Aberdeen Report: True Multichannel Sales Desirable but Rare

The analyst report says nearsighted corporate vision and outdated business models are to blame for e-commerce difficulties.

Although it is almost universally accepted that a truly integrated multichannel retail approach is the ideal, few retailers have been able to get anywhere close, reports a recent Aberdeen Group research report.

The report cites quite a few roadblocks, ranging from corporate attitudes and fears to difficult technology integration problems such as consistent order and inventory management processes and delivering a single view of customer history.

This internal problems run against todays typical purchasing consumer who insists on faster responses and stores that leverage—instead of being ignorant about—a consumers online efforts.

"Most enterprises attempt to deliver these services to the outside world while operating behind walls of channel-specific sales and fulfillment organizations," the report said. "Without a rationalized cross-channel internal structure, companies struggle to find creative ways to collaborate more effectively internally in order to make organizational stovepipes invisible to the customer and keep up with rapidly evolving purchasing behaviors."

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Paula Rosenblum, one of the authors of the report, said there is an easy remedy for retailers who are ready and willing to embrace the concept of multichannel: compensation incentives.

Senior executives can talk about customer-centric business models and that departments should cooperate with other departments, but what most managers look to when trying to figure out their true marching orders are their bonus plans. If store managers are incentivized solely on sales made in certain brick-and-mortar locations and not on online sales, they are almost certainly going to push sales in that direction, Rosenblum said.

"People always do what they are incented on," said Rosenblum, the Aberdeen director of retail research. "You need to structure yourself as a brand, not a bunch of channels."

The multichannel concept acknowledges that both offline and online have their own strengths and weaknesses and that a well-thought-out combination of the two is the retailers best option. But its not easy and its going to require breaking up a lot of time-honored divisions. About 25 percent of the retailers interviewed say brick-and-mortars still fear that online operations will cannibalize their sales, according to the report.

"Some organizations view the need to provide multichannel sales and service as yet another burden to shoulder with unclear impact on operating margins and corporate profits," the report said. "This vision is shortsighted."

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Another key finding is at the core of one of the retail IT challenges: that many retailers either did not know or were unable to measure the profitability of their multichannel customers. Aberdeen labeled that level of sales lack-of-awareness "somewhat disturbing."

"A companys inability to measure profitability of these customers should be a red flag to any senior executive and call the enterprises multichannel strategy into question," the report said.

Aberdeen encouraged retailers to invest more heavily in IT so that innovations deployed by online operations can yield information that can be shared by the rest of the company. The survey and the analysis suggested and that most multichannel retailers technology investment priorities include integrated order management systems, Web content management, multichannel catalog syndication, guided selling, and integrated search and natural language processing.

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