39 days
Positive value cash cycle has
negative working capital
Negative value cash cycle requires
working capital
30 days
24 days
20 days
-
15 days
- 19.112 12,093 6.694
- 134 6,132 10,334
7,781 13,370 16.985
Driver of cash cycle
When product
starts selling
Sales trajectory in
rst 2/3 weeks
Sell-through of
broken ranges
Physical retail only
Start selling as soon as
products arrive in store
New products immediately
visible in store
Visible to store staff moved
to clearance rail
Omni-channel retail
Start selling once product is
photographed, booked into web
warehouse, coded and uploaded to site
New products can languish if not
actively managed or promoted on site
Easy to send trafc to broken
products (customer journey is
more difcult to control)
How will customer strategy change?
Retail has always been about the customer.
However, for the last several decades the
customer has become anonymous to most
retailers. Only a handful of retailers such as
Tesco and Nordstrom have made full use of
customer data and many retailers including
Walmart have done very well by focusing on
other areas such as supply chain optimisation.
Even where retailers do have customer data, it
is often not obvious what to do with it beyond
direct marketing, and certainly not how to use it
to rethink the business.
For the last two hundred years of modern
retail, location = footfall, and footfall = sales.
Omni-channel unshackles consumers from their
physical location, requiring retailers to rethink
their relationship with customers. See table 3.
The new economics of customers
The prot challenge
Retailers have built very successful businesses
without needing to understand or model
customer behaviour. They have relied on a
conceptually simple model of prot per store
and category, and growth driven by like-for-likes
and new stores.
Omni-channel has changed everything. Retailers
now need to embrace prot per customer.
The new growth model is driven by customer
acquisition and retention. It is already well
understood in other industries with a customer
contract from mobile phones and insurance,
to utilities and traditional mail order. Retailers
will need to join them by thinking in terms of
customer acquisition costs, lifetime value and
retention economics.
The question to ask
The critical question for retailers to answer is:
What investment in customer acquisition and
retention maximises long-term protability?
To help answer this question, retailers should know:
What is the prot per customer?
What is the role of the store in inuencing
customer protability?
How much should we spend acquiring a
customer?
What is the appropriate payback for a new
customer?
What is a customers lifetime value?
2. Customers
Decision Intelligence. Omni-channel 101. Back to basics
www.ecommera.com
14-15
Planning
Insight
Measurement
Focus
Cost
Personalisation
Targets
Timeline
Approach
From
Location has been a proxy for
customers, and growth has been
planned based on like-for-likes and
new stores
Customers are typically anonymous
Customer insight comes from gut
experience or expensive ad hoc
market research
Customers not measured
Outcomes such as like-for-likes are
good enough customer proxies
Customers not part of the
conversation
Fixed rent = footfall
Fixed costs of store staff
Broadcast
Segment-driven for insight and
action
Channel targets: both store and
online
Transaction focused
Customers are anonymous
Service is uniform
To
Customer-centric planning growth is based
on customer acquisition and retention targets
Single view of all customers/transactions
across all channels
Decisions are based on customer data
Customer-centric input metrics critical to
understanding whats going on
Focus on most protable customers,
and highest potential customers
Understand business in terms of whos
making money
Variable costs of online marketing
Optimal investment in acquisition versus
retention
Next-best action based on every customer
interaction, what is the next best thing to do:
nothing, promotion, email, event invitation,
call from local store etc.
Personalised (segment for execution,
not insight)
Customer targets
Store managers focused on acquiring/
retaining customers
Lifetime value/relationship focused
Service is differentiated based on a customers
value and potential
Store staff are informed and incentivised
accordingly
M
A
N
A
G
E
M
E
N
T
M
A
R
K
E
T
I
N
G
S
E
L
L
I
N
G
Table 3: The customer in omni-channel
Decision Intelligence. Omni-channel 101. Back to basics
An example: Customer growth model
MODEL CONCEPT
We have developed a simple customer simulation
model to highlight the sensitivity of sales to a
customers transition from being new to loyal.
The model shows how overall sales are built
up from customer cohorts, where each cohort
represents the customers acquired in a particular
year. The transition from being a new to loyal
customer is the key how long does it take, how
many customers do you lose along the way and
how much do your loyal customers spend?
ASSUMPTIONS
New customers acquired in a week: 1000
Loyal customers annual purchases: 5
Probability of making next purchase in a week:
probability increases with frequency (i.e., the more
purchases you make, the more likely you are to
make the next one), and decreases with recency
(i.e., the longer it is since you made your last
purchase, the less likely it is you will make your
next one).
BASE CASE CHARTS
1. The acquisition curve shows a at acquisition
rate of 1000 new customers per week
2. The transition curve show the evolution from
new to loyal customer each line represents a
different frequency cohort and the chart gives
the probability of a customer purchasing in a
particular week. The base case indicates:
9 purchases to become loyal
55% of customers move from 1
st
to 2
nd
purchase
3. The loyal curve shows at purchasing of 5
times per annum
4. The growth chart shows how the cohorts
translate into an overall sales curve played
out over time.
1 0 2 3 4 5
Years
6 7 8 9 10
8
0
0
0
5
0
0
0
1
0
0
0
0
O
r
d
e
r
v
a
l
u
e
1
5
0
0
0
2
0
0
0
0
1
0
0
0
A
q
u
i
s
i
t
i
o
n
1
4
0
0
5 0 10
Weeks
15 20 25
0
2
4
6
8
1
0
P
e
r
c
e
n
t
a
g
e
b
u
y
i
n
g
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Yr 9 Yr 10
C1
C2
C3
C4
C5
C6
C7
C8
C9
C10
Key statistics
1 Percentage customers retained
2 Annual loyal spend as a % of 1st year spend
3 Expected 3 year orders for a new customer
4 CAGR Year 7-10
5 CAGR Year 3-6
6 Year 10 revenue vs. Year 1
7 Week when revenue > costs (i.e. in profit)
5.6%
23.7%
2%
8.7%
13.2%
3.2%
5%
Years
1 0 2 3 4 5 6 7 8 9 10
L
o
y
a
l
p
u
r
c
h
a
s
e
s
0
1
2
3
4
5
1 0 2 3 4 5
Years
6 7 8 9 10
8
0
0
0
5
0
0
0
1
0
0
0
0
O
r
d
e
r
v
a
l
u
e
1
5
0
0
0
2
0
0
0
0
1
0
0
0
A
q
u
i
s
i
t
i
o
n
1
4
0
0
5 0 10
Weeks
15 20 25
0
2
4
6
8
1
0
P
e
r
c
e
n
t
a
g
e
b
u
y
i
n
g
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Yr 9 Yr 10
C1
C2
C3
C4
C5
C6
C7
C8
C9
C10
Key statistics
1 Percentage customers retained
2 Annual loyal spend as a % of 1st year spend
3 Expected 3 year orders for a new customer
4 CAGR Year 7-10
5 CAGR Year 3-6
6 Year 10 revenue vs. Year 1
7 Week when revenue > costs (i.e. in profit)
5.6%
23.7%
2%
8.7%
13.2%
3.2%
5%
Years
1 0 2 3 4 5 6 7 8 9 10
L
o
y
a
l
p
u
r
c
h
a
s
e
s
0
1
2
3
4
5
1. Acquisition curve (Growth rate = 0)
2. Transition curve
Decision Intelligence. Omni-channel 101. Back to basics 16-17
www.ecommera.com
1 0 2 3 4 5
Years
6 7 8 9 10
8
0
0
0
5
0
0
0
1
0
0
0
0
O
r
d
e
r
v
a
l
u
e
1
5
0
0
0
2
0
0
0
0
1
0
0
0
A
q
u
i
s
i
t
i
o
n
1
4
0
0
5 0 10
Weeks
15 20 25
0
2
4
6
8
1
0
P
e
r
c
e
n
t
a
g
e
b
u
y
i
n
g
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Yr 9 Yr 10
C1
C2
C3
C4
C5
C6
C7
C8
C9
C10
Key statistics
1 Percentage customers retained
2 Annual loyal spend as a % of 1st year spend
3 Expected 3 year orders for a new customer
4 CAGR Year 7-10
5 CAGR Year 3-6
6 Year 10 revenue vs. Year 1
7 Week when revenue > costs (i.e. in profit)
5.6%
23.7%
2%
8.7%
13.2%
3.2%
5%
Years
1 0 2 3 4 5 6 7 8 9 10
L
o
y
a
l
p
u
r
c
h
a
s
e
s
0
1
2
3
4
5
3. Loyal curve
1 0 2 3 4 5
Years
6 7 8 9 10
8
0
0
0
5
0
0
0
1
0
0
0
0
O
r
d
e
r
v
a
l
u
e
1
5
0
0
0
2
0
0
0
0
1
0
0
0
A
q
u
i
s
i
t
i
o
n
1
4
0
0
5 0 10
Weeks
15 20 25
0
2
4
6
8
1
0
P
e
r
c
e
n
t
a
g
e
b
u
y
i
n
g
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Yr 9 Yr 10
C1
C2
C3
C4
C5
C6
C7
C8
C9
C10
Key statistics
1 Percentage customers retained
2 Annual loyal spend as a % of 1st year spend
3 Expected 3 year orders for a new customer
4 CAGR Year 7-10
5 CAGR Year 3-6
6 Year 10 revenue vs. Year 1
7 Week when revenue > costs (i.e. in profit)
5.6%
23.7%
2%
8.7%
13.2%
3.2%
5%
Years
1 0 2 3 4 5 6 7 8 9 10
L
o
y
a
l
p
u
r
c
h
a
s
e
s
0
1
2
3
4
5
4. Growth (C = cohort)
1 0 2 3 4 5
Years
6 7 8 9 10
8
0
0
0
5
0
0
0
1
0
0
0
0
O
r
d
e
r
v
a
l
u
e
1
5
0
0
0
2
0
0
0
0
1
0
0
0
A
q
u
i
s
i
t
i
o
n
1
4
0
0
5 0 10
Weeks
15 20 25
0
2
4
6
8
1
0
P
e
r
c
e
n
t
a
g
e
b
u
y
i
n
g
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 Yr 8 Yr 9 Yr 10
C1
C2
C3
C4
C5
C6
C7
C8
C9
C10
Key statistics
1 Percentage customers retained
2 Annual loyal spend as a % of 1st year spend
3 Expected 3 year orders for a new customer
4 CAGR Year 7-10
5 CAGR Year 3-6
6 Year 10 revenue vs. Year 1
7 Week when revenue > costs (i.e. in profit)
5.6%
23.7%
2%
8.7%
13.2%
3.2%
5%
Years
1 0 2 3 4 5 6 7 8 9 10
L
o
y
a
l
p
u
r
c
h
a
s
e
s
0
1
2
3
4
5
SCENARIOS: EXPECTED NUMBER OF
PURCHASES OVER 3 YEARS
We are then interested in understanding the
expected 3-year purchases from customers. As you
can see from the table below, the retailers evolution
is extremely sensitive to these assumptions.
IMPLICATIONS
This highlights the sensitivity of growth and prot
to these basic drivers:
Taking a high number of purchases to get to
loyalty is typically a service issue erratic service
drives attrition from potentially loyal customers.
A low number of purchases to get to loyalty
is good, but a low rst-to-second purchase
rate is bad; this is often driven by a poor CRM
A retailer with expected 3-year customer
purchases of 1.6 needs to focus on xing the
basics. A retailer with expected 3-year customer
purchases of 6.6 can put its foot to the oor and
focus on customer acquisition.
These dynamics are critical to understanding
and prioritising relative investment in customer
acquisition, service improvement, retention
promotions and range expansion. It is easy for
retailers to observe similar revenue growth but with
very different underlying drivers of performance.
Expected 3 year purchases
Long term transition from 1st to 2nd purchase Number of
purchases to
be deemed
loyal
25%
(bad)
35% 45% 55%
(good)
3.2
2.2
1.8
1.6
4.3
3.0
2.3
2.1
6.6
34.8
3.9
3.3
5.4
3.8
3.0
2.6
3 (good)
5
7
9 (bad)
The new economics of orders
The prot challenge
There are two elements to the new economics
of orders:
i. The cost to serve: The variable cost of
handling each order as more orders become
omni-channel
ii. The economics of service: How much does
it cost to deliver different service levels, and
what is it worth (in terms of impact on
customer retention)?
Many service industries have evolved to offer
different qualities of service at different price
points (think Direct Line versus Hiscox; RyanAir
versus BA; Travelodge versus Four Seasons). In
addition, businesses with a high variable cost
of sale have evolved their business models to
align revenue and costs.
How will the ordering process change?
The order is the retail transaction the exchange of goods for money. Omni-channel decouples the
customer contract from the physical exchange with profound implications. Transactions in store are quick,
simple and have a very low marginal cost. Decoupled transactions introduce delays, new costs, and process
complexity. A transaction now becomes a series of touch points. While this is a very standard challenge in
every service business (think hotels, airlines, insurance and pay TV), it is a new set of skills, processes and
economics for retailers (See table 4).
From
Simple
Store staff incentivised/focused
on closing sales in store
Immediate: Transactions
initiated/completed in store
Low marginal cost: Shopping
bag, credit card charge
To
Complex
Transactions can touch many parts of the
business
Delayed: Separation of order from delivery
Longer gestation: Interaction with all channels
(particularly for high value purchases)
High cost to serve: Home delivery, returns
handling, email/phone customer service
O
W
N
E
R
S
H
I
P
T
I
M
E
L
I
N
E
C
O
S
T
3. Orders
Table 4: The order in omni-channel
Decision Intelligence. Omni-channel 101. Back to basics
www.ecommera.com
The question to ask
The critical question for retailers to answer is:
How do we make the trade-off between cost
and service?
To help answer this question, retailers
should know:
Whats the cost of delivering different
service levels?
Whats the impact on customer loyalty
of different service levels?
Whats the cost of managing volatility?
An example: Cost to serve model
MODEL CONCEPT
All retailers have processes that require human
involvement or intervention such as: emails, fraud
reviews, order issues, picking, packing, shipping
and returns processing. Omni-channel retail means
requests arrive 24/7, so retailers have to align shifts
to get the right balance of cost versus service. Few
retailers work 24/7 and our model below highlights
the impact on the customer experience of the
misalignment between requests arriving and then
being handled.
ASSUMPTIONS
Requests per hour (24/7): 100
Shifts planned: 5 days per week (Mon Fri)
Shifts start: 8am
BASE CASE CHARTS
1. Stafng pattern shows the hours worked
5 days per week, 8am-8pm
2. Service request pattern: Shows requests per hour
over the week
3. Distribution of waiting times: We examine here
the average and longest customer waiting time,
and percentage of customers waiting more than
24 hours.
Mon Tue Wed Thu Fri Sat Sun
Service Request Pattern
Waiting times
0
5
0
1
0
0
1
5
0
N
u
m
b
e
r
o
f
r
e
q
u
e
s
t
s
p
e
r
h
o
u
r
Mon Tue Wed Thu Fri Sat Sun
Staffing Pattern (8am - 8pm)
0
2
4
6
8
1
0
N
u
m
b
e
r
o
f
s
e
r
v
e
r
s
Mon Tue Wed Thu Fri Sat Sun
0
2
0
0
0
5
0
0
0
0
5
0
0
1
0
0
0
1
5
0
0
2
0
0
0
0 10 20 30 40 50 60
5-
10
10-
15
15-
20
25-
30
35-
40
45-
50
55-
60
65-
70
75-
80
No. of items in the system
Key Statistics
1 Mean waiting time
2 Maximum waiting time
3 Proportion of time server is idle
4 Number of items in system for more than 24 hours
No. of hours a request has been waiting
30
60
0%
60%
Mon Tue Wed Thu Fri Sat Sun
Service Request Pattern
Waiting times
0
5
0
1
0
0
1
5
0
N
u
m
b
e
r
o
f
r
e
q
u
e
s
t
s
p
e
r
h
o
u
r
Mon Tue Wed Thu Fri Sat Sun
Staffing Pattern (8am - 8pm)
0
2
4
6
8
1
0
N
u
m
b
e
r
o
f
s
e
r
v
e
r
s
Mon Tue Wed Thu Fri Sat Sun
0
2
0
0
0
5
0
0
0
0
5
0
0
1
0
0
0
1
5
0
0
2
0
0
0
0 10 20 30 40 50 60
5-
10
10-
15
15-
20
25-
30
35-
40
45-
50
55-
60
65-
70
75-
80
No. of items in the system
Key Statistics
1 Mean waiting time
2 Maximum waiting time
3 Proportion of time server is idle
4 Number of items in system for more than 24 hours
No. of hours a request has been waiting
30
60
0%
60%
2. Service request pattern
3. Waiting times
1. Stafng pattern (8am-8pm)
Mon Tue Wed Thu Fri Sat Sun
Service Request Pattern
Waiting times
0
5
0
1
0
0
1
5
0
N
u
m
b
e
r
o
f
r
e
q
u
e
s
t
s
p
e
r
h
o
u
r
Mon Tue Wed Thu Fri Sat Sun
Staffing Pattern (8am - 8pm)
0
2
4
6
8
1
0
N
u
m
b
e
r
o
f
s
e
r
v
e
r
s
Mon Tue Wed Thu Fri Sat Sun
0
2
0
0
0
5
0
0
0
0
5
0
0
1
0
0
0
1
5
0
0
2
0
0
0
0 10 20 30 40 50 60
5-
10
10-
15
15-
20
25-
30
35-
40
45-
50
55-
60
65-
70
75-
80
No. of items in the system
Key Statistics
1 Mean waiting time
2 Maximum waiting time
3 Proportion of time server is idle
4 Number of items in system for more than 24 hours
No. of hours a request has been waiting
30
60
0%
60%
18-19
Decision Intelligence. Omni-channel 101. Back to basics
Shift worked
8am 8pm
8am 10pm
8am midnight
8am 2am
8am 4am
30 (hours)
29 (hours)
28 (hours)
27 (hours)
26 (hours)
60 (hours)
58 (hours)
56 (hours)
54 (hours)
52 (hours)
61%
60%
57%
54%
52%
Average waiting time Maximum waiting time % waiting >24 hours
SCENARIOS
We can see that in all scenarios, the lack of weekend working has a dramatic impact on the customer
experience.
IMPLICATIONS
Many retailers experience (and have become
inured to) the Monday backlog. Unfortunately,
this can have a ripple effect for the rest of the week
and create a systemically poor experience for
customers.
Human processes are typically not visible and
measurement of average outcomes obfuscate the
real issues. It is critical for retailers to understand
the value of service and instrument the business to
get visibility of service failures.
***
The economics of omni-channel are different and
complicated whats got us here wont get us
there. It is very easy not to make money, and it is
very easy to not understand how to make money.
While many things improve with scale (negotiable
and with xed costs); other things get worse
(customers get more expensive to acquire the
further you get from home and heartland). Tried
and tested formulas for retail success will need to
be rethought. However it is not all doom there is
signicant money to be made for many retailers in
this new era. Especially for those who can:
(i) Understand protability: Where do we make/
lose money
(ii) Optimise protability: Where can we make
things better
(iii) Prioritise investments: Where to spend next
$/
This requires new skills beyond the simpler
counting or assessing prots by store or
category. There is a new level of analytical
and statistical complexity to untangling
omni-channel protability.
Finally, its important to have a mind-set that will
evolve as new data becomes available, and as
omni-channel customer behaviour becomes easier
to track. In the words of John Maynard Keynes:
When the facts change, I change my mind. What
do you do, sir?
20-21
www.ecommera.com
Once youve done the heavy lifting
of setting your omni-channel
strategy, you need to consider what
technology will make it a reality.
While omni-channel does require an investment
in new systems, the most critical consideration is
how everything ts together. Solid integration of all
systems is key for two reasons:
Firstly, it enables you to deliver on all of the
promises of omni-channel: an end-to-end, more
personalised, consistent customer experience.
Secondly, solid integration will help you to
manage the complexity of omni-channel. With
all of the data from all systems from website
analytics, to order management to CRM you
will be able to drive integrated, efcient business
processes. Not only will this ensure operational
efciency, but you will be able to balance the
operational costs of service against the value of
any given customer or segment.
This article examines three critical technology
investments for aspiring omni-channel retailers.
For each, we explore what the technology will
enable you to do, why it is important, and what
to look out for when selecting the best systems for
your business:
1. Integrated inventory data
2. Omni-channel order management
3. In-store digital systems.
We wrap up the article by looking at how retailers
can then use their new found data to drive greater
protability.
1. Integrated inventory data
Why is it needed?
When making their purchasing decision customers
expect information to be accurate. Key to this
decision is product availability, so visibility into the
supply chain is critical. Channels need to be joined
up and seamless: when customers are researching
online, or when staff in a store or contact centre
place a customer order or direct customers to an
alternative source for a product the information
needs to be up to date and correct.
This is difcult because the inventory data needs to
be available wherever it is needed, when it is needed
in store, online or in the contact centre. Retailers
have traditionally used PoS systems for managing
local product inventory as well as handling in-store
transactions. Unfortunately, these systems are not
designed for an omni-channel environment and
lack a lot of the now requisite functionality. It is a
classic example of a system designed for a single
channel. Equally, the online store can typically see
the warehouse inventory but has no visibility of the
physical stores.
This leaves the customer risking a wasted trip to
their local store as the online system cannot tell them
whether the store is holding stock of the item they
wish to purchase. However, when faced with an
enquiry about an out of stock item, retail staff can
avoid a potential lost sale if they can access a view of
the inventory available in nearby stores or elsewhere
in the retail supply chain; or are able to place an
order for fullment from the distribution centre.
Barcode and RFID scanners can help capture
inventory movements from manufacturer to
warehouse, warehouse to store, from store to shop
oor, from returns back into stock. However they
are not enough without integration.
Omni-Tech
Nick McLean, Director of Products, eCommera
Decision Intelligence. Omni-channel 101. Back to basics
2. Omni-channel order
management
Why is it needed?
Once the data has been joined up it enables the
integration of the operational processes which are
essential to a seamless customer experience. When
looking for a product, customers now expect
exibility of fullment options and they want to
know when and how they can have it. If there is a
time constraint they might want to go their nearest
store to collect. Or if its not urgent they might
prefer to have it delivered to their home at
a convenient time.
A new omni-channel technology is required to
support this: a retail order management system
that can identify the available stock options and
can direct the order by the most appropriate
route to the customer. Key functionality includes
congurable workows that implement the
retailers chosen business rules, dening whether
product is shipped from:
a) the nearest / cheapest point to the nal
destination (the customer home or selected
click and collect location)
b) the fastest route (for a customer with a high
lifetime value) or
c) from the location with the slowest moving stock.
Similar rules are also needed to govern the returns
process. This will determine whether domestic
stock is returned to store inventory or whether
payments can be refunded when international stock
is received at a local processing point or only when
has been returned to a central facility.
Adding to the challenge is the need to integrate data
with external partner systems: supply side partners
such as a manufacturer or a drop ship vendor, as
well as the fullment partners who cover the nal
mile to the doorstep.
With so many point systems involved, a middleware
layer is required to protect the integrity of the
existing systems. It also enables unied view of the
data by providing the data transformation and
integration between these systems.
Selecting a middleware layer
If you decide that implementing a middleware
layer is right for your business, here are a few
things to consider:
Let someone else do the hard work. A
managed service approach will minimise the
time and resources required to implement and
run your middleware layer. This approach will
also minimise the risk, not only of the initial
implementation, but also of any future
integration projects
Make a solutions list. Consider all of the
existing and future solutions that need to be
integrated to your middleware layer; aim to nd
an option that has as many of these pre-integrated
as is possible. This will reduce the project time
and the risk
Build it for tomorrow. You want to ensure
you select a solution that supports both your
legacy and future investments.
Decision Intelligence. Omni-channel 101. Back to basics 24-25
www.ecommera.com
3. In-store digital systems
Why is it needed?
With the fundamental enablers of an integrated
view of inventory and cross-channel order
management in place, the stage is set for creating a
richer and more satisfactory end-to-end customer
experience.
The vast majority of digital investment to date has
been in the online experience. While the web is
hugely inuential in most retail sales, the majority
of purchases are still completed in a store. Despite
this, there is a major imbalance between the retailer/
customer relationship online and in store:
The online experience is information- rich,
personalised and offers rapid check-out
The in-store experience reduces customers to
anonymous wallets, inicts upon them under-
informed shop assistants and does little to mitigate
data charges for in-store research via mobile. To
add to the pain, they are then made to queue to
make a purchase.
The advent of new and cost-effective technology
now allows the benets of digital to be part of the
physical store and to empower the retail staff to
become a valued part of the customer engagement.
Arming store staff with tablets, clienteling software
and mobile PoS ensures they are able to access
necessary information, serve the customer better
and improve the checkout experience.
Furthermore, there are a host of technologies such
as augmented reality, virtual tting rooms, digital
displays and kiosks that all add to the customers
experience of discovery, persuasion and purchase
of a product (see page 26).
Retail order management systems need to have
open interfaces to interact with payment processing
and fraud engines as part of the order approval
process. They also need exible data interfaces to
absorb inventory information from the PoS system,
the distribution centre and the manufacturers. Plus
the capability to drive the pick, pack and ship
from a wide variety of locations the store, the
warehouse and the drop ship vendor along with the
decision engine that can route the order based on a
wide variety of real-time input parameters.
Selecting a retail OMS
When evaluating potential solutions look out for
the following:
Ensure the system you select is built for
purpose. Solutions built for a single channel
or even multi-channel retail will disappoint
your customers and in the end provide
disappointing results for your business
Choose a solution that has a long list of pre-
integrated systems. This will cut down the
cost, length and risk of your project
Pick a solution that you can grow into. SaaS
solutions are a good option; with automatic and
seamless upgrades you can benet from new
functionality without the headache of upgrade
projects
Make sure intelligent routing is on the feature list.
This feature will help you to reduce operational
costs and is a must-have
Be exible. Ensure that the solution you
choose has congurable workow rules. Youll
want to adapt and change as you go technology
needs to enable not limit.
Decision Intelligence. Omni-channel 101. Back to basics
Free Wi: A simple way of helping your customers to get more information on your products. While
there was initial concern over enabling showrooming, leading retailers like House of Fraser and
Debenhams are now offering in-store wi as standard.
QR codes: With plenty of free applications to support them, QR codes are an easy way of helping
customers to get more information on a particular product. Small and easy to create, these can be put
on product tags or shelf labels. US Retailer Best Buy includes a QR code reader in its mobile app to
ensure customers do not need to download anything extra to benet.
IBeacons: An Apple technology, iBeacons allow mobile apps to recognise when an iPhone is within
range of a beacon. The beacon can interact with a smartphone to identify customer locations and
transmit personalised promotions to customers in the store.
In-store mapping: Using their phone and a mobile app customers can use a store map to navigate
their way around the store.
Information kiosks: Already deployed by retailers including Marks and Spencer and Asda, kiosks
are an easy way of helping customers to navigate product information while in store
Mobile POS: Often enabled through tablet devices or smart phones, mobile POS systems allow
retail staff to check-out customers anywhere and potentially avoid queues.
Customer feedback software: Customer feedback can be captured in store or post-purchase via
telephone, email, ratings tools or social media. Analysis software can mine this data to inuence
anything from strategy to product descriptions.
In-store technology
These additional technologies benet both the
customer and the retailer. The customer perceives
them as enhancing their shopping experience.
The retailer gains a rich range of additional data
about which customers are in the store, what they
are looking at, what additional information they
are seeking and what they buy. Whereas retailers
previously knew very little about the customers
visiting their store or their browse and buy
behaviour, now a range of ofine shopping data
can be captured and correlated.
Selecting in-store technology
Here are some tips for selecting which in-store
technology is right for your business:
Choose the technology that helps your customers
to make purchasing decisions. Consider what is
important to them while in store. Is it the ability to
get more product information? To read reviews?
To consult a friend? To visualise themselves with
the product? Avoid implementing technology just
because it seems innovative and cool.
Aim for integration. Ensure that any new systems
can be integrated to your middleware layer to
enable data capture and automation.
Decision Intelligence. Omni-channel 101. Back to basics 26-27
www.ecommera.com
The advent of new and cost effective technology
now allows the benets of digital to be part of
the physical store and empower the retail staff to
become a valued part of the customer engagement.
Let your customers decide. Ask your customers
what they expect of your in-store experience and
take their advice.
Use your integrated data to drive
protability
With a fuller picture of the customers omni-channel
behaviour, a retailer can adapt product range and
customer segments to drive personalised marketing.
But there are also signicant and entirely new
opportunities for prot improvement. Omni-
channel retail is considerably more complex than
single or multi-channel retail. However it is here to
stay and the winners will be those that invest and
re-organise to capitalise on the rewards available.
So where are the big prot gains to be found?
Firstly, pricing and promotions. New approaches
are suddenly possible with a holistic picture of
a customers in store and online activity, and a
complete view of inventory and stock velocity in
each location:
Customers with a history of high-value
orders and a low level of returns may be
offered a more attractive proposition in terms
of product pricing and fullment options
Customers with a lower lifetime value may
be offered longer delivery times to help clear long-
tail stock from regional locations where stock
velocity is low.
Secondly operational improvements. New data
allows operations teams to allocate stock optimally,
to plan the stafng and shift planning in store better,
and to ensure the warehousing and fullment
functions can ex with the rise and fall in orders.
This will result in fewer abandoned orders from
out of stock products; higher customer loyalty and
greater merchandising potential.
Finally, lower costs and improved operational
margins from the buy side. Driven mainly by
managing return on inventory and dynamically
adjusting supply to demand. Reliable tracking
and fast, responsive processes with integrated data
views drive productivity through automation. This
helps scalability through the avoidance of manual
intervention to connect processes. In addition,
improved inventory allocation minimises the costs
of moving that inventory around the business,
while improved visibility and replenishment reduces
markdown and write-offs from carrying pockets of
superuous and long-tail stock.
In conclusion, omni-channel needs to be seen as
having omni-potential.
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ON L4B 3B2
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