Retail success depends on cross-channel selling
By Bela Lainck and Dominik Brokelmann
Whether they’re walking down the street, playing around on smartphones or working from desktop PCs, when consumers start their product hunting mission, retailers need to be front and centre. It’s no mean feat to be all things to all people in all places. But ‘always-on’ availability is the hallmark of cross-channel selling, and it’s key to survival in the modern retailing world.
Against the backdrop of this relentless selling cycle, it’s no secret consumers are continuing to embrace e-commerce and online shopping in mind-blowing numbers. Without exception, most research points to a growing global e-commerce juggernaut.
Amazon’s winning combination of user experience and product range availability, all at the right price, is proving a formidable market force. Where once it was just small independent retailers feeling the heat, today, large multinational retail chains are continuing to struggle with adaption strategies against maturing digital disruptor players.
While moving to a cross-channel sales approach may be the obvious solution for bricks and mortar retailers, the challenge to make it happen and successfully compete as a new online entrant is phenomenal.
For us, the key question is: how can businesses possibly match the Amazon model on user experience, price and product range, not to mention the backend IP and IT capabilities holding it all together? Well honestly – we don’t think business can do it in isolation anymore.
Many retailers may only sell 5 per cent online at the moment, but are aiming to lift that figure up to 25-30 per cent of total sales. How can businesses hit such aspirational targets? We’re starting to see some very interesting ‘share economy’ concepts flowing into retail and we think these ideas will be the linchpin of successful cross channel selling.
All manner of global retailing businesses are rapidly adapting to cross-channel approaches. In Australia, we’re seeing the establishment of a retail presence for Etsy, the online doyenne of craft. In Asia, we’re noting retail supermarket chains moving into online kiosk spaces in high-traffic utility zones like train stations. And in the US, the decline in foot traffic is birthing the movement of profit per square foot metrics in the bricks and mortar domain.
Even a market leader like Amazon isn’t standing still. It’s establishing micro-warehousing in high-density locations like New York, and abandoning expensive courier contracts for share-ride services to deliver on product fulfilment needs.
So what lessons can aspiring e-commerce retailers and operators apply to make the successful transition to cross-channel selling? We think there are two particularly interesting opportunities that retailers moving online should focus on.
Share the load
A small player starting its own online store has no chance of competing with larger established players. Being little and late to the party, your online brand simply won’t come up in any Google search results, so you’ll have to pay top dollar for SEM visibility. Collaboration is a vital area for retailers moving online to explore. So whether you’re a small dealer or a large operator, consider the benefit of a collective effort, versus going it alone. Can you formulate some strategic partnerships and win by sharing the load?
Simplicity trumps complexity
The next massive opportunity area is shifting stock control to a shared virtual inventory approach. The virtual inventory has been around as a concept for 20 years or more. It struggled to gain traction because few operators found ways of tackling the complexities of legacy IT systems (think ERP and PoS), curating a huge product range and dynamic pricing.
Try to imagine this scenario: a customer comes into your store only to find the item they want isn’t in stock. But the virtual inventory shows the item’s only two streets away at another store. “There’s no need to walk over there,” you tell the customer, “we’ll get it uber’ed over to you in the next hour.” Although still in the trial phase, this kind of retailing utopia really is in sight. Think about simple methods for integrating a virtual inventory, rather than coming up with a large-scale intricate solution that’s too complicated to succeed in the short to mid term.
As we recently explained, the most successful retailers of the future will encourage consumers to browse their “virtual inventory” via an in-store online catalogue, and place their order in-store as well. This gives retailers a huge product offering without having to keep items in stock. Consumers are satisfied by the wide choice and retailers mitigate their inventory risk.
Bela Lainck is the president of global services at Brightstar
Dominik Brokelmann is the founder and CEO of Brodos AG