by Nikki Baird, Managing Partner
9/4/2007
Sterling Commerce announced a major product release at their user conference in Denver last week, their Selling and Fulfillment Suite. The suite represents the first integrated offering that pulls together all of Sterling’s application acquisitions over the last several years, spanning Yantra, Nistevo, and Comergent. While retailers attending the conference were very pleased with where Sterling is taking their solution set, there was definitely a lot of deer-in-the-headlights looks when the conversation turned to the cross-channel strategies these solutions are designed to enable. Retailers love the idea of cross-channel synergy, but are a long way from making it a reality.
I was on a panel session at the conference that discussed the implications of a cross-channel strategy. Jim Bengier, a long-time retailer that has recently joined the ranks of Sterling’s Retail team, and Saurabh Mittal, the lead for Wipro’s Retail consulting services, joined me on the panel. The hottest topic of the day? Buy online, pick-up in the store. High points in the discussion included:
- Is buy online/pick-up in the store (BOL/PUIS from here on out) the cross-channel activity with the highest ROI? The panel’s consensus: the ever-popular answer, “It depends.” It certainly can provide a solid ROI – despite fears of channel cannibalization, whether coming from stores or from online, BOL/PUIS actually offers growth opportunities. It captures online sales that would have been lost because the consumer needed it “right now.” It also is additive to in-store sales, as consumers coming into stores tend to purchase more than just the item they came in to pick up. But some retailers have a very different profile of customer that shops almost exclusively online, vs. the customers that shop in stores. BOL/PUIS offers fewer opportunities for retailers in those situations. Retailers considering adding the capability should look at their top customer segments and identify if this capability is a high priority for their customers before deciding if it should be a high priority for the retailer.
- What’s the best practice for the store pickup process? According to our research, less than a quarter of the retailers we surveyed indicated that they have fully implemented or are rolling out BOL/PUIS. That means that on the store side, the process for actually fulfilling the customer order is extremely immature. No one has done this before, so there is no best practice. A lot of it seems to come down to size of the store – larger stores have the employee base that makes it more practical for them to have a dedicated employee, or at least a shift or role that bears responsibility for picking up orders in the store, picking the items, and putting them someplace safe until the customer comes to pick it up. Smaller stores have both fewer employees and less space, so have a harder time dedicating anything in-store to online order pickup. The only best practice to follow is the process of defining the pickup process: choose a geography where you have a high concentration of online customers, and test out the process you want to use. That applies to both the basic process and the exceptions. You don’t want to stick a store employee with the problem of picking an order that because of inventory inaccuracy turns out to be out of stock, and then provide no tools for them to solve it – and that’s a tricky problem to solve. What are you going to do to inform the customer that may well already be on their way to pick it up? Using a testing approach lets you tweak the process, and also gives you an idea of how much cross-channel fulfillment stores are really going to get.
- How do we deal with returns of online-only merchandise in stores? Saurabh spoke to one of the main problems behind store as return point: it’s the most likely return point today more because the other channels do a poor job of handling customer returns. When a customer has to wade through a phone tree and sit on hold, all with no guarantee that the person on the other end is going to solve their problem, that customer is far more likely to just take it to the store, where a real person is going to be forced to deal with and resolve their problem one way or another. In managing this process, it again comes down to volume – if you have a small volume of online-only merchandise coming back to stores, it’s probably cheaper to just mark it down and stick it in the clearance section than it is to send it back to the online store’s DC. If the volume of returns is high, then you probably have a more fundamental problem than what to do with the merchandise.
- What are the biggest implementation obstacles in implementing BOL/PUIS? There are two that I always get asked about. The first is around order management – what application should be the customer-facing order management system? Retailers have tried to adapt their merchandising order management, have tried to extend their POS special order capability, and have tried to build out their order capture front-end to serve this critical capability. The reality is, you need a system that is designed to be a customer-facing order management system, which is tightly integrated into order capture, POS, and fulfillment. Nothing else will work. If you don’t have a strong central OMS that can bridge online and in-store, you are going to drop the ball with your customers. The second is rollout. This is where the cultural friction between online and stores really comes into play. Online executives are used to moving quickly. But the most time-consuming and expensive thing that you can do in stores, besides install technology, is train employees. And pick-up in store is a new process that employees must be trained on. This isn’t just turning the Titanic – this is turning a whole fleet of Titanics. Unlike in the online org, where you implement a strategy by tweaking a website, pick-up in store will require months to rollout – something online executives tend to significantly under-estimate.
There may come a day when BOL/PUIS is ante to play in retail, but that day is not on us yet. In some verticals, yes – consumer electronics is one of the most cross-channel shopped categories out there, so it’s no surprise that the leading cross-channel retailers are the likes of Best Buy and Circuit City. But if you’re considering implementing BOL/PUIS, don’t do it because the neighbors are doing it – do it because your customers want it. If you stay true to what your customers want, you can’t go wrong.
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