How CRM Might Be Integrated into the Internet Channel of Retail
"Webified" Store Garners Rave Reviews
For the past two years, through the summer of 1999, a number of industry analysts
have opined that retail Web sites would largely replace physical stores. The
number of PCs is growing, they noted, and online sales are at an all-time high.
Stock prices of virtuals have, until recently, seemed sky-high. Experts" relegated
brick-and-mortar retailers to the past, a quaint symbol of the days when women
dressed up" to go shopping.
Until recently, however, analysts and even members of the press were waking up to what retailers have known for some time customers want exceptional service, and their best chance to get it is in a physical store that is connected to its own Web site. The webified" store is a new concept, but it's meeting with rave reviews from customers who appreciate the convenience and enhanced shopping experience. A primary success factor in this approach is the integration of Internet-based systems with traditional back office systems. This is particularly true of customer information.
While the virtual retailers are engaged in a headlong pursuit of qualified customer information, often at great cost, most traditional physical retailers already have that information. Their challenge is to integrate the channels so that information can flow between them in a seamless manner.
Browser-based devices in the store can solve a host of problems that customers may encounter while looking for merchandise. An item that might be out of stock in one store can be located at another, then shipped to the customer. Shoppers can order items which aren't carried in the store, like butter knives or pickle forks. They can access catalog-style product information which can be much more extensive than can be put on a shelf label.
Web-Assisted Selling Enhances Customer
Access
Taking it a step further, retailers can team up with manufacturer partners to
educate customers in ways that used to be the province of how-to magazines.
Web-assisted selling enables a customer in a hardware store to access a store-based
browser to learn how to install vinyl flooring from an expert at the flooring
company. Beauty counters can offer virtual makeovers. Curious about how to wear
the new skirt length? Call up the designer's fashion show to see how to pair
it with a sweater. To the extent that past purchasing history is available,
recommendations could be made throughout the process.
Web-assisted store sales can also fix the problems that are inherent in the online retail experience. Online customers complain that they can't see fabric texture, can't try items on for size, and can only guess what color pumpkin" might be. They find it difficult to purchase fragrance because they can't sample it in advance. And the entertainment value of online shopping is notoriously low.
The various drawbacks of virtual-only and brick-and-mortar shopping disappear in a hybrid environment where the Web and a real-live store coexist. And retailers who already have stores have a much better chance of bringing this to fruition than to virtual-only retailers without those physical assets.
Metrics Measure Effectiveness
Until now, retailers who installed browsers in their stores were pioneers who
only guessed about their effectiveness. But help is on the way. At a meeting
of the National Retail Federation (NRF) in Chicago in June, members created
a preliminary metric for retailers who want to determine the effectiveness of
their Web presence. They call this metric the Five Stages of Web Presence,"
and its centerpiece is a Web presence in the store. The five stages are:
- Phase 1: Brochure site.
Erected quickly, generally with a low budget, brochure sites on the Web may sell a few items, but they exist to provide the company with a test-drive that will show whether Web sales will work for this company. Customers won't find much to buy but can generally find the location of the closest store. At some point these sites nearly always transition to: - Phase 2: Commerce sites.
Phase 2 Web sites engage in full-scale commerce, sometimes with more SKUs on the Web site than are available in the store. Sites generally also have customer service, and information about the company's history and community activities. Phase 2 sites aren't connected to the retailer's back office, so customers may order an item, only to discover later that it's out of stock. - Phase 3: Integrated site that communicates with
the retailer's existing back-end processes.
Phase 3 sites are integrated with existing purchasing, inventory, customer, accounting, and other systems. This eliminates the need to generate reports from Web sales and re-key them into back office systems, and ensures that out-of-stock items are removed automatically from the Web site. It could also allow artificial intelligence systems to make recommendations based upon a customer's past history or profile. - Phase 4: The Webified" store.
IP network connectivity in the store brings Intranet and Extranet connectivity to browser-based POS, kiosk, or terminal units in the store. It allows retailers to sell items that the company carries but that may not be available in a particular store; directs customers to the item they're looking for in a larger store; allows for web-assisted sales; and provides additional information from manufacturers' sites. - Phase 5: Integrated site tied to manufacturer
systems.
Phase 5 sites combine an Internet site with extranet information to provide for collaborative sales; manufacturers can automatically replenish items which are selling briskly and would allow for direct delivery to consumers from the manufacturer if desired.
The Promise of Incremental Advantage
There is no question that many retailers are in the Phase 1 or Phase 2 category.
A number of large and successful retailers are happy to be at Phase 2; they
find that it brings them new customers and increased visibility. The Phase 3
Web presence, where the Web becomes simply another channel, was, for a time,
the achievement that retailers sought.
Expanding the digital network is the avenue by which retailers will achieve the rewards inherent in Phases 4 and 5. The presence of legacy networks and the uncertainty about the potential payoffs from investments in new technology have caused retailers to move with caution. No one anticipates that traditional analog networks will be replaced overnight, with the plain old telephone service into stores being replaced with a T3. But the promise of incremental advantage has larger retailers experimenting with bringing bigger bandwidth into the store, carrying the store's own Web presence.
Best of All Possible Worlds
Early indications are that a web presence in the store provides a best of all
possible worlds" approach that customers love. Customers at Gap flagship stores,
for example, can browse in person, then browse online, sometimes selecting from
colors which may have sold out in that particular store. Terminals are particularly
appreciated by younger shoppers who see nothing unusual about purchasing with
a mouse and monitor.
Focusing on the integration of Web and store also frees retailers from worrying about the relative personality of their different channels. The combination of Web and store marries the best of both and allows retailers to try a variety of approaches, confident that all customers will be served. That's the promise of the Internet, as well as the promise of CRM. Watch for it in a store near you.
