Six Optimization Opportunities in Multichannel Retailing

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1 White Paper Six Optimizatio Opportuities i Multichael Retailig Multichael retailers are facig challeges i adoptig e-commerce stadards ad so are strugglig to stay i touch with the chagig behavior of cosumers. However, there are opportuities for retailers to drive sigificat competitive advatage by stregtheig their processes. This white paper provides isights o six core processes that ca be implemeted to drive ehaced cosumer experiece. The paper also outlies how service providers ca parter with retailers to implemet ad maage their multichael retailig, ad the value additios they brig.

2 About the Author Shikha Agrawal The author is a Subject Matter Expert i multichael retailig. She has over 10 years of experiece i Digital Marketig ad her areas of expertise are providig cosultative support for e-commerce services ad developig offerigs for multichael retail. 2

3 Table of Cotets 1. Multichael Retailig 4 2. Multichael Retail Capabilities 4 3. Egagig Resources Ad Flexibility - Challeges 5 4. Six Processes To Tackle Challeges I Multichael Retailig 7 5. Value additio by service providers 9 6. Coclusio Refereces 11 3

4 Multichael Retailig I the past few years, techology breakthroughs have led to a proliferatio of electroic distributio chaels such as the Iteret, mobile devices, kiosks ad digital televisio. These have provided ew opportuities to the retailig idustry, offerig alterative chaels for cosumers to buy goods ad services. The Iteret has empowered the cosumer ad is providig iformatio ad access across the three stages of purchasig: Iformatio search durig the decisio-makig process Actual purchase trasactio Product owership period, icludig product delivery, maiteace, ad retur Figure 1: Multichael Shoppig Spectrum As Figure 1 shows, multichael shoppig is a jourey that starts with research ad compariso of products ad services, leadig to purchase trasactios, followed by delivery ad after-sales activities. At each stage, cosumers ca ow choose from a rage of differet chaels such as covetioal stores, olie platforms with home delivery optios, ad olie platforms with store-pick-up optios. Moreover, olie shoppig offers its ow suite of sub-chaels, from persoal computers to smartphoes ad tablets. A survey coducted by Pricewaterhouse Coopers (PwC) cites the top three reasos cosumers prefer olie shoppig as beig 24/7 access to shoppig, better prices ad offers, ad faster purchase trasactio tha visitig physical outlets. Multichael shoppig is completely about the freedom ad the ability to shop wherever ad wheever you wat with the best possible prices ad offers. Multichael Retail Capabilities To adopt multichael retailig optimally, retailers eed to esure that the master data (product, vedor, locatio, ad cosumer data) ad the processes are aliged both iterally ad throughout the retail ecosystem. Further, back-ed processes such as order fulfillmet ad trackig also eed to be ormalized ad aliged across poitsof-presece ad the ecosystem. The capabilities required to deliver a seamless cross-chael cosumer experiece iclude: 4

5 Process maagemet Data maagemet Metrics maagemet Process Maagemet Process maagemet ivolves idetifyig the key parties ivolved i the process, defiig the process steps, idetifyig the iputs ad outputs of each step, ad defiig the duratio ad executio of each step. It ivolves the maagemet of the etire process which helps the cotiuous ehacemet of multichael workflow itegratio withi merchadisig, order maagemet, marketig, ad customer experiece. It also icludes defiig the set of itegrated processes ad decisios that support a uified view of a brad from the product purchase, retur, ad exchage stadpoits irrespective of the chael (i-store, olie, mobile, call ceter, kiosk ad social media). The primary processes aroud which capabilities i multichael retail are developed iclude: Digital Cotet Maagemet Promotios Maagemet Sales Optimizatio Order Maagemet Customer Maagemet Aalytics Data Maagemet Data maagemet is about idetifyig ad defiig the key data attributes to be used i ay specific busiess process. It also ivolves defiig how data is created, updated ad used, ad how it will be maaged. The mai data icludes product, vedor ad cosumer details. Metrics Maagemet Metrics Maagemet is about idetifyig the key metrics for each process ad their idividual performace thresholds. This also icludes moitorig ad bechmarkig metrics for cotiuous improvemets. Egagig Resources ad Flexibility - Challeges i Multichael Retailig Retailers usig multichael retailig face challeges i egagig resources ad eablig flexibility i merchadisig ad delivery across multiple chaels. Esurig real-time sychroizatio of process, data ad metrics is also difficult. Brick ad mortar retailers usually have legacy busiess models ad the culture focuses maily o ruig a efficiet i-store operatio, which may ot be as flexible whe the eed to accommodate ew chaels arises. Essetials for multichael retailig like a cetral database for maagig customer iformatio across chaels may ot be available. Chagig to a multichael eviromet ca be difficult, ot just i operatioal ad commercial terms, but also because the eviromet requires ew orgaizatioal structures, ew goverace systems, ew icetives ad especially a expaded ivestmet commitmet. The key to success is havig the right support system flexibly balaced with the eed to meet ay level of customer demad. 5

6 The absece of a commo uderstadig o maitaiig data stadards across product categories, key master data, vedor data etc., leads to adverse cosumer experiece. This is due to retailer issues such as delay i oboardig ew items oto the website, icorrect product categorizatio ad icomplete product iformatio. Drop shippig, where retailers do ot stock merchadise, but have maufacturers or wholesalers directly ship products to buyers, may help olie retailers icrease sales ad profits. However, this strategy has its ow problems. Retailers ofte face challeges maagig ad trackig customer orders with Drop Ship vedors, ragig from gatherig product iformatio ad maagig orders to providig good customer service. Although a shift towards multichael retailig ca be difficult, there are opportuities i process optimizatio where retailers ca parter with service providers to ehace cosumer experiece. Six Processes to Tackle Challeges i Multichael Retailig Service providers today offer ed-to-ed capabilities i multichael retailig, where outsourcig ca be beeficial, deliverig excellece across all the chaels. Figure 3 idetifies services withi six core process areas that offer the best optimizatio opportuities. Figure 2: Ed-to-ed Multichael Retail Services 7

7 1. Digital Cotet Maagemet: This process makes product iformatio available to the cosumer at the poit of presece, most ofte a website. This is achieved by esurig that the master data (product, vedor, locatio, ad cosumer data) ad the processes are ormalized ad aliged both iterally ad throughout the ecosystem. It ivolves brigig together the fuctios of merchadisig ad marketig. Digital Cotet Maagemet services iclude product categorizatio, assortmet creatio, master data maagemet, image maagemet, creatio of marketig copy, product budlig, ad cross-sellig., image maagemet, creatio of marketig copy, product budlig, ad cross-sellig. Figure 3: Illustrative process flow Digital Cotet Maagemet 2. Promotio Maagemet: This process ivolves co-ordiatio with the various stakeholders ivolved i plaig (i coordiatio with aalytics team), ad settig up ad maagig promotios for olie operatios. Services iclude activatig ad de-activatig promotios, validatig product ad price updates, activatig ad de-activatig promotioal displays ad promotio types to develop a cotrolled ad itegrated program for effective marketig commuicatios. 3. Sales Optimizatio: This process ca directly icrease the website sales expoetially. Sales optimizatio trasforms a website ito a sellig or lead geeratio tool through a multi-step process that ehaces visitor experiece, improves coversio rate through attractio, coverts wat to eed ad desire, thereby drivig better sales. Sales optimizatio services iclude Search Egie Optimizatio (SEO), Search Egie Marketig (SEM) / Pay per click (PPC), Social Media Marketig, ad Ratig ad Review Maagemet / ereputatio. Sales optimizatio is also kow as Website Coversio Optimizatio. 4. Order Maagemet: Streamlied ad stadardized order processig ad fulfillmet processes across the ecosystem costitute a seamless cross-chael experiece through appropriate Order Maagemet techiques. Order maagemet services ecompass everythig from order takig, warehousig ad fulfillmet, to credit processig, delivery ad dispatch, exchages ad returs. 8

8 5. Customer Maagemet: Customer Maagemet is the most critical factor i multichael retailig, oe that ca ofte be better maaged by a third-party service provider. This ecompasses the areas of customer helpdesk maagemet, after-sales support, ad loyalty program maagemet. 6. Web Aalytics: This process ivolves the study of the websites for the purpose of aalyzig traffic i particular. Web aalytics helps idetify ad improve the effectiveess of a website especially durig assessmet of a ewlylauched campaig, or as a iput for optimizig the e-commerce websites for maximizig impressios ad thereby sales. This is a critical tool for the market research team. Value Additio by Service Providers A service provider i the space of multichael retailig will have the experiece ad the credetials to help with ay aspect of the retailers requiremets. Apart from leveragig their domai expertise to uderstad the retailers eeds ad challeges, service providers have access to domai-wide aalytics ad isights that they ca use to help retailers redevelop ad redesig their workflows ad processes. Service providers are equipped with various tools / methodologies to idetify ad measure iefficiecies i processes. Further, service providers use techology as a eabler to drive process improvemets ad trasformatios through implemetatio of best practices ad learig gaied through services provided to global retailers. This helps retailers cocetrate o core multichael retail capabilities while service providers maage their back office. Overall, retailers parterig with service providers esure seamless experiece for customers i multichael retailig while drivig sales. As illustrated i Figure 4, a mature service provider measures value delivered through improved process efficiecies ad service levels, turaroud times, trasactio accuracy ad team utilizatio. The service provider uses trasformatio methodologies to geerate cotiuous operatioal beefits, apart from optimizig the retail busiess performace through a value-based partership. Figure 4: Value Delivered by Multichael Services 9

9 Let us cosider two examples to uderstad how service providers ca help retailers i resolvig the lack of data stadards ad adverse cosumer experiece. Example 1 A retailer ca egage a service provider to maage the digital cotet maagemet process. The followig steps have to be followed to esure optimum value from the service provider. The retailer eeds to: 1. Defie the appropriate stadards ad processes for receivig key item data from vedors. 2. Esure iteral processes so that the data is appropriately eriched ad validated by the busiess owers. 3. Adopt idustry data ad process stadards to esure that vedors are ot over-burdeed. 4. Establish ad commuicate key metrics from across the orgaizatio such as volume, turaroud time, accuracy level, the quality of the data etc. By parterig with a service provider ad deployig idustry-leadig process stadards, the retailer ca dramatically reduce the cycle time by half. The retailer ca also o-board ew products o the e -commerce portal apart from streamliig other DCM processes. This ot oly reduces cycle times, but greatly improves the retailer s relatioship with the vedors. Example 2 A retailer ca parter with a service provider to streamlie the order maagemet process with Drop Ship vedors. The service provider will: 1. Establish frequet customer order status check i the Order Maagemet System to keep track of each order. 2. Update frequet ad o-demad order status to esure the right order iformatio reaches the cosumer. 3. Esure appropriate vedor maiteace processes are i place, icludig update of the vedor cotact list through frequet idividual checks. 4. Set up a process for cotiuous follow-up with the vedor to get the latest order status ad stock o-had. By parterig with a service provider, the retailer ca clear heavy backlogs of thousads of stock keepig uits (SKUs) ad make their order maagemet system up-to-date, brigig about greater trasparecy i their complete Order Maagemet Cycle. 10

10 Coclusio Retailers eed to amed their strategies to reflect customer eeds ad desires while aligig busiess processes for swift ad efficiet e-commerce. Focusig o iteral operatig efficiecies aloe is ot sufficiet to create the seamless experiece that cosumers demad. Retailers are part of a ecosystem where maufacturers, wholesalers, logistics vedors ad other service providers work together to create a seamless experiece ad deliver value to the cosumer. I this sceario, parterig with a service provider ca create a favorable eviromet for multichael retailig. Leveragig strog domai expertise, techology, processes, ad ifrastructure, service providers ca help global retail firms address ed-to-ed challeges ad brig i process efficiecies across the multichael retail value chai. Refereces [1] Aberdee The 2012 Omi-Chael Retail Experiece, 2012 [2] PWC,How the multichael shopper is chagig the global retail ladscape, 2011 [3] DeloitteRetail perspective, 2011 [4] [5] Google Books, Maagig busiess i a multichael world success factors for E-busiess by Timo Saarie, Markku Tiilä, Ae Tseg [6] Forrester, Five Retail E -commerce Treds To Watch I 2011 by Sucharita Mulpuru with Hery H. Harteveldt ad Doug Roberge 11

11 Cotact For more iformatio, cotact Subscribe to TCS White Papers TCS.com RSS: Feedburer: About Tata Cosultacy Services (TCS) Tata Cosultacy Services is a IT services, cosultig ad busiess solutios orgaizatio that delivers real results to global busiess, esurig a level of certaity o other firm ca match. TCS offers a cosultig-led, itegrated portfolio of IT ad IT-eabled ifrastructure, egieerig TM ad assurace services. This is delivered through its uique Global Network Delivery Model, recogized as the bechmark of excellece i software developmet. A part of the Tata Group, Idia s largest idustrial coglomerate, TCS has a global footprit ad is listed o the Natioal Stock Exchage ad Bombay Stock Exchage i Idia. For more iformatio, visit us at IT Services Busiess Solutios Outsourcig All cotet / iformatio preset here is the exclusive property of Tata Cosultacy Services Limited (TCS). The cotet / iformatio cotaied here is correct at the time of publishig. No material from here may be copied, modified, reproduced, republished, uploaded, trasmitted, posted or distributed i ay form without prior writte permissio from TCS. Uauthorized use of the cotet / iformatio appearig here may violate copyright, trademark ad other applicable laws, ad could result i crimial or civil pealties. Copyright 2013 Tata Cosultacy Services Limited TCS Desig Services I M I 04 I 13

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