Posts Tagged ‘GSI Commerce’

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Multichannel Retailing: A Source of Competitive Advantage

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During the 2009 holiday season, ForeSee Results measured customer satisfaction on 40 major retail Websites. When results were analyzed by business model, pure plays had an aggregate customer satisfaction score of 81 on a 100-point scale, while store-based retailers had an aggregate score of 77. Heading the top 40 list were two pure plays, Amazon (87) and Netflix (86). Trailing them were well recognized store-based retailers, including Wal-Mart (79), Target (78) and Best Buy (77).

ForeSee Results summarized, saying “in general, Websites for multichannel retailers significantly underperform Internet pure plays, which makes sense since they have more channels to divert corporate attention and focus.”

From this explanation, it sounds as if multichannel retailers are expected to deliver a poorer shopping experience. But this shouldn’t be the case. Multichannel retailers have the potential to create a highly satisfying cross-channel shopping experience by tying together the best attributes that stores and e-commerce have to offer.

In a November 2009 interview with me [the full version of which is here], Fiona Dias, an executive vice president of partner strategy and marketing at GSI Commerce, which runs the Websites of large retailers, admonished multichannel retailers for being slow to use their inherent strengths to prevent Amazon and other pure plays from taking market share. Here is a passage from that interview:

Shame on us. As a retail community, we have allowed Amazon to grow to be a $22 billion company. We have allowed it to happen because we haven’t leveraged our biggest assets, which are our stores and our people. We have things that Amazon doesn’t have.

A weapon against Amazon is multichannel because consumers love being able to get their product immediately. They love being able to touch, feel and see it. They love being able to return it easily to stores. There are a lot of things that consumers love about the multichannel experience. For the retailers that have done it, it’s paid off big time for them.

For the retailers who are asleep and ignoring this, they’re basically saying to Amazon, “Please take our business because we’re not going to leverage our assets and you’re welcome to steal our customers.”

I guess the overall point I would make is multichannel is not a nice thing to do if you have some spare time. Multichannel is a necessity to be able to defend against Amazon and the other Internet pure plays.

There were signs this past holiday season that some big retail chains were beginning to fight back. Walmart.com launched a limited online price war with Amazon in mid-October. Later, Raul Vazquez, Walmart.com’s CEO and chief executive, declared, according to The New York Times, that “it was only a matter of time” before it dominated Web shopping. Meanwhile, a number of traditional retailers, including Wal-Mart, J.C. Penney and Best Buy, offered Black Friday promotions online to attract the growing number of consumers who preferred to shop on the Internet rather than in stores.

Understandably, store-based retailers want to increase their online sales, but their top priority is to use their Websites to drive customers to their stores. That is why at the end of the day Wal-Mart and other store-based retailers will derive the greatest competitive advantage from developing tighter multichannel expertise that empower shoppers (e.g., by offering buy online, pick up in-store) and increase their own operational effectiveness (by leveraging the product information on their Websites across their other channels).

Posted: January 14, 2010. Filed under: Consumers & E-Commerce,Interviews  
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Retailers Deck The Halls and Shopping Channels

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Founded in 1999, GSI Commerce works with over 80 pure-play and multichannel retailers, including Toys “R” Us and RadioShack, as well as brands, including Ralph Lauren and Timberland. Clients look to GSI to implement strategies for customer acquisition to Web stores. We spoke with Jeff McCall, who leads the strategy services group at GSI, about how retailers are approaching the 2009 holiday season. A taste:

eMarketer: Where have retailers invested in their Websites, and where have they cut costs in preparation for the holiday season?

Mr. McCall: Retailers have spent time this year over the past few months making the shopping experience easier and better. Some have invested in usability studies, so they can remove some of the roadblocks that are keeping people from buying. It makes it a better customer experience, and it also raises the ROI on the marketing dollars that drove that traffic there, so we could argue that’s a cost savings.

The other place people invest that always seems to pay off is online gift centers. Retailers are anticipating what customers’ needs are and make some great suggestions, adding in customer reviews. It builds a community. Finally, we’ll see a push for gift cards and gift certificates for when customers can’t find the perfect gift or it’s late in the buying season.

eMarketer: Do you see differences in Website priorities for Web-only retailers versus the multichannel retailers?

Mr. McCall: Web-only retailers will do a lot of things we just talked about. Brick-and-mortar retailers have finally embraced the idea of tools such as associate ordering systems, where an associate can order an item not in the physical store from the online channel and ship it directly to the consumer. We’ve seen clients have great results with doing that. The same goes with in-store pickup. This has been around for a decade, but retailers have been slow to really embrace it, because there are challenges.

While we’ve seen divisions before between online and offline channels, I think a lot of those silos are breaking down. Customers are signing up for e-mail marketing in stores. Multichannel retailers are finally realizing that’s a good thing for both sides of the business.

eMarketer: How can small online retailers compete against large retailers such as Wal-Mart and Amazon during the holiday season?

Mr. McCall: The couple things I’d recommend to the smaller retailers would be first, make sure the site experience is everything it can possibly be, really fine-tune it to make it as compelling as possible.

No. 2 is to make sure that when you do get someone to come to your site and either sign up for e-mail or make a purchase, do everything you can to create that cycle of re-engagement with that consumer and bring them back again. Three or four years ago, retailers would throw lots of money into bringing consumers to their sites, but they didn’t worry about them after that. Now there’s a big shift, especially over the last year. Retailers know how much of their sales come from repeat customers. Make sure you’re locking those customers in and becoming their go-to source for whatever it is they’re shopping for.

The full version of this interview is available here, to eMarketer Total Access subscribers only. Every day they have access to new interviews with digital marketing leaders and trendsetting entrepreneurs.

Posted: October 30, 2009. Filed under: Case Studies,Consumers & E-Commerce,Interviews,ROI,The Economy  
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