Driving Digital Transformation with Modular Order Management
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1 Driving Digital Transformation with Modular Order Management DON DAVIS Editor-in-Chief Internet Retailer MICHAEL HINES VP of Ecommerce Technology & Mobile Strategy Nine West Holdings, Inc. MICHAEL SONIER Head of Product Management ebay Enterprise Sponsored by
2 E-commerce vs. stores in the U.S. YEAR-OVER-YEAR GROWTH 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 18% 18% 15% 16% 16% 16% 16% 15% Q Q Q Q Q Q Q Q E-commerce Stores Source: U.S. Commerce Department, Internet Retailer IR INTERNETRETAILER.COM RESEARCH NEWS ANALYSIS DATA EVENTS
3 Amazon vs. e-commerce vs. stores (YEAR-OVER-YEAR GROWTH. E-COMMERCE AND STORES, U.S. DATA; AMAZON, NORTH AMERICA) 35.0% 30.0% 25.0% 20.0% 15.0% 15.1% 17.7% 17.6% 15.7% 15.5% 15.7% 15.8% 14.6% 10.0% 5.0% 0.0% Q Q Q Q Q Q Q Q E-commerce Stores Amazon Source: U.S. Department of Commerce, Amazon.com Inc., Internet Retailer IR INTERNETRETAILER.COM RESEARCH NEWS ANALYSIS DATA EVENTS
4 E-retail growth is not all about Amazon Year-over-year % growth 2014 vs Catalog/TV/call center 8.8% Consumer goods manufacturers 12.3% Amazon 17.1% Web-only with Amazon 18.1% Retail chains 18.4% Web-only w/o Amazon 19.8% Source: 2015 Internet Retailer Top 500 Guid
5 35.0% 30.0% Having some success Q4 YEAR-OVER-YEAR GROWTH IN ONLINE SALES 31% 25.0% 20.0% 15.0% 22.3% 14.6% 18% 13.5% 14.7% 15% 19% 10.0% 9.7% 5.0% 4% 0.0% Ascena Retail Group Express Dick's Sporting Goods Neiman Marcus Williams- Sonoma Gap Best Buy Wal-Mart U.S. e- commerce Amazon Source: Internet Retailer, based on company reports
6 Omnichannel includes lots of channels 160 Top 500 retailers (159 in 2013, 155 in 2014) Order online, pickup in store Sell on Amazon Sell on ebay Ship to UK Offer mobile site Source: 2015 Internet Retailer Top 500 Guide
7 Driving Digital Transformation with Modular Order Management DON DAVIS Editor-in-Chief Internet Retailer MICHAEL HINES VP of Ecommerce Technology & Mobile Strategy Nine West Holdings, Inc. MICHAEL SONIER Head of Product Management ebay Enterprise Sponsored by
8 Michael Sonier Head of Product Management, ebay Enterprise
9 Consumer Expectations Are Driving Need For Omnichannel Order Management
10 TODAY S OMNICHANNEL CONSUMER of smartphone shoppers use their devices to help shop while in-store 1 Omnichannel customers spend shoppers bypass associates and use smartphones to find product info 2 of consumers expect retailers to be utilizing the technology available to improve their in-store shopping experience 4 times more than single channel customers 3 of consumers leave the store without all of the items they came to purchase 5 SOURCES: 1: RISNEws.com Oct 2013 Infographic In-Store Mobility 2: RISNews.com, Oct 2013 Infographic titled in-store Mobility Trendagram 3: Revel consulting, : ebay Enterprise research, May : ebay Enterprise and CFI Research, March 2014
11 TODAY S RETAIL REALITY The top strategic challenge (i.e., problem) for 2015, is increasing customer engagement with the brand At the root of the problem are two big challenges: adapting current technology to tasks they were not designed for (i.e., legacy systems that are not cross-channel ready) and balancing the high amount of risk involved. 1 The limitations of complex and disparate technology environments increase the risk of unsatisfied customers, rising costs, and lost revenue. 2 SOURCES: 1: RIS/Gartner Retail Technology Study 2015, March / April : Digitizing the Store the Next Wave of Online and Offline Convergence by the National Retail Federation and University of Arizona
12 TODAY S RETAIL REALITY more retailers plan to have a single order management solution in 3 years [to eliminate channel silos] 3 of retailers plan to purchase a distributed order management solution in the next 2 years 1 retailers and brands are rushing to operationalize increasingly complex cross-channel order processing and fulfillment scenarios. 2 retailers can drastically reduce the volume of online sales that are lost due to out-of-stock inventory situations. 4 SOURCES: 1: The Forrester Wave: Omnichannel Order Management, Q : Peter Sheldon s Blog, Forrester Research, January : Boston Research Partners, Order Management is the new POS : Forrester Research, Why Every Online Retailer Should Ship-from-Store, May 2014
13 TODAY S RETAIL REALITY of retailers cited a preference for software as a service (SaaS) or cloud-based OMS solutions 1 of retailers [surveyed] plan to refresh aging POS software over the next 3 years to satisfy the demands of increasingly connected consumers 3 of retailers are worried about the complexities of integrating an OMS platform into their existing back-end systems 2 of retailers plan to replace legacy POS systems with a Distributed Order Management solution 4 SOURCES: 1: The Forrester Wave: Omnichannel Order Management, Q : Peter Sheldon s Blog, Forrester Research 3: Digitizing the Store the Next Wave of Online and Offline Convergence by the National Retail Federation and University of Arizona 4: Boston Research Partners, Order Management is the new POS 2015
14 TODAY S RETAIL REALITY The impact to an organization of installing large-scale systems such as order management systems can be very significant. Studies show experiences run longer than planned, are over budget and don t provide expected business benefits. the average duration has been 16.1 months. In this period, approximately 54% of projects have exceeded their planned budgets, 72% of projects have exceeded their planned durations and a full 66-percent of respondent organizations have received less than 50% of the measurable benefits they anticipated 1 SOURCES: 1: Panorama Consulting, 2014 ERP Report, Multichannel Merchant, An Order Management System Installation: How Bad Could it Be?, April 21, 2015
15 KEYS TO SUCCESS Cloud Cloud-based distributed order management systems are extensible, cost efficient, have high scalability and provide opportunity to optimize IT resources. 20% of large retailers claim that the cloud is the most important technology over other recent innovations 1 Time to Market Rapid time to market is critical in attracting and retaining today s consumer. With potential of 20% or more incremental sales a $50 million online retailer is leaving more than $750 thousand per month on the table. Modularity Modular solutions provide flexibility; opportunity to deploy as you go to protect your existing investments SOURCES: 1: ebay Enterprise Study, Online Retailers Expect to Increase Revenue by 17 Percent in 2015, April 22, 2015
16 KEY TO SUCCESS: DELIGHTING YOUR CUSTOMERS Engage Consumers Successful retailers will empower store personnel with the information and tools to provide an optimal shopping experiences to consumers. Provide a unified brand experience across all channels Full Catalog Access In-store Proactively Engage with Consumers Enable In-aisle Commerce
17 Michael Hines VP of Ecommerce Technology and Mobile Strategy Nine West Holdings, Inc.
18 Nine West - fashion footwear, apparel, accessories since 1977 Retail and wholesale E-commerce since 2000 ebay Enterprise since 2008
19 OUR TECHNOLOGY OMS / WMS Ecometry Open Systems since 1998 E-commerce Storefront Demandware since 2008 Ship-from Store ebay Enterprise since 2008 Dropship ebay Enterprise since 2014 Retail Associate Platform ebay Enterprise since 2014 Native Mobile App PredictSpring 2015
20 OUR CHALLENGE 2008 Grow Top Line and Bottom Work with existing systems and architecture / low capex Contacted VendorNet (now ebay Enterprise) Worked with them to define the business rules for Ship-from Store
21 OUR EXPECTATIONS We expected 10s of orders per week We got 100s of orders per week Quickly grew into a multi-million dollar business With low support requirements
22 STRENGTHS OF APPROACH Uses existing OMS/WMS Stores use web or ipad interface Increase store productivity Identify unmet demand Easy integration with POS
23 BE CAREFUL BE SURE Stores get credit Associates get incentive Retail is aligned You have dedicated store ops support
24 SOME ALTERNATIVES Wholesale Mini-DC No DC
25 SOME CHALLENGES Split shipments are a killer Holiday Backlog and Customer SLAs Educating Stores Store Ops
26 THE FUTURE Real-time inventory Solve Split Ships ipad interface and Retail Associate Platform interface In-Store Pickup 1 Hour delivery
27 OUR FINAL THOUGHT
28
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