Bricks and clicks of Multi-channel E-retailing

The domain of IT-enabled marketing is driven by hype and hope today within the breathtaking pace of technological progress. It has made possible the transformation of ‘marketplace’ to ‘marketspace’, thus bringing marketers and consumers ever closer, and giving customers greater control over their own destinies. Here one is attempting to make he situation a little more understandable in the domain of e-retailing.

We are living in interesting time of e-commerce, and in that within the new concept of

e-retailing. Changes in retailing services from bricks and mortar to an electronic medium that have to endow marketers in retailing with magical insights into the needs and processes of customers.

E-shopping is today taken for granted these days in the West, but there can still be problems. More so in India where e-retailing is still developing. E-retailing is quickly changing from a niche of herds to an essential for everyone – but it is still poor for impulse and emergency buying. You can get information in seconds, but not milk, medicines, and chocolates! Similarly you can get cinema or railway tickets delivered to your home, but still not a refrigerator or a car, or a PC! With the exception of may be

e-Bay on which even homes are sold to customers! It requires a chain of multi-channel activities. That is what needs to be understood better in the domain of e-retailing today.

Need recognition first

A potential e-customer’s buying decision process also follows the established stages of need recognition – information search, information evaluation, purchase, and post-purchase behaviour. Therefore, a new or even a repeat visitor (customer) to an e-site must be treated to a combination of the four basic marketing elements – price details, product details, promotion offers, and distribution (availability) in line with the product or service’s marketing strategy and customers own needs.

One has to collect detailed information on customer needs and response to improve rapport with online customers. Then tailoring the site content to the customer demand.

A positive application from the data collection may be inclusion of customer loyalty programmes that encourage return visits to the e-retailer site, and increase repeat purchases.

Improved technology and general access to the Internet have transformed user availability to customization of information volumes. An e-retail site thus has the facilities to make available large volumes of information in a customized format to meet the immediate and potential queries of victors to the site. From product related questions to online brochures to price comparisons, through an efficient search engine technology, as well as the e-retailers e- mail system.

In true life marketing situation, when seeking to evaluate the information on products and services, the potential shopper will often turn to experiences and advice of family, friends and persons who have experienced use of such items. E-retailing therefore also can  give the user added facilities to access experts and previous users to aid digestion and customization of all information. In this many consumer groups act as such reference experts making available findings to others. The e-retailer gains all this free information through the web and its own systems, that otherwise would normally require expensive and time-consuming market research.

Another feature to be noted is that after a visitor to an e-retailer site has determined the product or service for his needs, he puts the item or items in the online shopping cart (or trolley) for the ‘check out”. But often as it happens, leaves the site without buying! This “abandoned cart syndrome” is important for us to study and understand. There could be various reasons for this and often invisible, because the e-retailer cannot still duplicate the human interactions possible in a physical store setting. E-retailers attempt to reduce the incidence of online cart abandonment through improved and faster site navigation, better links and interactive facilities, supported with supply of precise information, help facilities and screen prompts. Also if possible, establishing chat and customer discussion opportunities, improved guarantees on delivery, and wherever required offline contact details too.

The key to a retailer’s survival and success whether online or offline is to generate repeat purchase. Customer confidence in terms of quality deliveries and complaint handling, or the failure of this often leads to customer disatisfaction and alienates the customers. E-retailers must reduce the chance of customer expectations being left unfulfilled, by making available more information than could be considered in a bricks and mortar environment – from information updates, promotional offers, right to payment and settlement issues.

Hybrid retailers of the future

Hybrid retailers, also referred to as “multichannel retailers” appear to be taking the greatest advantage of e-retailing opportunities today. Internet based sales in the US

are up by as much as 72 percent last year according to a survey undertaken there. This

is so because long standing bricks and mortar retailers are today looking at an Internet presence as a means to becoming e-retailers. They are adopting new electronic systems that complement their customer relations and their physical store presence. Sears in the US (www.sears.com)  for instance uses a system “buy online, pick up at the store,” wherein the customers place orders and pay for their purchase with a credit card, but departing from other web stores procedures, pick up the items from a local Sears store!

E-mail is used by the store to advise customers on availability and when the item is ready for collection.

Improved customer education, availability of information, and clearer legislations has given rise to a new type customer today. A part of the retailer response is to empower the customer to tailor their own service exchange in the physical store and online. Future stores will match their offerings to researched customer experiences – from items for inclusion, to loyalty schemes, to an electronic personal shopping assistant (EPSA). From preferences of products and services, to delivery, and to the mode of payment. This new store technology will thus improve reliability for both customers and retailers, and to guide customers through the store like a global positioning system (GPS) today directs a car through traffic.

With inventory and delivery problems representing the key elements in successful

e-retailing, product and service tracking will be one of the essential development area for the future. Like the bar code system which became a world standard in retailing from the early 50s. Now the bar code may soon give way to “stock speak” system – where the stock will speak-up and identify itself in the retailers electronic inventory management system, through a radio frequency identification system (RFID) tag (carrying  64 and 94 bits f information and a life of 10 years). In this direction, some brick retailers like Wal-Mart and Benetton in the US have already piloted RFID tags in their retail business and it is helping the stores in customer selection and replenishment of stocks faster. RFID tags when used on a large scale will benefit both retailers and consumers, and fulfill management and marketing objectives, including reduced retail theft, asset supply-chain control, inventory control and intelligent packing. The customers will benefit through faster checkout at payment point, security, tracking for selection of items, and for information or instructions for care and use of the product or service.

In-store interactivity

Multi-channel e-retailers are not restricted to just the physical sale of physical products and services in bricks and mortar establishments, but now also market through digital means that were previously limited to virtual retailers. For instance, the present day interactive kiosks for banking and financial services, reservation of tickets for travel and entertainment events, personalized promotions, customer loyalty programmes, human resource services (like recruitment) and many more activities.

Even payments (check outs) for products and services today are facilitated and improved in flexibility through credit cards and e-technology. To make payment by credit card necessitates the retailer obtaining a payment authorization from a clearance centre and validating of customer identity, signature and PIN. Now with the customers carrying their own mobile technology in the form of cellular phones, palm tops and wireless laptops, (m-shopping as it is called), there is an opportunity for the customers to effectively contribute to the transaction verification process. The application of these devices of payment is widening and becoming more and more popular today. Another development within all this is the ‘pay-as-you-go’ system which enables customers to access credit at e-shops.

Data mining a resource of e-retailing

This is what Bill Gate’s book “Business @ Speed of Thought” speaks about. One main resource of e-retailing is data mining – the information extracting activity that probes patterns and correlations in given collections of data. Data mining in e-retailing helps making connections through associations, sequences, forecasting and clustering in a new way. Data mining is not a simple thing, and e-retailers have not yet actively mined their data, though nearly all have plans to do so. Typical e-retailing applications of data mining include market segmentation, customer profiling, fraud detection, evaluation of retail promotions, and credit risk analysis.

The future of e-retailing is most encouraging. But the format can be uncertain depending on the retail situations and the products or services being offered or marketed. The success and profitability will revolve around the fact that when the retailer knows the customer, the customer will continue to know the retailer, and that translates into repeat sales and profits. The success factor lies in adopting the appropriate technology to meet the needs of the customers in guiding best practices in multi-channel e-retailing.