Satisfying customer expectations: Succeeding in the Multi-Channel Retail World.

A white paper by Yantra Corporation

This paper examines the challenges of customer management in the multi-channel environment and looks at the requirements of the order management systems necessary to meet those challenges. It then presents solutions for delivering a sustainable superior customer shopping experience in the multi-channel retailing environment.

"We believe that retailers have no more than 18 months to get customer management right before Wal-Mart attacks this activity in the same vigor that it has attacked and won supply chain efficiency."

Scott Langdoc The AMR Research Outlook August 18,2003

The Multi-Channel Retail Experience

Nobody said multi-channel retailing would be easy. Customer management, for instance, becomes far more complex in a multi-channel environment. Yet, customer management offers one of the few remaining windows of opportunity for retailers competing against the dominant retail giants.

The need for customer management has never been greater than in the multi- channel retailing environment. Today the customer experience is fragmented. Prices, inventory, promotions and policies often differ between channels. Yet, customers want a seamless shopping experience across all channels. They want to order products online but return them to the store. They want to browse products in the store, yet order online, from a kiosk or a catalog. They want prices, return policies and promotions to be consistent across all channels. Providing this level of service requires effective customer management of the highest order.

There is no realistic alternative to a strategy based on excellent customer management. Most retailers cannot maintain a low price strategy over the long term against today's category giants. Similarly, few retailers can match the sheer breadth of inventory of the large-box stores. Rather, only superior customer management offers a sustainable way to compete and win in today's multi-channel environment. According to The AMR Research Retail Insider: IT Spending Profile, 2003 - 2004 by Scott Langdoc, published on December 10, 2003, "All retail segments see customer order management as the most strategically important initiative."

The Multi-Channel Retailing Challenge

Multi-channel retailing almost looks like a no-win proposition for the retailer. Each channel must be maintained and managed, promoted and merchandised. And the customers must be cultivated and serviced from the moment they first enter the channel through the fulfillment process, to complete satisfaction with their purchase. Each channel represents a significant financial commitment.

Complicating matters and increasing the cost is the difficulty of achieving operational efficiency across multiple channels. Policies, processes and systems must be synchronized for the multi-channel environment. This requires integration of systems and easy access to and exchange of information among channels. It means rationalizing business processes to deliver a seamless shopping experience across all channels.

Furthermore, consumers bring high expectations to today's shopping experience. Again, citing AMR Research's Retail Insider: IT Spending Profile, 2003 - 2004, "It's well known that customers have little tolerance for out-of-stocks and slow checkout. Given what little loyalty most shoppers have today, one bad experience sends that customer and their wallet to a store across the street. Realizing this, a majority of top retail IT investments are positioned to improve the overall interaction between customer and retailer." In short, multi-channel retail success is all about customer management.

Leveraging Systems to Meet the Multi-Channel Challenge

To deliver the kind of superior shopping experience customers demand, retailers will need to provide seamless integrated service across all channels. This requires the retailer to optimize its systems for the multi-channel environment by:

Extending existing retail systems across all channels -- retailers can no longer afford to maintain different systems for different channels. They must extend and integrate the existing store systems for customer and order management, inventory and fulfillment to all channels.

Synchronizing operations and processes - customers must experience consistent policies and processes. They must be able to special order merchandise, specify delivery or return products the same way, whether they are interacting with the retailer online, through a catalog or in the store.

Coordinating supply chain with fulfillment - retailers must manage the supply chain to ensure the vendors are meeting the service and delivery levels specified for each channel, whether the need is for replenishment or drop shipment.

The key to optimizing the multi-channel environment is implementing capabilities that let your customer buy anywhere you sell and fulfill the order as promised from anywhere. This hasn't been easy. For starters, it requires a robust order management system.

Certainly the typical retail systems widely used today - commercial packaged applications, piecemeal Web applications, and custom-developed homegrown applications cannot do it. They are costly to extend across channels and difficult to integrate. Built specifically for individual channels, they cannot easily be managed and synchronized to provide a seamless multi-channel shopping experience. In short, they leave too many gaps in capabilities, thereby hindering the profitable pursuit of the multi-channel retail opportunity.

Instead, "technology investments that highlight speed of checkout, self-service, multiple sales channels, inventory availability, and personalized content are what will engage your customers and help you compete better," according to the August 18, 2003 AMR Research Outlook, 2004 IT Initiatives in Retail: The Priorities Are Emerging.

To do this, retailers need to integrate appropriate multi-channel customer order management and inventory control within the existing retail system infrastructure. "Retailers recognize that efficient checkout and expanded customer interactivity through more targeted offers require a new technology framework that supports not only traditional POS, but online and catalog channels as well," adds AMR Research in the Retail Insider: IT Spending Profile, 2003 - 2004 . Such a system must also support flexible process configurability.

Customer-Driven, Multi-Channel Retailing

From its work with leading retailers, Yantra understands the multi-channel retail challenge and has turned its proven multi-channel fulfillment solution into a powerful tool for retail differentiation. Through multi-channel customer order management, Yantra enables retailers to:

Increase customer satisfaction and profitable customer loyalty by delivering a superior shopping experience

Reduce costs by expediting order management, including special orders, as well as reverse logistics

Increase revenues and profits by ensuring customers are able to find and purchase exactly what they want

Boost responsiveness and enable innovation through flexible, configurable processes

Yantra allows retailers to meet increasingly difficult and complex customer expectations. Through Yantra, for example, retailers can handle special orders profitably, which previously were a costly headache. They can, in effect, establish their own endless aisle to ensure customers will find whatever they want, even when it is not sitting on the retail shelf. It enables retailers to gain the control of all the levers necessary to ensure customer satisfaction and deliver a superior shopping experience - control over selection, order management, fulfillment and returns - and gives them the ability to coordinate sales and service across all channels.

As a result, retailers are able to overcome the multi-channel challenges. Specifically, they can:

Unify the cross-channel customer shopping experience through seamless customer order management and fulfillment

Satisfy customer requests and special orders and create an endless aisle

Leverage inventory data across channels

Synchronize and coordinate the supply chain across ail channels

Improve inventory management by reducing out-of-stocks and by enabling aisle-level replenishment

And retailers can do this without replacing their existing systems. Instead/ they can take advantage of Yantra's modular, standards-based approach to augment their existing systems, filling in any critical gaps. In effect, they can mix and match their systems and Yantra modules to create the exact combination that works for them. Major retailers, including leading consumer electronics and mass-market department stores, have already adopted the Yantra solution.

Leading industry analysts have stated the following: "[Yantra] exhibits overall leadership in both current offering and product strategy." Forrester Research Grading Apps For Inventory And Order Visibility June 2002

"Yantra remains at the front of the pack because of its ability to produce multiple live customers from multiple industries that have implemented a combination of unified capturing, brokering, and fulfillment coordination."

Rod Johnson, AMR Research Consolidated Order Management- ERP Alone Doesn't Deliver February 2003

The Multi-Channel Test: Do You Have the Right Capabilities?

Success in multi-channel retailing comes down to systems capabilities. To fill the gaps in their multi-channel retail systems infrastructure, retailers will need to assess the capabilities they have today and identify the critical capabilities they will need to ensure a superior shopping experience.

These critical capabilities include:

Order from anywhere, fulfill from anywhere

Multi-channel support for returns; buy anywhere, return anywhere

Choice of delivery and service scheduling, including vendor drop-ship

Real-time order visibility, tracking, and control through a multi-channel order repository

Workflow automation to coordinate fulfillment

Flexible process configuration to support third-party partners

Support for endless aisle, including direct-from-supplier inventory

After retailers have identified the gaps in their existing capabilities, they need to think about how they can fill the gaps. Think open, standards-based systems. Think extensible architectures. Think real-time environments. Think flexibility and scalability. Think modular.

Achieve Profitable Multi-Channel Customer Satisfaction

The current retail system solutions are insufficient to meet the challenges of today's multi-channel environment. Typically intended for a single channel, they do only part of the job, forcing retailers to deploy, integrate and maintain multiple systems, which is a costly undertaking. More importantly, the resulting systems do not allow the retailer to excel at customer management and deliver a superior shopping experience. This shortcoming can have dire consequences as retailers attempt to differentiate themselves from the dominant category leaders.

Retail success requires superior customer order fulfillment and inventory management. To achieve this and sustain it as a competitive advantage, retailers need to provide a seamless_multi-channel shopping experience. They need systems to coordinate order management across all channels and effectively orchestrate the supply chain. Only when they do this, can they support the kind of retail innovation required to consistently satisfy the customer and be profitable in the process.