| With rapid advances in interactive technology and the growing popularity of the web, the retail sector provided an obvious route for Internet development. However, many online retailers have perished because they did not have a business model that generated sufficient cash flow. The corrective phase in the dotcom industry that we are witnessing sees an end to companies that lacked a long-term vision. The failure of most pure-play online retailers resulted in brick and mortar retailers becoming skeptical about integrating their physical stores to their web-operations. Indeed, many traditional retailers setup their online presence within completely independent companies. These retailers are now bringing their online offspring back into fold, having realized that they cannot gain the benefits of integration while remaining separate. The shakeout of pure-play online retailers does not mean that the eRetailing industry is economically unsound. Winners will be those who focus on making their current transactions profitable while stopping the suicidal race to acquire more and more customers at any cost. Brick and mortar retailers can still re-assess their business models and benefit by leveraging web technologies within their physical operations. In this early phase of Internet retailing, the promotional efforts of most pure-play online retailers were mainly focused on developing awareness and acquiring customers. As the industry moves through the retail life cycle, the focus of marketing activities is switching from wide-reaching brand awareness to sophisticated schemes designed and integrated to build customer loyalty and in turn, increase repeat traffic. Brick and mortar retailers have the advantage of a name that consumers already recognize. A strong brand name provides powerful benefits of awareness and credibility for establishing a web presence. Brick and mortar retailers also have several relatively low cost mechanisms at their disposal to get the word out about their online shopping venues. They can include their web addresses in advertising campaigns as well as print their web addresses in store-catalogs and on store receipts. Moreover, they can also tie their store loyalty cards and catalog circulation lists to their mailing lists in order to increase awareness and usage of the online channel. Furthermore, establishing an online presence can help them track the URL that shoppers came from or the email message that motivated them to shop. They know how many unique shoppers come to their site and how many of them ultimately make a purchase - knowledge that's almost impossible (or rather too expensive) to obtain in real world retailing. Traditional retailers should leverage their "physical" assets to build strong "bricks and clicks" organizations that are able to deliver seamless offerings across multiple channels to build and strengthen customer loyalty. However, integrating offline and online store operations is a complex process. From a long-term perspective, it would be ideal for a traditional brick and mortar retailer to have an integrated Internet platform, supporting the complete retail cycle right from understanding the needs of the consumer to their efficient fulfillment. However, most companies today, suffer from lack of complementary automation in their value chain. That is, while an individual company may have automated its interactions with customers, its value chain partners may not have yet embraced the Internet for their operations. The true benefits of electronic commerce will not be harvested until all value chain partners enter the new economy. The following suggestions could help retailers more easily integrate offline stores with their virtual operations: - Outsource e-fulfillment operations
- Integrate private labels and own brands online first
- Leverage online presence through in-store cyber kiosks
Outsource e-fulfillment operations The success of online retailing is heavily dependent on two fulfillment competencies; fulfilling orders efficiently and providing an exemplary level of customer service. Retailers that are not able to effectively carry out these two functions will ultimately experience a decline in Web site traffic and sales. Moreover, other fulfillment challenges such as fulfilling orders on time, lowering delivery costs, managing peak season volume, staying in stock, offering a wide assortment of products, keeping up with order volume and tracking orders make many a retailer wary of establishing an online presence. Today, most online retailers pay very high delivery costs on low-value transactions. They need to handle small transactions in large numbers and still be able to make money. Though economies of scale would improve as the business grows, these same retailers can achieve greater profitability by sharing the infrastructure required for online order fulfillment, be it warehousing space, delivery networks or call center infrastructure. Ideally, any retailer would first think of leveraging their existing store capabilities for these fulfillment tasks. However, today, a lot of companies do regard that fulfillment is not one of their core competencies, and outsourcing it to a dedicated fulfillment resource would be more realistic. Integrate private labels and own brands online first Brick and Mortar retailers can, not only, leverage their recognizable brand name, physical locations and existing advertising budgets to market their websites, but also make the most of their private labels and own brands to establish a strong online presence. Private labels cannot be compared with other alternatives in terms of price and other attributes from one retail store to another. Retailers can easily include all costs related to deliveries and payment gateway charges within these prices in order to maintain the price the retailer wants in private labels compared to other national brands. In short, established retailers should view the Internet as a tool to deliver value to their customers, challenging themselves to use the Internet to redefine their offers and leverage these assets that their competitors do not have. Leverage online presence through in-store cyber kiosks Brick and Mortar retailers can also leverage their physical store base with the convenience and breadth of products they can offer through in-store cyber kiosks. In fact, in-store cyber kiosks offer consumers an easier transition between a physical and a virtual shopping environment, from what they would experience through their online websites. In-store cyber kiosks act as a bridge to the virtual store just as the virtual store acts as a bridge to the physical store. Consumers get the opportunity to see and touch the merchandise they are interested in, order it through the in-store cyber kiosk and then get it delivered right at their door-step. Offering a cyber kiosk in the store also allows retailers to keep smaller quantities of merchandise in stock, while also providing consumers with access to products in a variety of colors and sizes. Secondly, it is also a cost-effective way for retailers to expand the number of products available and avert lost sales due to out-of-stock merchandise. In the real estate sense, this could increase a physical store's square footage exponentially with very little incremental cost, especially in a store that sells large and bulky items. Conclusion All retailers, whether large or small, should try the click-and-mortar strategy. After all, it is an additional sales channel that addresses the consumers' demand for having a product when, where, and the way in which they want it. In order to meet the needs of this newly empowered consumer, retailers will also have to integrate their marketing activities to incorporate that differentiating value of the physical store into their Web site. As online retailers develop more sophisticated selling techniques, the potential is there to delight consumers in more innovative and interesting ways. While this industry has come a long way in a very short span of time, it still does have a long way to go. Feedback!Make your opinion count! Click here for our online feedback form or email us using this link: mailto:feedback@eretailnews.com Other features FREE NEWSLETTER, click here | 