Hardly any economic area is growing as dynamically as the online business. The web-based B2C sales will increase by 17% in 2013, forecasts the U.S. market research company eMarketer. The hot spot in this regard is the Asia-Pacific region with a growth of 23%. In China alone this year, online sales are climbing by 65%, while Indonesia shows growth rates of 71%.
The international outlook anticipates two-digit annual growth rates. This applies to the Asia-Pacific market, which is still relatively “young” when it comes to online business. According to eMarketer, sales for this year should reach just under $ 390 billion, and the forecast for 2016 predicts online sales of $ 708 billion. However, this also applies to the more seasoned Internet regions. In North America sales for 2013 reach approximately $ 430 billion, while for 2016 an amount of $ 580 billion is expected to be generated with the sale of goods and services online. According to the eMarketer forecast, e-commerce sales in Western Europe will increase from $ 291 to $ 388 billion in the same period.
Thus, the Internet business conquers more and more market shares worldwide. In the USA or Australia, but also in western European countries such as Great Britain, the rates are already close to the 10% mark compared to the respective total sales of goods and services to end consumers. According to the Cologne-based E-Commerce Centre Handel (ECC), the online market share in Germany is currently 7.7%.
Entry into the Multi-channel World
Whether regional major player or international chain store company – offline retail companies want to benefit from the online boom and do not want to leave business to the exclusive online suppliers. They are therefore developing into cross, multi or omni-channel dealers. Generally these terms are used synonymously in the field. “Multi-channel retailing is becoming a standard for retailers worldwide, and it is the decisive success factor for a growing number of companies,” observes Thilo Freund, Managing Director of MICROS Retail Deutschland GmbH. “Through multi-channelling, a retailer can gain a strategic advantage in the competition with exclusive online suppliers such as Amazon, for example,” adds Ulrich Kaiser, Sales Specialist with NCR.
However, in the multi-channel world, retailers’ information technology has to adjust to new processes. A typical entry step into multi-channel retail is ‘click & collect’, for example. The customer buys a product online and then picks it up at the retailer’s outlet. Other scenarios are possible. The customer can online-order an item not in stock while at the retailer’s store and can have it sent to a specified address. “Nowadays customers expect this kind of service from their preferred retailers,” explains Freund.
Discerning Multi-channel Customers
This is especially true for the USA and Western Europe, where retailers are dealing with experienced and increasingly demanding customers. Modern multi-channel customers move through the shopping worlds like vagabonds. They search out specific channels for specific needs, often change these channels and are shrewd shoppers. According to a study by PricewaterhouseCoopers, 69% of multi-channel customers consider themselves “expert shoppers“. They accept no restrictions when hopping between brick-and-mortar sand click-and-mortar shops. They want to buy here, pay there, order here, complain there, redeem vouchers here, return goods there.
Retailers must offer smooth processes for these transactions. The objective: web-shop and offline store should generate sales for each other. “If one aligns the offline, online and mobile sales channels, one opens up completely new possibilities to offer existing and new customers true added value, from personal consultation via service and logistics offers to easy payment methods,” says Christoffel, Division Head with Dresdner IT service provider SALT Solutions.
New Alignment of IT Structures In order to connect the offline and digital business, retailers require a standardised perspective across channels with regards to customers, sales, orders, inventory and deliveries. The information technology used should integrate customer data and personalised marketing campaigns. Processing of cash and non-cash payments, including the accounting for down payments, remaining receivables or reimbursements, should be synchronised across all sales channels. Mobile services – to mention just one of many requirements – should be available. Companies must adopt an integrated view of the sales processes, and their IT systems must support this approach.
For many traditional bricks-and-mortar retail companies this means a major IT project. Their IT environment is traditionally aligned to offline business; it has grown over the years and is often very heterogeneous. A web-shop created at some point is often run separately from the outlets. Some retailers try to fit it into the existing structures by creating a makeshift replica. However, multi-channel processes cannot be illustrated this way.
Shifting of IT Budgets
In such cases there is a need to act. “We observe everywhere in the world that omni-channel integration is on top of the agenda for retailers,” reports GK software expert Dr. Rene Schiller. “Even if - at first glance - it seems to just be about the exchange of individual components, the question how a new solution would function in an omni-channel environment is always a very important issue,” Schiller adds.
A study done by the Cologne-based EHI Retail Institute supports this assessment. “By now more than 50% of the large German chain businesses are planning multi-channel operations as a strategic IT project,” the EHI Trend Study 2013 reports. As a result, IT budgets are being shifted in this direction.
Electronics Dealers as Pioneers
Similar things are true for retail companies in other western European countries; however, with different characteristics. In Germany, online purchases of food, for example, rank below 1% of overall sales and hardly play a role at all to date. On the other hand, the topic of home delivery is becoming more and more important in Great Britain or Switzerland. With this in mind, the food retailers in these countries are very active in the build-up of functioning multi-channel structures.
More and more books, sound storage media and consumer electronics are being bought online in all western European countries. Retailers in these sectors have therefore been dealing with multi-channel operations for many years already. The Omnichannel Maturity Index, a study by IBM, appears annually and tests retail companies with regards to their MC capabilities based on 75 criteria. Among the criteria are cross-channel marketing, pricing and article presentation, online orders at the branch office as well as return and exchange processes but also loyalty programs for channel integration. According to the IBM ranking, the retail of consumer electronics has made the biggest advances in 2013. Of the top 10, five were electronics retailers.
Just as is the case with the product lines, multi-channel retailing is developing at different rates in the various European countries because of their specific structures. In territorial states, where the next bricks-and-mortar retailer is a few kilometres away, the multi-channel option will offer the customer few advantages over an exclusive online option. “The more compact the infrastructure - as is the case in Germany or Austria - the more advantageous is a combination of the channels for the customers,” observes Andreas Christoffel of SALT Solutions.
Focus Topic at EuroCIS
By its very nature, multi-channel is a focus topic at EuroCIS, which is held in Düsseldorf at the beginning of February 2014. In connection with EuroShop, Europe’s largest trade fair for retail investments, the IT service providers in the EuroCIS segment present their solutions for multi-channel integration. The trend here is towards the creation of comprehensive structures. This means: Instead of linking a network of individual interface connections for multi-channel applications, a central web-based integration platform is created that serves as a superordinate multi-channel intelligence and that supplies the required information to centralised, POS and web-shop services. Whether GK Software, NCR, Micros, Wincor Nixdorf, Salt Solutions or others – the solutions of the IT suppliers are built on such platforms. This modular design principle enables the successive implementation of cross-channel functionalities.
With Retailix 10, NCR GmbH in Augsburg, for example, presents an omni-channel solution that enables retailers to offer customers a standardised purchasing experience across all channels. The NCR solution portfolio includes customer interaction points, administration and payment solutions, as well as customer, inventory and supplier management systems. A part of the modules is being used by Italian retailer Unicoop Firenze, for example.
MICROS Company is also showing its solutions for multi-channel retailers at EuroCIS. Among those is the ‘Retail Process Modeller’, which is a platform that intelligently controls customer orders and warehouse stock across all sales and delivery channels. Other MICROS applications include the ‘Retail Assistant’, a mobile purchase consultant for personalised guided selling. The solution offers sales associates detailed information about customers, products and orders across all sales channels. The application ‘Relate Retail CRM’ is used to analyse information from all transactions across all sales channels. One of the European users of MICROS solutions is Calzedonia, an internationally active Italian apparel company. Customers in the USA include Charlotte Russe and Lily Pulitzer.
Salt Solutions GmbH from Dresden has developed ‘alexa', a solution suite with an ERP core that supports an integration of the sell-down channels, in particular for the fashion, lifestyle and hardware sectors. The system consists of various modules that can be introduced as a whole or in functional parts. The IT service provider developed a solution architecture with multi-channel approach for the start-up company Emma`s Enkel in Düsseldorf, for example. At Emma`s Enkel, customers can selectively combine various channels.
GK Software AG is presenting its omni-channel product developed in cooperation with SAP and EuroCIS 2014. Thanks to SAP HANA, it is able to deliver required information across channels almost in real time. Based on this, GK has adapted its solutions so they may be used in a HANA environment as well as in the cloud. In addition, the IT Service provider and its partner, valuephone, offer a comprehensive ‘mobile customer experience’ program. This can be used to implement applications such as mobile couponing and mobile payment. For the Edeka subsidiary Netto Markendiscount, these services have already become a nationwide reality in Germany. Cross-channel couponing is also used in the Telecom shops. Interested retailers can experience live presentations of these innovative applications at EuroCIS.
Source: Messe Duesseldorf