization in 1996. Wildberger is a 1984 electrical engineering graduate of the University of Toronto.
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