Top 10 Issues to Consider When Evaluating a Multi-Channel Management Platform. Steve Weber President and CEO

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1 Top 10 Issues to Consider When Evaluating a Multi-Channel Management Platform W ritten by Steve Weber President and CEO

2 If you're evaluating multi-channel strategies to expand your retail business, maximize revenue and offer customers choice and convenience, you're also weighing all "brick, click and flip" options including adding stores web sites, marketplaces, mail order, interactive television, catalogs, and comparison shopping sites. Industry leaders are engaging in multi-channel integration for some very good reasons. More effective cross-channel strategies lead to more satisfied consumers, as well as more efficient, more profitable retail operations. The fact is, most consumers expect to buy their favorite brands from any channel; online, in the store, over the phone and in marketplaces at any time. While the multichannel landscape is always changing, the path ahead is clear. Retail channels will continue to widen, offering customers more autonomy over their shopping practices. In an uncertain economy, one of the safest bets for enhancing revenues may be providing consumers with a comprehensive and effective multi channel experience. Leading experts have identified the top 10 considerations companies evaluate technology platforms to power their multi-channel strategies beyond traditional channels. They are as follows: 1. Are the systems you're using today connectable? In a multi-channel environment you're probably using at least a point of sale, ERP or accounting system, and one or more ecommerce solutions. If your point of sale system is incapable of easily getting data in and out, multi-channel efficiency is going to be nearly impossible. Check to see if your systems have a published application interface (API). If they do, you'll know that you can get data in and out. Systems that are not flexible (no API) or have limited import/export capabilities will add expense to your project. If you haven't kept up with your software support plan, or applied new versions over the years, you may need to consider

3 replacing a system that can't effectively be integrated with the other systems you use to sell your products. Older ecommerce solutions can be rigid as well. Be sure to do your homework. In many cases the cost of replacement may be far less than trying to connect and support rigid systems and the operational efficiencies from integration you may gain with a new system could increase the value even more. 2. How will you manage and troubleshoot the connection points? Now that you've assessed whether your systems can share data what connection points do you need and how will you manage them? If you need to connect Magento and ebay to your ERP system, you may find a fantastic cloud-based solution that connects ebay and Magento, but that same solution doesn't support a connection to the ERP system. When you want to add a new Volusion site, or add Amazon in the future, you may need to add one or more additional connection point solutions from additional vendors and then figure out a way to manage all the connection solutions so they play nice together. Add in custom developed integration points and you 've got a potential support mess on your hands. Thinking through how you'll connect your channels and what solutions you'll use is key. Ultimately, you want a platform that is: Easy to monitor so you can tell when there are issues and which connection point is not working well with another Simple to connect and the connection point providers play well together and are focused on ensuring the total solution works (not just their portion of it) Easy to manage especially if you have multiple vendors involved Provides you with the ability to add or remove channels as your business changes Easily supported so you don't have to worry about applying the latest upgrade to your accounting or point of sale system and having everything break How will the platform leverage systems you already own? You should be able to master items in one existing system such as ERP or POS and connect that system to all other systems to sync, manage and share data. By sharing the data across all systems you reduce manual updates, duplicate work and eliminate errors while streamlining operations, improving efficiencies, and time to market. If you truly want to engage in all or most of the multi-channel practices above, you need to be able to effectively manage orders and inventory. This requires visibility into multiple sources of inventory and your system needs to orchestrate a diverse set of order flows across multiple channels. 3. What does your data look like? Don't forget to build content preparation into your plan. You can't expect any multi-channel platform to work efficiently if your data is a mess. If you have duplicates, have data in multiple locations, use a variety of naming conventions, etc. it's going to be difficult for your platform to be as effective as it could be.

4 For ebay users, think through how your items are named. "Black Shoe" may be an acceptable item name in a point of sale system or ERP system, but is not going to provide you with acceptable search engine results, or apply the best ebay categories when you go to merchandise items for other channels. Think about the channel systems you'll be using and what attributes are required especially if you're merchandising items across channels that have different attribute requirements. Be sure to think through who will help you with this if you can't or don't want to do it yourself. It's important part of managing a multi-channel operation that many companies overlook. 4. What will your sales channels look like a year from now? 2 years? 3 years? Your multi-channel platform (any combination of integration points, custom development or connector solutions) needs to be flexible and scalable. Business conditions change quickly - some for the better, some for the worse. When business is booming you may want to add ebay or Amazon which may involve custom integration work or the ability to find connectors that will work for your environment. You'll want to think through your long term goals and plans to ensure that the multi channel platform solution you choose can address your growth goals. If your business isn't so great and you need to pull the trigger on channels that are underperforming will your platform give you the ability to accurately predict what your costs for adding and subtracting channels will be? If not, the solution you choose should be able to track the costs for each channel and determine expense for adding new channel or removing current sales channels. 5. Item Syndication Companies selling through many online channels have to contend with content such as ebay and Amazon categories and other product information that needs to be shown for merchandising. How do you do this when product information changes rapidly and must be shared across different channels? Effective multi-channel commerce solutions will give you the ability to streamline content management and "syndication" of product data across multiple channels. A change to the item in the master system should ideally update the product in all channels - or the channels you designate. 6. Order Collection When you operate a multi-channel sales environment efficiency is going to increase profitability and help you sell more product. If you have to log into your web store, ebay, Amazon and other solutions to collect your orders how much time will that take you? Don't forget to factor in how long it will take you to either a.) fulfill orders out of each different system or b.) hand enter the orders into your fulfillment system. Additionally, don't forget to add in time to send s back to each customer to let them know that their order has shipped and provide them shipping details if

5 you have them. With manual entry comes the risk of mistakes and can certainly account for delays in being able to process and ship orders. Delays and mistakes impact customer service, which you already know can be life or death to multi-channel sellers. Just a few unhappy customers that write a few bad reviews can quickly impact sales and ratings on marketplaces. A multi-channel platform should be able to route orders from your online or brick and mortar stores to a single fulfillment system or route orders to other fulfillment systems if you deploy drop ship or third party logistic partners. 7. PCI Compliance You're not capturing credit card information right? No credit card information should be passing through your multi-channel system, nor should you be storing credit card information in any of your software systems. We are continually surprised how many companies open themselves up to fines and risk by doing so. Most ecommerce systems will support payment processing gateways to avoid PCI compliance issues. Many companies don't realize that they shouldn't be capturing payment of a sale prior to the customer's order being shipped. Be sure to review PCI compliance with any multi-channel platform you consider and ensure that you are properly capturing payment details. 8. Bi-Directional or One Way? When you need to connect channel systems, be sure that data is bi-directional. For example, many connector solutions will push items from one system to another such as items in Magento to ebay. That function certainly goes a long way in cutting down the process of manually populating ebay with items but it won't help in streamlining and closing the loop of the complete order process. For example, one-way connection solutions mean data is passed from one system to another only data can't be passed back. If you are trying to streamline the process of item syndication, order collection, inventory synchronization and customer collection - one-way integration is only going to solve a small portion of your needs. Your multi-channel platform should be able to push items, collect orders, send back fulfillment details, update inventory and bring in customer information to be effective at managing multi-channel environments. Can it connect to your warehouse system or the system that tracks inventory? If not, it should. 9. Inventory Synchronization and Visibility As you expand the number of channels from which customers can purchase, you'll need to ensure that inventory can be easily updated so you're not selling items you don't have in stock. The term inventory synchronization is used to describe the automated process of updating available quantities as inventory is leaving the warehouse (or back office). As orders are fulfilled in the system that is mastering inventory, the platform needs to be able to get updated item quantities and publish those quantities to your channels. A multi-channel commerce operation requires that a company have inventory visibility across stores and warehouses. If you have several inventory locations you may want the ability to make

6 decisions as to which inventory locations should fulfill orders perhaps by state or region. In some cases you might want the ability to manually route orders to inventory locations based on inventory availability at that time. 10. Know all the Costs of Software vs. Cloud-Based Solution Implementation Consider a "pay-as-you-go" month-to-month vs. long term contract payment plan to allow you maximum flexibility. Watch the fine print. Some vendors charge a percentage of marketplace sales in addition to monthly fees as a recurring revenue strategy. Be sure to weight month -tomonth plans against annual maintenance fees and the combination thereof if you'll be deploying several connection point solutions. Choose the Right Technology. Select the Right Strategy The keys to an effective multichannel retail implementation include choosing the right technology platform for your business model. Selecting the right strategy and enabling your organization with proven technology optimizes your chances of success. nchannel provides an easy, cloud-based subscription service that quickly links existing web stores, and marketplaces like ebay and Amazon with back office systems and POS software. nchannel enables these solutions to work together seamlessly so you can increase sales, improve customer service, optimize inventory and save time. With no long term contracts and no percentag e of sales subscribers pay as they go. nchannel gives you your own web-based portal so you can reduce data entry, gain better visibility and better manage sales orders. You can connect your existing POS, ERP, ecommerce and accounting systems from one place to manage orders, items, inventory and customers. nchannel doesn't replace your systems you'll still use them to ring transactions, sell online and handle your accounting, but you'll be able to work more efficiently. Before you decide on a multi-channel management platform take a look at nchannel's cloud-based solution to manage, connect and sync data from your existing systems to manage item, order inventory and customer information in your multi-channel environment. Learn how companies maintain tight integration with the ability to streamline item syndication, inventory synchronization, and order processing integrated into their marketplace, ecommerce, POS accounting and ERP systems with a single cloud-based platform. Contact nchannel at for a live demo. Connect, Manage and Streamline!

7 A primary business investment for retailers is updating existing operational systems. With retailers now realizing that supply chain systems once thought robust cannot meet rising customer expectations, the 2012 RIS/Gartner Retail Technology Study titled "Embracing Change" states that 25% of merchants with real-time inventory systems have systems that are up-to-date, with 15% the next highest level saying they have started but not finished the process of updating their systems. In the same study the majority of retailers surveyed are either planning or testing a mobile commerce strategy, or have an existing strategy - 46% of merchants are currently in the planning stages; 24% have pilots in progress; and 10% have a fully functional mobile strategy in place. The Mandate for Multichannel Retail Evaluating Supply Chain Models Booz & Co mp any Inc. To remain competitive, retailers will have to implement forecasting systems that provide a high level of accuracy to minimize stock outs and keep inventory at a reasonable level and simultaneously embrace innovation in picking, packing, and shipping so that packages can rapidly depart an increasingly dense network of distribution centers, which must be appropriately located near major cities. To facilitate this highly distinctive capability, systems need to be designed to improve inventory accuracy and create product transparency and visibility throughout the supply chain and all retail outlets so items can be moved quickly to where they are most needed. There are a number of tangible gains from this model including improved margins as better inventory control ensures that less online or in-store merchandise has to be sold on sale. And equally important, the retailer can resell long tail SKUs returned to stores without the expense of sending these items back to the main distribution center. "Before the nchannel integration, we relied on manual processing of sales orders from the RMS system to the ERP system. The amount of manual intervention was impacting our ability to improve order processing speed and accuracy. For example shipping used to take 3-4 days. We invoiced and billed credit cards after shipping because we couldn't charge until product was received. Now we ship in 1-2 days and send a receipt via from GP. Now we collect cash faster which has improved cash receipt volume. Transaction volume is up 10%-20% and we've reallocated resources to selling instead of duplicate manual data entry. We're very pleased and plan to include nchannel integration into our new stores in San Francisco." Renee T h elen Controller Blu D ot

8 ABOUT AUTHOR Steve Weber is a 13 year veteran and former Vice-President of emarketplace Outsourcing Services for Sterling Commerce, a division of IBM. More recently Steve was named Microsoft Partner of the Year for Dynamics Retail and awarded Microsoft Retail Independent Software Vendor (ISV) of the year for his company s data sync solutions. Steve has more than 20 total years software industry experience building and leading teams in various roles including sales, marketing, produ ct development, infrastructure hosting, call center operations and customer service. ABOUT NCHANNEL nchannel provides an easy-to-use, cloud-based management platform that enables companies to cost effectively synchronize, manage and exchange sales, customer, and product data from transactions that occur at the register, in the warehouse, or via a web-store. nchannel s centralized, web-based model enables companies to easily manage sales processes for both wholesale and consumer channels. Using nchannel, subscribers connect their existing financial, ERP and/or POS systems with any number of external online and offline stores including marketplaces such as ebay and Amazon. Publishers of software or cloud applications can develop connections to the nchannel platform to quickly provide integration to any other connected application on the platform. For additional information about nchannel, please visit our website at nch annel Incorporated K innear Rd Colu mbu s, O H DISCLAIMER 2013 nchannel Incorporated. All Rights Reserved. This document contains proprietary information protected by copyright. No part of this document may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying and recording for any purpose without the written permission of nchannel, Inc.

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