The Cross-Channel Advantage

The retail market has changed dramatically in recent years. Today just about every company that wants to stay relevant to its customer base is multichannel. This has made it essential for retailers of every stripe to optimize technology and business disciplines on the Web, in print catalogs, in brick-and-mortar stores — and beyond.

This level of optimization can be profound, producing operational efficiencies but also creating strategic liabilities. Consumers want the freedom to decide when and where they conduct transactions and obtain information. They want cross-channel availability of all the services and products retailers have to offer, without needing to decode arcane restrictions caused by the siloed reality beneath the cross-channel veneer.

A standard list of cross-channel retailing processes includes:

• Ordering online with store pickup.

• Browsing online and completing orders with phone agents.

• In-store Web kiosks.

• Browsing catalog and ordering online.

But even these elementary processes are time-consuming, burdensome, expensive and ultimately static — and hard to evolve and enhance as consumers continually raise the bar. At the end of the day, today’s cross-channel integration provides conveniences to customers. But it exposes a fundamental problem — that merchandising is organized and executed within the confines of each channel.

Merchants typically employ a quasi-content management approach, focusing on products and their attributes, and manually managing products and categories at a low level, which for the most part is redundant across channels. This limitation is rapidly becoming a pain point as channels evolve into dynamic push/pull mechanisms, designed to draw consumers through the awareness, consideration and purchase funnel.

MAKING THE LEAP

In the cross-channel world, merchants ought to rethink their decisions about the classic four considerations — product, pricing, promotion and placement — and avoid designing marketing plans around where they would like consumers to be. Instead, they have to find out where — and who — their potential customers really are. Adding personalization as a fifth merchandising consideration is key to being able to use any channel to create demand in another. This requires dynamic cross-channel merchandising, where product, pricing, promotion, placement and personalization decisions that span channels are managed both centrally and channel-specifically.

Merchants in each channel silo spend too much time — as much as 80% — performing basic tasks week after week, season after season. This overwhelms those with low-level tasks, preventing them from pursuing unique merchandising opportunities like providing lifestyle-focused promotions, upsells and cross-sells online.

The model must shift to a point where merchants can rely on a systematic underlying category-management-based approach that lets them deal with what’s new, what’s changed or should change, and what’s not working.

For example, within a category called “Outdoors,” the question across seasons is what’s in and what’s out for the coming period, without having to redo or change all the merchandising decisions.

Instead of starting with (at best) a copy of the last set of data, merchants will draw from a common repository and work with exceptions to the standard category structure. This way they can focus on the dynamic aspects of merchandising and marketing — cross-sells and other variants.

In a common repository of categories, persistent structures — say hats, mittens, gloves — provide leverage to the merchandising process by capturing relationships between products and the rules governing those relationships.

Retailers need to reinvent the merchandising process and leave the channel-captive model behind. By dynamically using channels in new and different ways, they can create fresh revenue streams, provide a better overall customer experience, and present strongly branded, satisfying encounters across all channels.

STAN DOLBERG is chief platform strategist for e-commerce software provider n2N Commerce, Cambridge, MA.

Why Bother?

Is a catalog a marketing channel or a marketing vehicle? And what does that mean, anyway?

Why should you consider a cross-channel merchandising strategy?

Here are two big reasons:

• With a new approach that embraces category management and not just product management, merchants can see the forest and the trees. They’ll get back time they can spend specifying products to channels, instead of manually setting products up in every channel for every season.

• Cross-channel dynamics will come clearly into focus, spawning the creativity and responsiveness to consumer demand that retailers must exercise in this environment.—
  SD