Crowdsourcing and Online Retail

Before leaving the house this morning I caught a TV news article about http://www.galaxyzoo.org, a new website asking the public to help classify star systems and spot oddities in the vast number of photographs scientists have of the universe. What a great use of crowdsourcing I thought, how could online retailers benefit from such concepts?

An obvious example might be a competition to design a new product, similar to Walkers recent efforts to get the public to define new flavours of crisps.

Possibly slightly less obvious would be to address a couple of issues most website managers would profess to having, search result relevancy and product hierarchy. So, how about having something similar to Googles new additions allowing your users to rank site search results
or comment? Or allowing users to re-categorise products? It would be an interesting experiment to see the affects on conversion rates. The theory being these would improve as the customers with common interests improve each others routes to find products.

Using Social Media to drive footfall and customer retention

I've just been reading Joe McKendrick's SOA blog over at ZDNet where he's been blogging from the Microsoft Fastforward conference in Las Vegas. He's described what he calls the LIFT phenomenon; Linkedin, Facebook and Twitter.

I was thinking, with a good Social Media marketing strategy in place a retailer could really benefit from these platforms, gaining insight, introducing rich interaction with their followings.

Many retailers have RSS enabled their websites, but what if it were just as easy on their eCommerce platform or Enterprise Marketing Mgmt (EMM) tool to click a box when creating that latest and greatest promotion and it to appear directly on those Social Media sites?

With the advent of FaceBook Connect and the Twitter APIs that shouldn't be so difficult should it?

If these customers have already pledged allegiance by following on Twitter or becoming a Fan on Facebook, imagine how special they'll feel if they're always the first to know about special offers and discounts.

Multichannel Poster Child: Argos

Here in the UK one of the retailers regularly held aloft for being a successful multichannel retailer is Argos. Pioneering kiosks, click & collect amongst others.

However, compared to most store based retailers, Argos have a couple of distinct advantages:

• Each store is effectively a mini warehouse with tight stock control
• The customer journey is almost identical across all channels

Let's take the latter point and observe the typical in-store customer journey...

1. Customer enters the store and is presented a catalogue to browse through
2. Products of interest are placed on a list and can be checked for availability
3. Customer takes the list to the checkout and pays
4. They now wait for the product to be picked from the local warehouse and delivered to the collection desk in the store

Does that all sound familiar to those of us working on eCommerce websites? How easy must that have been to transfer this business model to the web and phone ordering? "Hey Joe, this Internet thing, how do we get ourselves on it? - Heck! It's just a virtual version of our store with a large warehouse attached, we just need to get the home delivery logistics in place"

Having only display stock on the shelves means they must have much more accurate stock visibility, none of this late check in of received stock only for it to already be out on the floor and half of it already gone! (of course this wouldn't be issue if there was real-time reconciliation between ePOS and stock management systems, as well as automated check-in).

Such stock accuracy means cross-channel functionality such as 'Click & Collect' can be implemented with confidence.

The Multichannel Retailing Reference Architecture

NOTE: I've updated this to include the Decision Support function, see the MCR-RA Updated post

For a while now, I've been pondering over what the ideal Multichannel IT architecture might look like or for want of a better term, the Multichannel Retailing Reference Architecture.

At the very highest level it might look something similar to my diagram below.

Whilst very high-level, I have attempted to address the business functions for a retail organisation rather than cross-cutting IT concerns, such as security, systems management and monitoring, etc.

The key element to this diagram is the horizontal 'Business Interaction Services' layer that separates the vertical business systems from the 'Sales & Fulfilment Channels'. By decoupling the multiple channels from the underlying business applications through a single consistent set of interactions, customers, employees, suppliers or business partners can interact with the business across any channel consistently. What I'll now attempt to do is give an overview of each element.

• Sales & Fulfilment Channels - these are the selling channels to the customer, such as Web, Phone, In-store POS, Mobile, etc. However, I have also placed fulfilment channels here too, the idea being that 3rd parties providing dropship fulfilment services, build-to-order services or logistics will interact with the retail organisation preferably through a subset of the Business Interaction Services. It also gives the opportunity for a flexible fulfilment network.


• Business Interaction Services - this horizontal layer provides a common data/services model for the whole enterprise and in a manner that can be easily expressed to non-IT people during the design phase of applications. A catalogue of services should be maintained and governance in place to ensure re-use of services and removal of duplication. In providing this layer it ensures consistent interaction with the core vertical business systems between the sales and fulfilment channels. Whilst a service may be interacting with multiple business systems to fulfil a channels request, it will appear seamless to the end user. As an end user moves between interaction channel, the selected channel will present the same services and information in an appropriate form, e.g. on an ePOS display, mobile PDA, Kiosk or Website. It should be made clear that this may not have to be a technology layer, but could simply be a catalogue of the interaction services provided by the underlying business systems, though typically due to legacy business applications it will almost always need to be a technology layer!

The reality these days is the 'Buy vs Build' tenet manifesting itself in sets of packaged or best-of-breed platforms, delivering business systems for specific functions of the retail organisation. Those vertical components in the diagram above represent these. In most cases, the business units being supported by these systems will access them directly rather than via a channel or the business interaction services (E.g. Call Centre staff accessing the CRM platform, Distribution Centre staff accessing the Warehouse Mgmt system).

• Warehouse Management - this function would be in place if the retailer manages its own warehouses, this may also be extended to logistics fleet management. Here we would see processes and services for picking, packing, dispatching and individual warehouse inventory management.


• Customer Relationship Management - a broad function, covering all customer contact - inbound calls, website visits, outbound marketing, etc. It is this function that understands and develops the interactions with the customer. It will also manage the single view of the customer, providing services to the channels for creating and manipulating customer information.


• Product Information Management - the central management of the product life cycle, here is where the product master data is managed ensuring the product data is available for consumption by all channels. This capability will also manage rich content associated to product; images, video, baseline descriptions (the channels may enrich this with localised content appropriate to the channel). One approach may be to hold this as a central catalogue and for channels to take a subset of products and localise their content.


• Order Management - providing the capability to capture and manage a customers order centrally. Ideally, the order management platform would also provide fulfilment planning to determine which home delivery enabled warehouse is best placed to process a customers order. For Global organisations (and dependent upon their organisational design) this would provide services to 3rd party fulfilment partners or their separate operating companies fulfilment operations via the business interactions service layer.


• Finance & HR Management - these core capabilities, typically implemented through the use of an ERP system, are unlikely to be exposed through any of the channels (though could be to streamline processes between the organisation and 3rd parties).


• Content Management - whilst product related content should ideally be managed within the product information management business systems, non-product content would be managed here. Examples might be marketing materials, property digital assets, non-channel specific content. A catalogue of core content could be created here, allowing channels to select content appropriate to their channel or locality and re-purpose as required.


• Retail Operations Management - this vertical contains all the systems for managing store processes, examples might be range planning, store planning, workforce task management. Again, whilst not necessarily obvious to expose processes through the business interaction services, it may be beneficial for optimising interactions with third parties.


• Master Data - the other most important part of this architecture is securing the single version of the truth. Ensuring only single data stores for each key logical data entity for the organisation. To retain integrity of that data, one of the business systems should be made responsible for maintaining that master data entity and access/modification of that data entity only possible through the services exposed by that business system.


• Technical Interaction Services - These services are provided as an alternative to the business interaction services layer, supporting legacy business systems, suppliers and partners that cannot interact through the preferred business interaction services layer. Use of these services should be kept to a minimum, though whilst transitioning to this architecture this is may be impossible to avoid.

A couple of technical points to labour; ensure loose coupling between channels and core business systems, and that a business system masters the data and access to that data is only achievable via that business system. The former will allow flexibility and choice of channels and the latter will enforce data integrity.

Of course, it doesn't take much imagine to compare the above to what we in IT commonly refer to as Service Oriented Architecture (SOA). However, given recent reports of the imminent death of SOA, at least as a term, I thought I'd avoid using it in my diagram and descriptions ;o)

Deloitte's Xmas Retail Survey 2008

Just spotted Deloitte's related paper to their annual Christmas survey; 'Multichannel retailing - every cloud has a silver lining'.

It's a succinct read and I'm sure only touches the surface of the survey results. In reading it, I felt a level of vindication for my earlier posting about the need for CRM. The survey results would indicate that retailers do see the need for a CRM as an enabler to consumer x-channel behaviour - great news!

Interestingly, joint top of the key challenges faced to becoming a true multichannel retailer is 'Inflexible organisation structures and processes that are based on channel and not brand' at 41%, but 'Implementing the required cultural shift and changes to measures and incentives' was last at 9%. Surely these should be of joint importance, the latter going some way to address the former? I may not be an organisational change expert, but laying out some incentives to encourage behavioural change is a good step in the right direction for getting organisational change accepted.

Does Multichannel retailing need a re-brand to Cross-channel?

Over the past few months I've noticed the increasing use of the phrase "Cross-channel" replacing "multichannel" in presentations, whitepapers and blogs by various industry commentators and consultancies.

However this doesn't come as any surprise to me, as back in February when I posted a question on LinkedIn Q&A asking about the challenges of becoming truly multichannel, I received an interesting response.

Satindra Chakravorty believed, even back then, that we needed to decommission the phrase multichannel as it did not convey what the customer does or what's required by the retailer to enable the customer journey across channels. In fact, his view that any organisation that considered its processes as multichannel also would have the notion of boundaries between those channels. My view is that if this is the case, those espousing they are multichannel haven't really understood what it's about.

Maybe the marketing teams at these consultancies have decided that a rebranding exercise is required, though I can't help but think that maybe if they'd got the message and scope of impact right first time around we wouldn't be needing Multichannel 2.0 aka Cross-channel now.

Either way, whatever you call it the key challenge is moving from purely a product and sales centric to customer-centric retailer and overcoming the obstacles of people, process and technology that accompany all such transformations.

eCommerce Expo - Day 2

Given that I'm making this blog entry well before the end of the expo may give an indicator that I've some free time not attending the seminars. Not that the seminars have finished, more that I've given up attending them... A single word sums it up - disappointed.

Whilst many of today's sessions had multichannel in their title all but one actually had actual multichannel content. Even that session only skimmed the surface. In any case, here's a rundown of the sessions I attended.

First up, "Customer-generated content goes multichannel" with Bazaarvoice and Screwfix. This was moderately interesting, but given that I'd spoken to Bazaarvoice recently nothing particularly new surfaced. It was interesting to hear about the Screwfix experience. They are beginning to use online review content in their offline channels, though didn't indicate whether this was having a positive affect on their trade desk or catalogue sales. More interestingly, their email campaign to incentivize reviews threw up a surprise. Where the subject did not include their win £100 promo they saw 2% more reviews! In terms of uplift, Screwfix have seen a 34% uplift in sales of products with a 2 star or above rating and an overall lift of 32% in sales for products with ratings versus those with no rating. This backs up a statement in a later session featuring Bazaarvoice, "with the proliferation of advertising, reviews are a key differentiator in driving sales".

The next session, "Multichannel: the road to true retail success", didn't start off too confidently. The presenter, Chris Barling of Actinic, telling us he was the John McCain of eCommerce and that many in the room probably knew more about multichannel than he did! It was tempting to walk at that moment, but didn't want to dent his confidence further. Chris' opening slides presented a few top-level facts from recent IBM and MORI surveys on multichannel behaviours and it would have been nice to dig a bit deeper here, but as I know there's only so much you can get from a web trawl before you have to pay good money or let the consultants in to get hold of the detail! Sorry Chris, but it was obvious. The rest of the session was a Chris taking us through a selection of Actinic's SME retailers and how their only using 1 or 2 channels to do business... not a great advert I'm afraid.

The final seminar I attended was the BT Expedite/Mosaic/Wickes presentation on Multichannel integration strategies. As always, John Bovill of Mosaic spoke confidently and heaped praise on the BT Fresca platform. A few good points were how Mosaic recognised that the customer interacts with the brand, not recognising channel. The key was to ensure consistency at every touchpoint. Mosaic's biggest challenge was the cultural move to become customer centric.
The rest of the session was a quick talk from Bazaarvoice (again!) and the customer experience manager from Wickes telling us how they're doing more or less the same as Screwfix. Hat off to Justin Crandall of Bazaarvoice for getting so much airtime for his company!
Again though this was hardly multichannel or the issues we face implementing multi or cross channel retailing.

Before leaving I did get a chance to chat with the guys from Mercado, who indicated they're currently being acquired by Omniture. This could be interesting to see how they compliment each other to improve upon their closed loop analytics and merchandising. I also wonder what will happen with the relationships between Mercado and the other Web Analytics vendors such as Coremetrics?

All in all a disappointing day, I was hoping to see wider coverage of multichannel topics and advice, to name a few

• multichannel fulfilment and inventory mgmt
• how single view of customer enables multichannel
• organizational barriers to cross channel retailing

Whilst I appreciated it was an eCommerce Expo, why tempt the audience with titles if the content isn't there!

eCommerce Expo - Day 1

The day looked like it was going to turn into something of a damp squib as the first seminar I attended was a real let down. Entitled, 'Online shopping cross-border' it was billed as insight from the IMRG on international commerce. Unfortunately James Roper, Chief Exec of IMRG, first slipped up by using the phrase 'it's just another postcode' - destroying any credibility almost immediately. Obviously he's unaware of EU intrastat sales reporting, the varying sales thresholds for tax reporting across the EU countries, the x-border invoicing legislation or that not all Eire addresses have a postcode... Oh dear James. Though none of this mattered as it inevitably turned in to a pitch about the broader IMRG work. The couple of pieces of wheat that could be taken from this were the 'pathfinder' project the IMRG are spearheading. This hopes to provide a x-border working model with the EU commission (more on this would have been great) and the other, imrworld.org - a website containing lots of stats and info on x-border ecommerce.

The next session I chose was a case study, much, much better! Long Tall Sally took us through their approach to selecting Hybris and PortalTech as their ecommerce platform and SI. They kindly presented their lessons learnt;

• using traffic lights to communicate their evaluation results worked well,
  
• don't get hung up on details in the early stages of selection - use the quotation for this,
  
• ensure plenty of time for UAT - don't let downstream slips squeeze it,
  
• don't underestimate content migration,
  
• engage 3rd parties (e.g. Payment services) as early as possible checking and double checking they can meet your timescales.
  

Afterwards I caught up with Andy Piscina, UK Manager for Hybris, who was very upbeat about how brisk business in the UK is going with a couple of significant recent signings.

After a bite of lunch and a catch up with colleagues it was time to see what Tesco had up their sleeve. An excellent presentation from Charlotte Tookey, Tesco.com, and Finlay Clark of Bigmouthmedia. It outlined how their online operation interprets the core principles and
distills them to: Easy to shop and Delivery on time.

To Tesco, SEO is key to their non-food offer as it's not what customers typically know Tesco for. They teamed with bigmouthmedia who helped get them ranking highly through the use of sitemaps, understanding Googles indexing behaviour, hierarchy naming and so on. All of which they bundled up into best practise documentation to utilise across Tesco's numerous microsites. Finlay then gave a heads up on what's next, utilising social networks and growing their community microsites. A great presentation and plenty of food for thought.

The following session was disappointing, probably for the technology vendor as much as the audience. I was hoping to find out how GSI Commerce were being utilised as an enabler to Casual Male's European expansion, instead we were subjected to a pitch from CMs COO and the
GSI guy barely got 10 minutes... A shame.

The final session I attended for the day was Simon Evetts, CTO of Javelin, session on buying or renting your ecommerce platform. A good session, whilst perhaps a little too brief, showed a good level of knowledge of the current marketplace and that with the numerous delivery models it really isn't a clear cut decision. There were also some good tips in there for what to consider when going out to tender. A key point well made was to plan a 3-5yr lifecycle for the platform.

Overall a day of hit and misses, but nothing new there for those that have attended these affairs before.

Tomorrow has more multichannel on the agenda, so it should be interesting.

eCommerce Expo

I'm off to the eCommerce Expo at London Olympia over the next couple of days, where I'm sure there'll be plenty of sales pitches. Though there does appear to be a few multichannel sessions, so I'm hoping to get a feel for what other retailers and tech vendors have achieved and experienced.

Let's hope they focus on the broader issues more so than the recent multichannel summit I attended. Where it felt that the presenters were too focused on just the Internet channel.

I can only hope! Watch this space...

Will the economic downturn postpone your multichannel efforts?

With the downturn appearing to be in full swing there's a danger that
some retail execs will postpone their multichannel aspirations.

Today I attended a presentation about strategies to retain core customers. This was followed by a statement that a CRM programme was not needed and that experience had shown that no x-sell or up-sell initiatives have ever been successful. This really grated with me and seemed counter-intuitive.

The customer is king to the multichannel retailer - how do you target your core customer when you don't know who they are and cannot connect with what they're buying? You resort to sampling and lesser accurate techniques whilst your competitors use their CRM and loyalty schemes to mine customer trends and buying patterns!

Surely in the current climate knowing your customer and what they are buying is key to retaining them. I would suggest the lack of success relating to x-sells, etc is more related to the lack of the ability to measure success.

I suspect the statement was more related to the state of budgets for such a CRM programme.

My view is that now more than ever is the time to find out who your customer is, how they are interacting with you and how you can serve them better.