By Elizabeth Millard E-Commerce Times
08/19/02 4:15 PM PT
Companies that initially set up an e-commerce initiative as a separate company have seen
the error of their ways and have restructured to promote integration.
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With consumer confidence beginning to ebb, brick-and-mortar stores are
implementing new strategies designed to lure consumers across their
thresholds. But for retailers trying to balance an actual store with an
online presence, the challenges of attracting customers seem even fiercer.
Such retailers must compete not only with each other, but also with
their own online arms. Therefore, they must employ an array of tactics
to prevent cannibalization.
Although many brick-and-click companies
strive to find the middle ground, some definitely do it better than others, and
according to a few analysts, some need not do it at all.
A Nonissue?
Fortunately, since e-tailers have been trying to combine offline and online efforts for
a few years now, they seem to have learned some important lessons.
Paul Ritter, program manager of Internet business strategies at the
Yankee Group, told the E-Commerce Times,
"The balancing act of managing online sales initiatives in a way that won't cannibalize
brick-and-mortar sales has become much less of an issue in the past 12 months."
This has occurred for two reasons, according to Ritter. First, companies that
initially set up an e-commerce initiative as a separate company have seen
the error of their ways and have restructured to promote
integration.
In addition, Ritter said, "There is now a much greater awareness of synergy that can be
harnessed from operating a completely seamless multichannel selling
operation, where the positioning, branding , marketing and
incentive structures are similar across all channels."
Different Aims, Same Group
Although an integrated marketing effort can boost sales in both online and
in-store channels, e-tailers are finding that shoppers approach each channel
differently.
"A number of retailers have been successful identifying the specific
categories and subcategories, even the SKUs, that consumers want to buy
online versus offline," Boston Consulting
Group manager Simon Stephenson
told the E-Commerce Times.
For example, he said, most consumers prefer to buy clothes in a brick-and-mortar
store, where the ability to feel and try on merchandise is important. However,
those same consumers will happily buy replacement shoes or staples like
socks and underwear online.
One e-tailer found that a particular type of boot sold very well online long
after it had been rotated out of the store, so the item was featured heavily
online but was not restocked in the store.
"Part of the recipe for success is constant trial of
different categories or assortments, and systematic testing of results to
see what really works," Stephenson noted.
Mixing It Up
Taking advantage of multiple channels, rather than viewing them as
competitive with each other, is another tactic that has helped many
e-tailers achieve success.
In particular, allowing online shoppers to return items to a
brick-and-mortar store has proven to be a popular option. Customers also
seem to appreciate online promotions that offer a discount that can be redeemed
at store cash registers.
"Retailers that are successful at multichannel retail are deploying online
features that address the primary reasons shoppers move from Web site to the
store," Jim Crawford, an analyst at
Forrester Research, told the
E-Commerce Times. "Those [include] wanting to see the product or talk to a salesperson,
needing the product right away, or not wanting to pay shipping costs."
Crawford added that the practice of allowing online shoppers to research a
product, such as an appliance, then pick up the item in a store has been
very successful.
Star Examples
As in any business, some companies acquit themselves better than others.
Ritter cited Lands' End (NYSE: LE) , Eddie Bauer,
Best Buy (NYSE: BBY) , Circuit
City (NYSE: CC) , The Sharper
Image (Nasdaq: SHRP) and J.C. Penney as shining examples of retailers that
present a unified and cohesive image to customers, regardless of the channel in
which people shop.
"Each of these firms does an excellent job of capturing the synergies among
all their sales channels," Ritter noted.
In doing so, he added, they drive down customer acquisition costs, improve
customer retention rates, and
increase the amount of revenue received from shoppers
who buy through multiple channels.
"Making improvements on those three critical metrics is what
every retailer strives for, but [it] ends up keeping the majority of them up
at night," he said.