Post on 13-Jan-2015
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© Copyright IBM Corporation 2011
Thomas Møller Jensen
Seamless Cross-Channel Retail Execution Web, Mobile, & Store
IBM Commerce Solutions
© 2011 IBM Corporation22
AGENDA
A trip to Cross-Channel Nirvana
Why Retail Cross-Channel
The Cross-Channel Participants
IBM’s Smarter Commerce Portfolio
Example Results of Cross-Channel
IBM Commerce Solutions
© 2011 IBM Corporation
Cross-Channel ?
Shopping
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Marketing
Fulfillment
Social networkDirect Mail
OnlineTV...
MobilePhoneShopFieldAppsWeb
...
DeliveredServicesIn ShopPick-up
DirectMail
...
IBM Commerce Solutions
© 2011 IBM Corporation
Cross-Channel Nirvana @ Stables
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IBM Commerce Solutions
© 2011 IBM Corporation
Cross-Channel Nirvana recap
Social media integrationAccurate inventory information Location based promotionRewards program/CRMCross/Up sellSplit payment (Online/Shop)One View of Customer and Order at all times
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Social media integration MarketingAccurate inventory information Fulfillment Location based promotion ShoppingRewards program/CRM MarketingCross/Up sell ShoppingSplit payment (Online/Shop) FulfillmentOne View of Customer and Order at all times
Marketing Shopping Fulfillment
IBM Commerce Solutions
© 2011 IBM Corporation66
AGENDA
A trip to Cross-Channel Nirvana
Why Retail Cross-Channel
The Cross-Channel Participants
IBM’s Smarter Commerce Portfolio
Example Results of Cross-Channel
IBM Commerce Solutions
© 2011 IBM Corporation
Consumers Are More “Instrumented” Than Ever Before
Source: “Capitalizing on the smarter consumer”, IBM Global Business Services Executive Report, 2011
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IBM Commerce Solutions
© 2011 IBM Corporation
Consumers Are More Interconnected And Intelligent Than Ever Before
Customer
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IBM Commerce Solutions
© 2011 IBM Corporation
Today’s ‘Smarter Consumer’ Sees One Brand, Not Multiple Channels
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IBM Commerce Solutions
© 2011 IBM Corporation
Consumers’ Interactions With Your Brand Are Varied And Ever Changing
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Store Create Order Check Status Cancel OrderInitiate/Track
ReturnSchedule DeliveryChange Order PickupResearch
Product
Create Order Check Status Cancel OrderInitiate/Track
ReturnSchedule Delivery
or PickupChange OrderSchedule
Store PickupResearch ProductMobile
Create Order Check Status Cancel OrderSchedule Delivery
or PickupChange OrderSchedule
Store PickupResearch ProductWeb
Initiate/Track Return
Call Center Create Order Check Status Cancel OrderInitiate/Track
ReturnSchedule Delivery
or PickupChange OrderSchedule
Store PickupResearch Product
IBM Commerce Solutions
© 2011 IBM Corporation
Consumers Have Come To Expect Seamless Cross-Channel Retail Execution
1 Source: “Cross-Channel Brand Interaction: 2010 Consumer Preferences,” Sterling Commerce, DemandWare
85% of respondents “expect a seamless experience across all channels for a retailer”. 1
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IBM Commerce Solutions
© 2011 IBM Corporation
Increasingly, Consumers Expect You To Operate Seamlessly Within Your Brand
1 Source: “Cross-Channel Brand Interaction: 2010 Consumer Preferences,” Sterling Commerce, DemandWare
Importance Of Cross-Channel Capabilities 1
Notify when item is ready for in-store pickup (important to very important) 91%
Maintain cross-channel customer history (important to very important) 53%Notify when frequently-purchased item will be on sale (important to very
important) 59%
Assist with matching the compatibility of a new purchase with a previous purchase (important to very important) 49%
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= Requires cross-channel capabilities
IBM Commerce Solutions
© 2011 IBM Corporation
Even Consumers’ Expectations for Mobile Apps Include Cross-Channel
Source: “Cross-Channel Brand Interaction: 2010 Consumer Preferences,” Sterling Commerce, DemandWare
Most Desirable Mobile App CapabilitiesLook up and verify product availability at a particular location 62%
Look up price of an item while in the store 57%
Find nearest store location 49%
Receive pro-active notification about status of outstanding orders 48%
Locate an OOS item at an in-stock location, purchase it, and have it shipped to you or held for pickup 46%
Access product reviews while in the store 46%
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= Requires cross-channel capabilities
IBM Commerce Solutions
© 2011 IBM Corporation
Consumers’ Expectations Keep Increasing
2007-2010 Comparisons1
Cross-Channel Consumer Expectations 2007 2010
Complete an order anywhere 55% 61%
Modify an order anywhere 65% 74%
Track an order anywhere 56% 87%
Shipping Notice (via any combination of channels) 94% 88%
Shipping Delays (via any combination of channels) 91% 91%
Delivery Notice (via any combination of channels) 78% 79%
Cross-channel return to store 90% 84%
1 Source: “Cross-Channel Brand Interaction: 2010 Consumer Preferences,” Sterling Commerce, DemandWare
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= Requires cross-channel capabilities
IBM Commerce Solutions
© 2011 IBM Corporation
Other Retailers Are Responding To Their Customers’ Cross-Channel Expectations
69%In-store pickup of cross-channel orders
Currently support (46%); plan to support in 12 months (23%) 1
Source: Edge Research Retailer Survey; 2010
77%In-store returns of on-line purchases
Currently support (57%); plan to support in 12 months (20%) 1
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IBM Commerce Solutions
© 2011 IBM Corporation
Other Retailers Are Responding To Their Customers’ Cross-Channel Expectations
Source: Edge Research Retailer Survey; 2010
76%Single cross-channel view of customer
purchasesCurrently support (40%); plan to support in 12
months (36%) 1
76%Cross-channel order/shipment status
trackingCurrently support (47%); plan to support in 12
months (29%) 1
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IBM Commerce Solutions
© 2011 IBM Corporation
But, Few Retailers With Cross-Channel Capabilities Are Satisfied With Their Current Approach
Source: Edge Research Retailer Survey; 2010
% of Retailers Satisfied With Current Capabilities 1
Customers can complete an order via any combination of channels 22%
Customers receive order, shipment, and delivery status updates 24%
Overall ability to deliver cross-channel capabilities 21%
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IBM Commerce Solutions
© 2011 IBM Corporation
1. Source: Deloitte Research, Forrester Research, Internet Retail Offline Influence Model: 2. Source: CEO Brian Dunn- 9/21/2010-RIS News
Cross-Channel Execution (Enabled By Cross-Channel Order Management) Delivers Results
Macy’s: Every advertising dollar spent online influences $5.77 spent in the store over the next 10 days1
REI: 40% of online orders are picked up in-store, with 35% of pickups resulting in additional sales that average $90 per sale1
Best Buy: Best Buy, recognized as a leader in cross-channel retailing, has achieved a 40% buy online/pick up in store rate2
Nordstrom: Multi-Channel customers spend, on average, four times more than single channel buyers1
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IBM Commerce Solutions
© 2011 IBM Corporation1919
AGENDA
A trip to Cross-Channel Nirvana
Why Retail Cross-Channel
The Cross-Channel Participants
IBM’s Smarter Commerce Portfolio
Example Results of Cross-Channel
IBM Commerce Solutions
© 2011 IBM Corporation
Fulfillment Network.
Distribution Centers 3PL’sDrop Shippers Store NetworkEnterprise
ApplicationsExternal Services
Call Center eCommerce StoreMobileKiosk
Customer Channels
There are Lots of Participants
IBM Commerce Solutions
© 2011 IBM Corporation
Performance M
anagement?
Glo
bal V
isib
ility
?
Fulfillment Network.
Distribution Centers 3PL’sDrop Shippers Store Network
Enterprise Applications
External Services
Call Center eCommerce StoreMobileKiosk
Customer ChannelsVarious Expectations
Can We Set Accurate Expectations with the Customer?
What Steps are Required to Fulfill each Specific Order Line?
How do we Coordinate these Steps Across Applications?
What are the Fulfillment Rules for a Specific Order Line?
How do we Best Leverage the Fulfillment Network?
How do we Remain Flexible to Enable New Business Initiatives?
IBM Commerce Solutions
© 2011 IBM Corporation
Fulfillment Network.
Distribution Centers 3PL’sDrop Shippers Store Network
Enterprise Applications
External Services
Call Center eCommerce StoreMobileKiosk
Customer ChannelsThis Can Get Complex
IBM Commerce Solutions
© 2011 IBM Corporation
Fulfillment Network.
Distribution Centers 3PL’sDrop Shippers Store Network
Enterprise Applications
External Services
Call Center eCommerce StoreMobileKiosk
Customer ChannelsIBM \ Sterling Approach
Performance M
anagement?
Glo
bal V
isib
ility
?
Promising(ATP)
OrderOrchestration Visibility
Sterling Cross Channel Inventory and Order Hub
IBM Commerce Solutions
© 2011 IBM Corporation
A Single Source of the Truth…In-Store
Call Center
On Line (web)
iPhone RF
Sterling Platform
Enable single face to customer with access to information about any order from any channel or division to be available where and when a customer needs it.
IBM Commerce Solutions
© 2011 IBM Corporation2525
AGENDA
A trip to Cross-Channel Nirvana
Why Retail Cross-Channel
The Cross-Channel Participants
IBM’s Smarter Commerce
Example Results of Cross-Channel
IBM Commerce Solutions
© 2011 IBM Corporation
There are Various Approaches
IBM Commerce Solutions
© 2011 IBM Corporation
Store Web POS Call Center Other
Warehouse(s) Store(s) Other(s)
Broad Representation of Interfaces
IBM Commerce Solutions
© 2011 IBM Corporation
Customer Integration & Compliance
Platform
SLAs, Customer Mandates
VAN, IaaS
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There are 4 Distinct Capabilities Needed to Project a Single Face to the Customer
Channel Partners
Repair Depots
Plants / Warehouses
LSPs / Carriers
Contract Manufacturers
Banks / Payment Processors
Synchronized Multi-Tiered Fulfillment
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Business Unit 1
Business Unit 2
Acquired Company
Order HubERP 2
Legacy System
ERP 1
Single Point of Order Visibility
2 Multi-Channel Order Capture
NamedAccounts
Field Sales Mobile
Web Store
CSR
Field Sales
Store / Service Center
EDI, Email, Fax
DiverseCustomers & Partners
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IBM Commerce Solutions
© 2011 IBM Corporation
IBM’s integrated portfolio for Smarter Commerce
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Buy Market Sell Service
Core Business ProcessesCORE BUSINESS SOLUTIONS
VALUE CHAIN STRATEGY AND SERVICESMarket and customer mgmt.Aligning sales, marketing and operations
to engage with customers
Innovation and business valueInnovating and aligning business models to
drive value to the customer
• Trading Partner Mgmt..• Supplier Management• Supply Chain Visibility• Logistics Management• Inventory Optimization
• Predictive Analytics/Modeling• Behavioral Segmentation• Cross‐channel Campaign Mgmt.
• Search Optimization, Ad Targeting
• Marketing Resource Mgmt.
• B2B & B2C Cross‐channel commerce
• Distributed Order Orchestration• Fulfillment and Supply Chain Optimization
• Mobile Commerce• Retail Store
• Delivery & Service Scheduling
• Customer Self Service Enablement
• Reverse Logistics• Case Management
Operating and Organization ModelsDesigning operations, supply chain and the
organization model to deliver customer value
Workload Optimized SystemsSystems, Storage and Software focused on agility, integration and automation to drive relevant business outcomes
Advanced AnalyticsStore analytics | Purchase analytics | Consumer loyalty | Predictive and prescriptive | Social analytics | Web analytics | Master data mgt
IBM Commerce Solutions
© 2011 IBM Corporation30 GBS Smarter Commerce Sales Enablement Training | Introduction to Smarter Commerce Products
CORE BUSINESS SOLUTIONS
• Cross‐Channel Order Capture, Cart and Catalog
• Customer‐centric Shopping Experience• B2C/B2B Storefronts• Mobile
Coremetrics• Digital Analytics• Behavioral Segmentation• Search Optimization, Ad Targeting, and Real‐time Website Recommendations
Sterling Commerce• Distributed Order Management
• Configuration, Pricing, Quoting
• Multi‐vendor catalog
Unica• Cross‐channel Campaign Mgmt
• Real‐time Decision, Event Detection, and Contact Optimization
• Operations Mgmt
Sterling Commerce• Warehouse Management• Transportation Management• Supply Chain Visibility• Sterling Collaboration Network/B2B Services
ILOG Supply Chain• Product Optimization• Inventory Optimization• Network Optimization• Transportation Optimization
Retail Store Solutions • Retail POS Solutions• Self‐Service Portal/Kiosk
• POS Applications
Sterling Commerce• Delivery and service Scheduling• Reverse Logistics
•Customer Self Serve Portals
•Call Center•Collaboration Environments
• Case Design, Run‐time, Analytics
Sourcing and procuring goods and materials required to deliver products and services to meet
customer demand
Selling and fulfillment of products and services across multiple
channels to drive sales
Servicing customer needs across all interaction channels to drive
repeat sales and enhance lifetime value of a customer
Developing, delivering, and measuring relevant and
consistent messages across multiple channels to drive
demand
Buy Market Sell Service
VALUE CHAIN STRATEGY AND SERVICES
Core business processes
Advanced Customer Insight
IBM’s integrated portfolio for Smarter Commerce
IBM Commerce Solutions
© 2011 IBM Corporation
Questions/Discussion
ThMJ@dk.ibm.com
IBM Commerce Solutions
© 2011 IBM Corporation3232
AGENDA
A trip to Cross-Channel Nirvana
Why Retail Cross-Channel
The Cross-Channel Participants
IBM’s Smarter Commerce
Example Results of Cross-Channel
IBM Commerce Solutions
© 2011 IBM Corporation
Key Cross-Channel Retailing Direct Impact Areas
In-Store Pickup– Impact: Additional in-store purchases (cross-sell/up-sell)
In-Store Returns– Impact: In-store purchases (converting the return back into a sale)
Recovering From Out Of Stocks (OOSs)– Impact: Sale of the OOS item – Impact: Sale of companion items – Impact: Salvaged future shopping trips
Cross-Channel Sourcing– Impact: Avoiding duplicate safety stock
Available-To-Promise Sourcing– Impact: Inventory reductions by sourcing from in-transit inventory (before it
arrives at the DC) Sourcing From End-Of-Life (EOL) Inventory
– Impact: Reduced markdowns by sourcing from inventory pools with excess inventory
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IBM Commerce Solutions
© 2011 IBM Corporation
Key Cross-Channel Retailing Direct Impact Areas
In-Store Pickup– Impact: Additional in-store purchases (cross-sell/up-sell)
– Drive additional in-store traffic– 40% of those making online or mobile purchases will choose in-store
pickup as their fulfillment method– Cross-sell/Up-sell
–38% of those opting for in-store pickup of online, catalog, or mobile orders are likely to highly likely to make additional purchases while in the store
–Retailers with high attach rates benefit even more (e.g., general merchandise, apparel, electronics, toys, sporting goods, hardlines/home improvement, etc.)
–Avoided shipping overhead–For every in-store pickup of an online, catalog, or mobile order, the
retailer avoids the shipping overhead that would have been incurred
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Source: “Cross-Channel Brand Interaction: 2010 Consumer Preferences,” Sterling Commerce, DemandWare
IBM Commerce Solutions
© 2011 IBM Corporation
Key Cross-Channel Retailing Direct Impact Areas
In-Store Returns– Impact: Additional in-store purchases (cross-sell/up-sell)
– Drive additional in-store traffic– 46% of those making online or mobile purchases will choose to return
their purchase to a store– Cross-sell/Up-sell
–33% of those opting for in-store return of online, catalog, or mobile purchases are likely to highly likely to make additional purchases while in the store
–Retailers with high attach rates benefit even more (e.g., general merchandise, apparel, electronics, toys, sporting goods, hardlines/home improvement, etc.)
–Avoided shipping overhead–For retailers that do not charge customers for shipping returned goods
back to the retailer, for every in-store return of an online, catalog, or mobile order, the retailer avoids the shipping overhead that would have been incurred
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Source: “Cross-Channel Brand Interaction: 2010 Consumer Preferences,” Sterling Commerce, DemandWare
IBM Commerce Solutions
© 2011 IBM Corporation
Key Cross-Channel Retailing Direct Impact Areas
Recovering From Out Of Stocks (OOSs)– Impact: Sale of the OOS item
– 66% of consumers would purchase an OOS item if the retailer could find it at an in-stock location and ship it to the customer
– For those cases where the retailer has the item in stock somewhere, they could save the sale 66% of the time
– Impact: Sale of companion items – 42% of consumers faced with an OOS leave the store without purchasing anything– For every saved sale, the retailer has the likelihood of selling attachment items 42%
of the time– Impact: Salvaged future shopping trips
– For every saved sale, there’s the potential to save the sales associated with one or more future shopping trips
– 29% of consumers who experience an OOS will forfeit at least one future shopping trip to that retailer
– 13% of consumers who experience an OOS will forfeit at least two future shopping trips to that retailer
– 6% of consumers who experience an OOS will forfeit three or more future shopping trips to that retailer
36Source: “Cross-Channel Brand Interaction: 2010 Consumer Preferences,” Sterling Commerce, DemandWare
IBM Commerce Solutions
© 2011 IBM Corporation
Key Cross-Channel Retailing Direct Impact Areas
Cross-Channel Sourcing– Impact: Avoiding duplicate safety stock [liberated capital; avoided working capital
interest]– For those SKUs that are common across channels, the ability to source across
channels enables the retailer to reduce duplicate safety stock Available-To-Promise Sourcing
– Impact: Inventory reductions by sourcing from in-transit inventory (before it arrives at the DC) [liberated capital; avoided working capital interest]
– Internet, catalog, and mobile items can be sourced from inventory that has yet to arrive at the direct-to-consumer shipping site
– For those SKUs, every additional day’s orders that can be sourced from in-transit or on-order inventory is another day’s inventory that can be reduced for those SKUs
Sourcing From End-Of-Life (EOL) Inventory– Impact: Reduced markdowns by sourcing from inventory pools with excess inventory
– For EOL inventory that is at risk of being marked down (in order to sell the merchandise), the ability to source across channels from pools of excess inventory enables the retailer to sell the product at full price and avoid the markdown
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IBM Commerce Solutions
© 2011 IBM Corporation
Consumers Will Reward Retailers That Make The Desired Cross-Channel Improvements
58%
19%
23%
0% 10% 20% 30% 40% 50% 60% 70%
Yes
No
Not sure
Percent selected
Likelihood to spend more with retailer if improvements are made
US
Source: IBM Institute for Business Value Analysis, Retail 2010, n=13,960
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IBM Commerce Solutions
© 2011 IBM Corporation
According to their quarterly sales report (8K) dated August 12, 2010:• $2.52 billion in revenue, up roughly 13% from the year ago period • Net earnings increase of $41 million compared with the same period in fiscal 2009 • Multi-channel same-store sales increased 9.9% compared with the same period in fiscal 2009• Full-line same-store sales in the second quarter increased 8.2% • Direct sales increased 34.1% compared with the same period in 2009 • Same-store sales during the Anniversary Sale event increased 9.0%
“Nordstrom has implemented several solutions within Sterling Selling and Fulfillment Suite, including Sterling Catalog and Offer Management and Sterling Order Management, to enhance its order capture and fulfillment capabilities. A critical element of the Sterling Commerce implementation is the centralized order hub that synchronizes and orchestrates customer orders, without having to replace warehouse or distribution systems. Instead, the software extends Nordstrom’s existing systems to help improve service, make more efficient use of inventory and reduce costs. For example, Nordstrom is able to open-up website inventory to the stores, operating a single distribution center to fulfill deliveries for every channel. The end result is a better shopping experience for the consumer and better control over the entire fulfillment lifecycle for the retailer. ”
Nordstrom’s efforts are paying off.
In the 8k report Nordstrom credits the shared inventory platform between full-line stores and the Direct business for improved financial results, because this platform enables better fulfillment of customer demand and greater access to inventory. Nordstrom was also able to reorganize the business as a single, "multi-channel" operating segment, which reduces costs and improves their ability to serve customers well. From Nordstrom's 10Q filed 09/08/2010,"Through our multi-channel initiatives, we have substantially integrated the operations, merchandising and technology of our Nordstrom full-line and online stores, consistent with our customers' expectations of a seamless shopping experience regardless of channel.”
Nordstrom Results
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IBM Commerce Solutions
© 2011 IBM Corporation
Press Release Source: Best Buy Co., Inc. 9/23/2010; 1:55 a.m. EDT
MINNEAPOLIS--(BUSINESS WIRE)--Best Buy (NYSE: BBY - News) makes holiday shopping even easier this year by offering one of the most comprehensive shipping programs in the retail landscape, Store Pickup Plus.
The Store Pickup Plus program consists of the following capabilities:
• Store Pickup: Buy online, skip the shipping charge and pick up an order in as little as 45 minutes after placing it.
• Ship-To-Store: Out-of-stock products that are available online can be shipped to any Best Buy store for customer pickup, without any shipping fees.
• Friends & Family Pickup: Place an order online and have someone else pick it up, avoiding an inconvenient trip to the store or giving an out-of-town relative immediate access to a purchase.
• Warehouse Pickup: Avoid delivery charges and scheduling conflicts by picking up products directly from a local Best Buy warehouse. This is an expedient option for appliance purchases and same-day pickup.
With each of the program options, customers will be notified via email when their product is ready for pickup, creating an overall expedient and efficient on-site transaction.
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IBM Commerce Solutions
© 2011 IBM Corporation
85% report improved customer satisfaction from ensuring product information and pricing is up to date and consistent across channels
40% report a 2-5% increase in eCommerce profitability
29% report a 5-10% increase in overall return on inventory investment
25% report a 2-5% decrease in warehouse space requirements while another 20% report a 5-10% decrease in space requirements
33% report a 2-5% increase in overall inventory turn while another 25% report a 5-10% improvement in the same metric
31% report a 5-10% improvement in gross margin percent
24% report a 2-5% sales lift on cross-channel promotions while another 20% report a 5-10% lift and a very surprising 22% report a 10-25% improvement.
27% report a 5-10% improvement in fill rates
Retailers Who Enable Cross-Channel Order And Inventory Visibility And Cross-Channel Execution Enjoy Quantifiable Benefits
Source: Cross-Channel Retailing For The Anytime, Anywhere Consumer; Benchmark Study, 2009 – Brian Kilcourse, Paula Rosenblum, RSR [“benefits achieved by retailers who enable cross‐channel order and inventory visibility and enabling cross‐channel processes”]
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IBM Commerce Solutions
© 2011 IBM Corporation
Additional Validation
There are two undeniable facts of being a retailer in 2010: Online sales outpace brick-and-mortar sales growth rates by 3-5x. Customers increasingly expect retailers to leverage technology to provide a
consistent, efficient and satisfying buying experience across channels.
Retailers who implement demand-optimized multi-channel inventory, order, and fulfillment
applications will enjoy the following benefits:– Reduced stock-outs– Improved sales: 15%-35% increase in average transaction size – Higher customer retention rates – Fewer lost sales: e.g., increased online conversion rates between 30% and 45% – 5%-10% increase in loyalty customer profitability – 20%-60% reduction of inventory losses as a percentage of sales
– Leslie Hand-IDC Retail Insights
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