OmniChannel Retailing: If You Build It, They Will Shop
As previously published in CIO Journal from The Wall Street Journal:
CIOs in the retail sector may be required to fundamentally redesign their technology frameworks if they hope to support a growing number of new ways to shop.
In their relentless quest for bargains, consumers now deploy an arsenal of smartphones, mobile apps, social apps, tablets and other tools to research prices, redeem coupons and make purchases.
The full ecosystem of ways that retailers meet customer needs through any conceivable touchpoint is called OmniChannel, a much broader strategic approach to retailing than traditional e-commerce. OmniChannel puts the customer at the center of the universe and uses diverse technologies (mobile, social, local, etc.), flexible operating principles and fungible teams to drive business performance.
The bad news for CIOs is that it is nearly impossible to build effective OmniChannel support without first creating the technical infrastructure required to offer customers the services they want: the ability to review product information and compare prices, learn about and take advantage of promotions and purchase products. To deliver these basic OmniChannel services, retailers must design and implement a technical framework that is modular, flexible and scalable – a requirement that can be costly and time-consuming.
However, in the intensely competitive OmniChannel retail environment, CIOs have little choice: Implementing a service-oriented technical framework could be essential for success, if not survival.
Building a services framework
OmniChannel technical infrastructure should be designed with a simple service concept in mind – meeting customer demands quickly and consistently, at every touchpoint. So, for example, pricing and product information should be consistent regardless of whether it was accessed using an iPad app, a laptop or an Android phone.
To build a framework that delivers this kind of quality service at an ever-growing list of touchpoints, CIOs and their IT teams should:
Design a services architecture on top of a core commerce backbone. The core commerce backbone should be built to support existing and emerging requirements. Everything from the applications that display prices in different currencies, to the systems required to conduct business with both end-users and other businesses, must be supported by this framework. The services architecture will be designed on top of the commerce backbone and support customer, product, pricing, promotion, checkout and other services.
Build modular, reusable services. For the very reason that automobile manufacturers often use the same widget in multiple models, OmniChannel retailers can simplify their processes and reduce errors by standardizing interfaces across channels. So, for example, if a retailer delivers pricing information to customers in the same way across all touchpoints, that retailer only has to design one pricing interface, which can then be paired with touchpoint-specific applications to deliver a seamless experience. The idea is to avoid customization and promote reuse, whenever possible.
Create consistency across touchpoints. If a customer using a laptop sees a $25 price tag on a particular item, and the same customer using a tablet sees that same product for $19, the retailer is most likely accessing two different data sources to display pricing for the two different touchpoints. To avoid inconsistencies like this, all data appearing across channels must be derived from one master data set, also known as the “single source of truth.” This single-source design can not only reduce costs but can also help retailers avoid the risk of losing customers because of inconsistent information.
Invest in consolidated reporting and performance management technology. You cannot manage what you do not measure. One of the goals of any multiple touchpoint strategy is to calculate relevant metrics and KPIs across the OmniChannel. Of particular importance are cross-sell/up-sell conversions, pricing and promotion effectiveness, shopping basket analysis, etc. To make this possible, the data across multiple channels must be consolidated into a single repository that offers the ability to drill down, as necessary.
Invest in back-end infrastructure and consider the cloud. As a channel serves more and more customers, it taxes back-end infrastructure, like inventory management and warehouse management systems. Enhancing back-end infrastructure can help it scale to handle the extra load. As part of this enhancement, conduct internal tests to determine the peak load systems can handle. With this information, you can then create a plan for increasing capacity as traffic grows. The scalability issue can be overcome easily by hosting the back-end infrastructure in the cloud. Many cloud applications have a “scale-as-you-grow” setup that is ideal for environments that are constantly growing and changing.
Become more agile. If an electronics manufacturer releases a new version of its popular tablet, retailers must upgrade their apps within weeks to support this new touchpoint. The longer they take to release the new app, the more sales their companies can potentially lose. To move quickly, CIOs and their teams must be agile, which can mean releasing small, critical chunks of functionality sooner, rather than releasing larger, more comprehensive solutions later. There will be time to enhance these fixes later.
Over the next two years, major electronics manufacturers will release powerful new versions of popular tablets, smartphones and other products consumers now use to shop. Early adopters will likely have little patience for a retailer whose online presence does not support these products. To avoid this scenario and meet consumer expectations across all touchpoints, CIOs and their teams should act now to create a more service-oriented architecture that can support business innovation in a timely manner. With this scalable, flexible framework in place, OmniChannel retailers can be ready, at any moment, to meet ever-evolving consumer demands.
Deloitte Consulting LLP