New business, new site, new blog

For any of you still subscribed to this feed, I've now moved over to the ThinkBulb.co.uk blog, we're you'll find all my musings in future. It's been a while, but I'll be writing again soon over on that blog.

Thanks and hope to see you soon!

eCommerce Archeology: The 3 Ages of eComm

Everybody seems to be talking about eCommerce re-platforming. It's got me thinking about how retailers have evolved their use of eComm over time. I kind of see it as 3 ages, of which we are now entering the 3rd age.

The 1st Age - The toe in the water (mid 90s - early 2000's)
The goldrush starts and retailers begin carving out their marketshare. The key was speed to market, very few eCommerce platform vendors existed and those that did were in their infancy. Many Bricks & Mortar retailers believed they could build it themselves, and set out on that path.

The 2nd Age - Handling the success (mid 2000's - late 2000's)
eCommerce gathers pace, as consumers opt for the convenience. The success of the likes of Amazon and eBay show the way and the growth of shopping on the web is exponential.
Those that built it themselves see cost of ownership spiralling to support increased traffic, but the ability to make changes slows. All contrary to what is required by the business stakeholders who see competitors adding capabilities.
The stakeholders lose faith in the existing platform. Many traditional Retailers at this point decide to outsource to the experts, to remove the application/infrastructure headache and concentrate on what they know buying and merchandising - this was also aligned with the trend toward outsourcing the commodity IT functions of their primary business.
Those that implemented an early platform, may have taken the same outsourcing route or decided on the upgrade path.
It was toward the end of this period that new innovations began to gather pace, many termed it Web2.0, in general it revolved around the concepts of User Generated Content. Whereby the wisdom of the masses was being used by consumers to inform purchases.

The 3rd Age - Masters of destiny (2010+?)
This brings us to now, as retailers look to harness and leverage the new concepts and put them to use. Business Stakeholders have realised eCommerce is no longer that web thing that contributed negligible revenues. The term Multichannel, having risen to prominence halfway through the previous period, and dismissed, begins to gain traction again.
Those that outsourced, realise that the size of their eCommerce business and the cost model, whether it be revenue-share based or traffic based, are no longer sustainable. A combination of this and frustrations with their suppliers has led back to insourcing, the attraction of leveraging the wealth of experience in the skills marketplace and potential agility of an in-house team is just too great an attraction. It also positions them to compete more effectively with the pure-plays.

The fight is on for the next generation of eCommerce and to be ready for the upturn in consumer confidence and a share of their pockets.

I predict this next age will be an exciting one! It'll be interesting in around 5yrs to reflect upon this 3rd period and the trends that occur.

Will mobile Twitter apps mean a decline in SMS?

As I began yet another tweet from my iPhone, the thought struck me - I wonder if there'll be a decline in SMS? Surely SMS is what Twitter was modelled on in the first place given its message limit?

I also remembered the reports suggesting that traditional email traffic was seeing a decline as Facebook users began utilising FB mail. I wonder if the same is true of the IM services?

I wonder if the Mobile Marketing Association (MMA) have spotted any trends since Twitter growth spurt?

What are your thoughts?

Getting a shared basket between brands right

Over the last week or so I've been doing some consulting work for a retail group that has a multitude of brand identities. I've been working with them on their eCommerce strategy and one piece of functionality they're keen to introduce is a shared basket across their various branded sites.

I seemed to remember that Gap had done this for their Banana Republic, Old Navy, Piperlime and Gap branded sites. The Client referenced AH in the Netherlands as an example.

So, I thought I'd take a look at the Gap site and what the general perception of how successful it had been. I found an article by eConsultancy dated January 2009 which referenced Foresee's Online Retail Satisfaction Index report indicating that Gap had seen a fall in satisfaction since the shared basket went live, citing:

"This feature may not have been important to Gap’s online customers to begin with because they may view the other brands differently in terms of price, quality, and style"

Interestingly, taking a look at the AH brands and how they've implemented shared basket, I would expect it to be quite a success. They have clearly differentiated product assortments between the brands sharing the basket; Groceries vs Wines vs Telecoms vs Photos.

The key point here and probably a lesson Gap are learning, is that when you make it easy for your customers to compare between your brands with similar assortments at different prices, in this current climate it will inevitably lead to sales cannabilisation as their customers defect across from the higher cost brands. I'm sure it's probably led to an uneasy political atmosphere as the lower cost brands exceed expectations, whilst the higher cost brands fall short.

Whilst there maybe some overall benefits in sharing IT infrastructure, as I have advised our client, be careful which of your brands end up sharing the basket, particularly given the similarities between their assortments and their online pricing models!

Multichannel Retail Roundup

Having watched my Google Alerts stack up, I thought it was time for another brief round up with a couple of highlights from what I've been reading recently...

Cranfield School of Management's view on what it takes for Multichannel Success
This recent article on the MyCustomer website caught my attention. An interesting article and a surprise to find a Management School article with a focus on technology.

As I pointed out in the comment I left, whilst I agree that integration forms a large part in terms of gaining single view of several important data elements, the real hurdle within long established retailers is securing stakeholder buy-in and funding. This is made much more difficult if the organisation is siloed and the stakeholders you are targetting do not have incentives to encourage cross-channel behaviours.

A nice cross-channel customer service anecdote
RightNow's CEO, Greg Gianforte, posted a nice anecdote on his blog of a recent experience with iRobot's customer service. It's an area I'd not paid a great deal of attention to, but it's just as important as your multiple sales channels - having a joined up aftersales customer service will generate brand loyalty and increase your customer retention.

An elegant definition of Multichannel vs Cross-channel
This interview with Kevin Ertell is an interesting read. A couple of good points in there, namely the difficulty in measuring conversion rates as retail websites evolve beyond just simply selling stuff to us and I had to quote this too:

“Multi-channel” is more than one channel while “cross-channel” is leveraging the strengths of each channel to create an overall customer experience that is greater than the sum of its parts.

Kevin has also picked up on a growing view that mobile will find a use in-store, providing the ability for customers to make purchase decisions based upon reviews, recommendations, etc right from their mobile phone. I believe Bazaarvoice's Customer Reviews offering comes out-of-the-box with the capability to deliver reviews via mobile phone.

A discussion on Web access within the store
RetailWire have published an article on web access in-store (registration required). However, it's not the article that's particularly interesting, it's the subsequent discussion. Several of the panellists hit upon the theme that customers will evolve to use their mobile smartphones if they want web access. I'll admit I don't use my iPhone as much as I should whilst shopping in-store, but that's currently because the Apps aren't necessarily there yet. It makes sense for stores to be spending their scarce budgets on targeted mobile apps (reviews/recommends, store locator, stock checker), rather than trying to deploy kiosks out in their store estate. As stated by a couple of the panellists, those investing in store technology need to be aware that mobile applications are coming and are likley to be adopted by their customers before the accountants have depreciated those in-store investments!

UK Retailers on Twitter

It's hard to miss Twitter at the moment, there seems to be dozens of posts and news articles appearing on a daily basis right now... and yes, I know I'm adding to that.

However, going through my recent Google Alerts, I chanced upon an article by eConsultancy. They're constructing a list of UK retailers on Twitter. Interesting to see a lack of presence from the big name high street retailers, though I'm sure that will change with all the current Twitter hype.

One question in the comments asking whether tweeting about offers, promotions, etc was well answered. Whilst it's valuable in terms of visibility (possibly even early visibility for those loyal twitter followers), it still needs to be combined with an engaging stream of tweets to keep people interested and engaged.

By the way, I've been tweeting myself over the last couple of months. You can follow me @mc_musings.

The Current State of Cross-Channel Retailing: Part 2

Continuing my review of RSRs “Cross-channel Retailing for the Anytime, Anywhere Consumer” benchmark study on the current state of multichannel retailing, I'll take a look at the inhibitors and technology enablers sections of the study.

Obviously a major concern for retailers currently is the impact of the economic climate, though the study does highlight how the retail winners differentiate themselves from the rest of the pack during these difficult times, “Winners know that other retailers focus inwardly in stressful times, looking for ways to cut costs and laying low until external conditions improve. Winners however are unwavering in their focus on the consumer.” Investing now whilst their competitors haul down the shutters will put them in good stead for the upturn in the economy.

The top 2 identified inhibitors to becoming an efficient cross-channel retailer indicate the survey respondents recognition that becoming customer-centric is key, as opposed to product and location:

• Inability to effectively use customer information for cross-channel marketing
• Do not have one view of the customer across all channels

The studies section entitled, “Organizational Resistance is Tenacious and Lingers On” highlights the continued issues with getting the organisation onboard with multichannel efforts. I've recently read the book “Fast Strategy” which discusses approaches on how organisations can become more agile, giving examples of recent tech company successes to allow them to adapt quickly to market forces. I wonder how some of these approaches could be applied to Retail.

Retailers are attempting to address their inhibitors, though a later graph in the study suggests there's an opportunity to greatly improve, with 67% of respondents suggesting they still have work to do synchronising customer and inventory information across channels.

On to technology...

Another clear differentiator between retail winners and their competitors becomes apparent when asked about their approach to managing cross-channel data. 52% of winners enter product and customer data into a single system of record and move electronically in to other channels, whilst 71% of their competitors are still entering that information seperately into each channel - clearly the winners have optimised their data processes.

The study highlights how retailers view the importance of real-time customer and inventory data and the need for cross-channel content and product information management, but interestingly the third most important is a modern eCommerce platform. It would be interesting to find out what retailers believe to be a “modern eCommerce platform”, what feature set do they believe such a platform should comprise? Do they think these modern platforms require more Web2.0 features? Or is this a refelction that they feel their eCommerce platform capabilities require further investment?

As discussed in my previous posting, few retailers see adding channels as important in the current climate with a distinct view that mobile is most definitely low on that list. Only 4% of Retail Winners considering it very important, even though mobile operators are predicting significant growth in this area. Could this be the retailers are holding their cards close to their chests, or are the mobile operators just trying to encourage a market in its infancy?

To summarise some of the key recommendations from the study; Winners will continue to invest during this downturn and emerge even stronger, with the help of technology vendors and some creative financing options. Though there are still some key challenges, the most significant, the lingering issue of organisational change to support cross-channel initiatives. To address this will require new metrics and processes to aid alternative compensation structures and promote cross-channel behaviours and attributes.

What are these metrics? The need to track a customers journey across channels and their spends, what product did they browse on the website? Did they go on to buy that product via an alternate channel? – this should be easy for an integrated web to store/phone journey where those channels share that customer information and have the ability to identify the customer at point-of-sale. Though I suspect from reading the study there aren't many retailers out there with that kind of sophisticated integration, or have even considered it a metric to measure – I look forward to being proved wrong.

Again, for full access to the study see the Retail Systems Research website.

The Current State of Cross-Channel Retailing: Part 1

Over the next couple of postings I'm going to review this years annual Retail Systems Research survey on the current state of multichannel retailing and some of the interesting stats the report uncovers.

This years survey results reinforce the analysts and many industry pundits views that multichannel customers are more profitable than single channel customers – 56% of the surveys respondents felt this was the case. However it appears that many retailers can't actually quantify this as 29% still don't know whether their multichannel customers are profitable or not!

The survey continues the growing trend in using the term 'cross-channel', including it in the title, “Cross-channel Retailing for the Anytime, Anywhere Consumer”. What's nice about this report is the use of the term in context, identifying cross-channel with the behaviours of the customer and multichannel with the underlying systems. It also highlights the focus on the brand, particularly with this great phrase – "the brand is the value, and the channel is how the value is delivered".

It would appear that the survey respondents are switching on to the importance of brand and that customers shop the brand not necessarily the channel these days – 76% of the respondents see creating a single brand identity across all channels as the most important opportunity to improve customer satisfaction.

However, only 20% believed it very important to explore new channels, e.g. mobile. This is probably an indicator of the current economic climate and the focus on strengthening foundation channels, or perceived barriers to entry for new channels. This is still quite a surprise, given that International should be considered an additional channel and with potential brand saturation in local markets, international expansion should be more appealing in their efforts to counter balance shrinking local revenues.

An interesting observation is that 40% of what the survey refers to as Retail Winners are fulfilling online orders from the stores. To me, this is not a scalable model – as volumes increase there's a serious risk of cannabilisation of store inventory, leading to dissatisfied local customers. Where's the incentives for that Store Manager to promote cross-channel behaviours and attributes?

The report uncovers some clear benefits to enabling cross-channel processes and behaviours. Here are some highlights below, I suggest downloading the report from RSRs website for the full picture.

- 40% report a 2-5% increase in eCommerce profitability
- 20% report a 5-10% decrease in warehouse space requirements
- 31% report a 5-10% improvement in gross margin percent
- 22% report a 10-25% sales lift on cross-channel promotions

Multichannel Retailing Reference Architecture: Update

The Multichannel Retailing Reference Architecture

This is a minor update to the architecture after the comments on the original posting. I've now added the 'Decision Support' component.

This component should contain the enterprise-wide reporting and Business Intelligence (BI) tooling not encompassed in any of the other components, such as the CRM. Ideally all reporting and BI should be performed using this component, though the reality is that many application packages will provide their own specialist reporting tools that may be better suited to the job at hand. These tools may be best placed for operational reporting, whereas the tools within Decision Support will be for non-operational reporting, such as data mining historic information and trend analysis.

The challenge here will be deciding what should be considered as operational and non-operational data. One possible approach could be as follows.

Partition the 'Master Data' in to two areas; Operational and Historic. The Operational Data Store (ODS) may enforce a policy of containing only 13-months of data, whilst the Historic Data Store (HDS) may contain all older data. Of course, each entity in the ODS may have data of varying age due to legislation and compliance issues, much as data in the HDS will also be governed by such factors. From a cost perspective the HDS may go further and implement Information Lifecycle Management (ILM) techniques to store the data, e.g. 1-3yrs online, 3-7yrs automated/retrievable offline, 7+yrs offline/offsite.

The tools providing reporting on the HDS are always likely to be generic, it's more cost-effective than having secondary instances of each of the business applications for specialist reporting on the historic data. However, this is where there will always be the challenge of the business user requiring the same level of reporting they have on their operational data. Though this frustration can usually be circumvented by demonstrating the data mining and flexibility of the BI tools. The only time it may be necessary to provide secondary instance of a business application against the HDS is for legislative compliance. A recent example I have experienced was to ensure a despatch system could reproduce all labelling for any customer orders shipped internationally for a period upto 7 years. To achieve this, we had a secondary instance of the application configured against the HDS that would only be started upon business request (e.g. during an audit) and agreed with the application vendor that this would not constitute the need for an additional software licence. A cost-effective solution, satisfying both the business stakeholders and our IT budget!

Multichannel Retail Roundup

This is the first in what I hope to make a regular spot on the blog where I'll be rounding up and summarising articles, blog posts and generally any content that's caught my attention relating to Multichannel Retail. Hopefully you'll find some of it interesting and of relevance.

UK Retailers continue to invest in multichannel programmes
First up is this recent article documenting the multichannel round table debate hosted by BT Expedite. Looks like it was a very open debate, with some great soundbites captured and addressing some common issues across retailers. I particularly like Andrew Clarkes comment relating to TopShop not becoming a social networking site, which RetailWeek decided to highlight in a callout. Reading between the lines it sounds like there could be some disagreement on strategy there between the parent and operating company. Another notable mention in the article was Comet's click to chat, whilst they were reluctant to give out figures the article seemed to suggest they've seen a measured impact on conversions. As a slight side on this, an ATG partner recently implemented a callback feature for a Health Insurance client. An email was automatically sent to the call centre when a customer abandoned their application, the call agent contacted the customer to see if they could be of assistance - this resulted in a 17% reduction in abandonment, imagine something similar for an online retail site as part of checkout abandonment.

How a Company’s Culture Can Affect Efforts to Integrate Channels
This article published by Retail Systems Research provides an interesting insight in to the multichannel strategy of US retailer, Bare Escentuals. Clearly hampered by their US growth strategy, whilst complex was primarily product-centric and store based (typical of most traditional brick'n'mortar retailers world-wide), are using their EU and Asia expansion to implement their multichannel vision. The final objective to migrate their US operations to the multichannel model once it has proved itself. This is a relatively risk free approach, as it removes any potential impact on their currently successful, if slightly hamstrung, US business.

Blog: Mobile Retail - Coming to any store near you
Finally in this roundup, a fellow blogger's post on mobile retail and the recent Forrester Report. Some nice references to recent mobile retail applications and how consumers are now using mobile devices more and more to inform their buying decisions whilst on the move.