The challenges of internet retailing
By Leslie Belcher, President, Jesta I.S. Inc.
At the dawn of e-commerce, retailers were skeptical about the potential to grow sales via the web. Today, however, by integrating e-commerce into their business models, retailers are realizing the Internet’s positive contribution to overall sales. For many retailers, e-commerce has become the gateway into previously inaccessible markets. However, entering this new world of opportunity comes with some strings attached: the Customer is a significantly more sophisticated shopper; inventory fulfillment needs to be optimized; and existing stores must be part of the e-Commerce strategy. It is not enough for retailers to be Multi-Channel capable. Retailers must be seamlessly ‘Cross Channel’ as well.
Customers that shop in the bricks and mortar stores are also passing through the gates of e-commerce and are becoming better informed about the products they wish to purchase. According to eMarketer.com, 70% of online shoppers are making their purchase decisions based on product/service reviews, ratings, and/or advice from friends or family. Only 3% indicated they would rather have advice from sales people.[1]
While consumers appear to benefit from the competition in the market, they have also been impacted by the economic downturn. Each purchase takes on more meaning as consumers cut back on discretionary spending. They are becoming much more informed, willing to actively research products and the companies that sell them.. The Internet has been critical in giving consumers access to other consumers – allowing them to share a wide variety of information and opinions. As they become more informed they become more demanding; consumers now expect a particular level of not only quality, but social responsibility.
At the end of the day, consumers call the shots. Their spending may be slowing but their product/service expectations are on the rise; they want to be able to buy anywhere, ship anywhere, and return anywhere, and still retain the ability to shop online or in-store.
While it would be reasonable to conclude that consumers’ expectations for uniformity make perfect sense, the reality for retailers is very different. Shoppers often receive inconsistent messages from their experiences of buying online and in-store. It is critical that retailers integrate e-commerce into their business models in order to assure their systems are able to uniformly identify their products, promotions, and customer base. As a result we’ve seen the advent of business intelligence tools as companies actively gather as much information as possible about their products and customers.
Internet retailing requires availability of both internet technology and distance payment methods. In their most basic form, multi-channel retailers are using disparate systems, run by separate organizations (and importantly, separate inventories) for each channel. While each unit may be profitable, finding and harnessing synergies to enhance that profitability throughout multiple channels remains elusive. As a result, each channel is effectively run as a separate business, sharing only a common brand logo.
With regard to manufacturing and production, retailers could face logistical complications, government regulations and communication barriers. Moreover, retailers with stores are forced to maintain a balancing act between lean inventory and production capacity. If they are too aggressive they can lose sales by having too few products in stock, however if they attempt to maximize capacity they increase their chances of being overstocked. Web retailers often avoid this problem by using a drop-shipping model (products are delivered to customers directly from the manufacturer).
Sharing sales, inventory, and customer data is perhaps the most critical first step to achieving the benefits of multi-channel retailing. Even if systems are not yet fully integrated, decision makers, from customer service representatives all the way up to the C-level executives will be more informed.
As noted, business intelligence tools are critical in providing decision makers with accurate real time and consolidated information. Adopting a single integrated ERP platform that can manage all channels with the same toolset has many benefits. All initiatives are analyzed and managed together. Inventory visibility is complete and can be shared with the customer and supplier alike in near real time. Customers can easily check in-store availability or the status of an order on-line. Stores can expand their capabilities by presenting various options to customers when confronted with a stock-out such as reserving an incoming unit, sending the customer to a nearby store, or placing an order.
It is critical that management consider shaping their organizations to encourage the success of the brand, not the channel. Brick and mortar retailers have traditionally fostered a sense of friendly competition amongst stores, districts, and regions. However since each was driven to achieve its own goals for their given geography, cannibalization was not an issue.
The boundaries separating brick and mortar from e-commerce retailers are becoming blurry; both types are in search of new markets and consumers. As a result, competition has increased and consumers now expect store-based prices and promotions to match those found online and vice versa. For many consumers, shopping on the web is equivalent of yesterdays “window shopper”.
Very few small to medium sized retailers have bridged the chasm between multi-channel retailing and cross-channel brand management; they have successfully transformed their organizations to give customers what they want, when and where they want it, and benefit from streamlined, efficient management, and greater inventory flexibility. Ultimately, these retailers will be outperforming their peers.
Transitioning from a single channel retailer, to varied levels of multi-channel integration, to the ultimate in cross-channel optimization, one thing has remained constant: the customer. The truly customer-centric retailer has always understood this, and has built up the technical capabilities as quickly as budgets have allowed. Opening up new channels has opened up a new customer base. Integrated reporting has allowed marketers to better target the increasing client base, resulting in higher margins. Those new profits can help fund an integrated system that leverages an inventory investment that can dramatically increase returns and decrease stock-outs. Finally, an integrated cross-channel ERP strategy/system unites the business, reduces costs and optimizes forecasts and execution. All aimed at giving customers what they already expect: anything, anywhere, anytime.
About Jesta I.S. Inc.
Jesta I.S. is a leading supplier of business solutions in supply chain management systems for manufacturers, distributors and retailers primarily in the soft goods and specialty industries worldwide. Jesta I.S. is recognized for its expertise, innovative products and services and its commitment to evolving business solutions in today’s rapidly changing business world. Jesta I.S.’ solutions process essential business management information for well known industry leaders including Perry Ellis International (NASDAQ: PERY), Puma (German: PUM), Genesco Inc. (NYSE: GCO), Town Shoes Limited, Cole Haan, Haggar Clothing Co., Cavender’s Boot City and DSW Inc. (NYSE: DSW) as well as many others.
Jesta I.S. Inc.
P: 1-888-925-5152
Email: info@jestais.com
Web: www.jestais.com
Copyright (2010) Jesta I.S. Inc. ALL RIGHTS RESERVED. All information contained in this document is the property of Jesta I.S. Inc. Vision E-DOM is a trademark of Jesta I.S. Inc. All other company and product names are trademarks or service marks of their respective owners.
[1]“ E-commerce in a recession”,p.6 www.eMarketer.com,
Transforming Retail from Bricks to Clicks
Transforming retail from bricks to clicks
By Leslie Belcher, President, Jesta I.S. Inc.
The economic downturn has created a challenging environment for retailers as the concentration of consumer spending has had a direct effect on overall retailing. Individuals are looking more closely at their discretionary spending and are cutting back most on non-essential products while performing more active price comparison. Today, internet retailing enables consumers to compare prices, save money and limit their delivery costs.
The traditional brick-and-mortar retailers built their IT infrastructure in a piecemeal fashion using legacy merchandising and planning systems to support their growing business (although now it is becoming more expensive to sustain). In the 1990’s, the catalog/call-centre system was introduced to manage that sales channel. Presently, various new web-based e-commerce platforms are helping to grow the business by effectively tying together processes and procedures for the internet channel, with systems that help ensure service excellence by giving the customer the opportunity to buy anything, anywhere, anytime.
Internet retailing is expected to outpace all store-based formats, as most retailers will either enter or expand in the internet retailing channel, while a significantly higher proportion of the world population will have access to the internet. [1]
By the end of 2010, non-store sales will account for nearly 7% of global retailing. Virtual retailers, which initially dominated internet retailing, are coming under pressure from store-based retailers, as they harness the benefits of multi-channel retail, such as collect-in-store options, driving sales and improving the customer’s experience by eliminating common obstacles surrounding order delivery.[2]
The conventional retailing business model is no longer working as it was. Retailers are seeking to transform themselves into multichannel enterprises that will use new channels to grow and to cut service costs without abandoning their traditional strengths; however the systems that worked once to manage brick-and-mortar, catalog and call center channels are not designed to support the complexity of the e-channel operations. While it is typically not feasible to instantaneously change a promotion or a marketing message within the brick-and-mortar store, the same is not true of a transactional e-commerce site which will often provided up to date information at the click of a button.
The virtual channel is expected to put increasing pressure on store-based retailing in the coming years. If retailers remain stagnant they risk alienating their evolving customer base who are in turn becoming accustomed to enhanced services such as order tracking, customer service and online account management, thus increasing operational expenses, leaving them out of the competition and out of their customers’ scope.
In order to be a successful multichannel enterprise, retailers should follow a four-stage process: Create a multichannel strategy; Determine the relative positioning and priority for the channels; Organize for multichannel operation; and adopt best practices for integrating the traditional and virtual business.[3] Their competitive advantage will rely on how they control their multichannel operations. It is essential to ensure the right offering when expanding via online channels. Moreover companies need to have the capability to capture accurate demographic information about their online customer base in order to meet their expectations and be consistent through the channels. To do this, retailers must have the right systems in place to collect such information therefore improving their customer relationship management and service excellence/delivery capabilities.
Finally, the technology associated with e-commerce systems will support a wide range of retail applications offering the ability to improve product supply, enhance service and/or reach otherwise inaccessible markets. Providing real-time data and allowing customers to access to inventory information is crucial for internet retailing operations because is directly related to the effective execution of customer relationship management practices.
Jesta I.S. Inc.
P: 1-888-925-5152
Email: info@jestais.com
Web: www.jestais.com
Copyright (2010) Jesta I.S. Inc. ALL RIGHTS RESERVED. All information contained in this document is the property of Jesta I.S. Inc.
[1] Source: Global Retailing: Expansion Strategies of the World’s Leading Retailers – Euromonitor International, July 2009. P 31
[2] Retailing: New Concepts in Retailing-The thin line between Success and Failure – Euromonitor International July 2009,p.22
[3] Multichannel Retailing: Bringing the New Into the Old. David Flint, Geri Spieler, July 2001.
Perry Ellis Europe Completes the Roll-out of Jesta I.S.’ Vision Sourcing and Demand Management in Parallel with an Enterprise-wide Upgrade
Filed under: Press Releases, Supply Chain Management, Wholesale
Perry Ellis Europe Completes the Roll-out of Jesta I.S.’ Vision Sourcing and Demand Management in Parallel with an Enterprise-wide Upgrade
Perry Ellis International Unifies its Global ERP Solution
Jesta I.S. a leading supplier of business solutions for the soft goods and specialty markets, announced today that Perry Ellis International (NASDAQ:PERY) has completed a company-wide upgrade of its ERP to version 10 of Jesta I.S.’ Sourcing and Demand Management, and the implementation of Jesta I.S.’ Vision Sourcing and Demand Management ERP for its European Division, Perry Ellis Europe.
Perry Ellis Europe is a wholly owned subsidiary of Perry Ellis International based at Witham, Essex, in the United Kingdom. Perry Ellis Europe is primarily known for its vintage Farrah brand, the #1 selling branded bottom in the U.K., and for the successful expansion of Original Penguin in Europe. After the roll-out of Vision Sourcing and Demand Management, Perry Ellis International fully integrated this platform into the overall organization, increasing its visibility into Perry Ellis Europe’s operations and enabling the brands to better coordinate resources and operate more efficiently.
“With the successful addition of our European division to the Vision ERP system, Perry Ellis International will better detect and address new opportunities in European niches, increasing our reach and ability to cross sell our brands into new markets, and further solidifying our relationships with retailers across the U.K. and continental Europe,” stated Luis Paez, CIO for Perry Ellis International.
The global upgrade allows Perry Ellis International to ensure consistency across the enterprise by fully integrating operations globally onto a single platform. Business intelligence is also greatly improved, with reports automatically delivering pertinent information to any person in any location.
“In addition to the merger of our European Operations, the enterprise-wide upgrade of Vision Sourcing and Demand Management was performed to take advantage of enhanced EDI capabilities, WIP, moving average cost tracking, and various task and process scheduling including allocation management,” added Filiz Yavuz, VP Business Process Engineering for Perry Ellis International. Read more
Jesta I.S. Announces the Signing of Taryn Rose International
Taryn Rose International Sees Enterprise System as a Key Differentiator
Luxury footwear firm to implement Jesta I.S.’ Vision Suite of Solutions
New York, NY, June 25, 2009 – Jesta I.S. a leading supplier of business solutions for the soft goods and specialty markets announced today that a leading luxury fashion footwear brand, Taryn Rose International, has selected the Vision Suite of solutions as its new enterprise platform. The suite of Vision products provides Taryn Rose International with an end-to-end enterprise solution which includes; Vision Sourcing and Demand Management, Vision Financials, Vision Merchandising, Vision Planning and Vision Store.
Taryn Rose International’s management team identified business systems as a key driver in their goal to strengthen brand awareness and increase market share. “Understanding the competitive advantages gained from the right business system, our team recognized Jesta I.S. as an important vendor in our industry that was able to demonstrate its strength in both wholesale and retail,” stated Bob Meers, Chief Executive Officer for Taryn Rose International.
The Vision Suite will enable Taryn Rose to execute their strategy while optimizing business operations with an integrated solution, increasing its visibility into critical business processes from concept to check-out.
Leslie Belcher, President of Jesta I.S. added, “The Vision Suite has been designed to meet the needs of organizations like Taryn Rose International. Offering a single source, modular solution, for both retail and wholesale, makes the suite more appealing for today’s self-sourcing retailer. Jesta believes that the breadth of our solutions enable organizations to reduce total cost of ownership and benefit from a single IT partner. Our goal is to continue to evolve with the market demands and work with forward thinking organizations like Taryn Rose International.”
“Taryn Rose International prides itself on its ability to seek out new technologies and breakthroughs in areas of design, marketing, manufacturing methods, and branding strategies. With the Jesta I.S. team on our side, we are confident that our business is in good hands. Their team is very experienced and knowledgeable in the footwear market, both retail and wholesale which was a critical part of the decision to partner with Jesta I.S,” stated Mr. Meers. Read more
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