The Convergence Question

By Bill Spaide

Need a seamless interface from e-commerce through order management to physical fulfillment? Here's how to get it.

Online retail sales continue their year-over-year surge. Web consumers' expectations for the range of services and ease of online shopping also are increasing. As a result, Web and fulfillment technology solutions available to direct commerce marketers have undergone several changes during the last few years.

What's been happening, why, and how can you take advantage of these noted trends to improve your multichannel sales and customer service efforts? In this article, I'll look at how converged software solutions are impacting multichannel operations.

From Disparate to Converged Solutions

Once there were only fragmented technology solutions with separate Web store and order management system (OMS) applications that were, at best, loosely integrated with daily batch interfaces. Or worse, they weren't integrated at all: Web orders had to be manually re-entered into a back-end OMS.

But in recent months, those involved in the software and services marketplace that supports the direct commerce industry have been busily evolving the sophistication of their technology and range of functionality. Specifically, they've begun to converge the Web, retail and fulfillment technology offerings available to you.

Today, you can find tightly integrated e-commerce, OMS and distribution-related solutions. For the most part, these solutions are the result of Web developers, software suppliers and third-party fulfillment organizations partnering to provide a bundled, best-in-breed, Web-to-warehouse, outsourced offering. Previously, your only option was to establish separate relationships with each of the suppliers, a process that often required you to manage the implementation, integration and ongoing operations of multiple service organizations that provide essential support. The new bundled arrangement affords you a fundamentally simpler and more seamless approach to managing e-commerce operations.

At the same time, responding to multichannel marketers' demands, several direct commerce software suppliers have established relationships with leading retail technology companies. As a result, they've been able to extend their application offerings beyond the direct channel and into multichannel solutions that support traditional brick-and-mortar retailers.

A tighter Web-to-store integration is the linchpin for cross-channel consistency and expert customer management. As a multichannel marketer, no doubt your goal is to provide a seamless shopping experience for your customers. Your need to synchronize both information and customer service across sales channels is essential to that enjoyable shopping experience.

To boost customer loyalty and maximize revenue, you must be able to optimize and integrate multiple customer touchpoints, including e-commerce, opt-in e-mail marketing, direct mail catalogs, in-store sales associates, gift registries, point-of-sale messaging, loyalty programs and other marketing campaigns.

Finally and most importantly, you need the ability to deliver on the promise of these marketing interactions. Web, catalog and store operations must ensure cost-effective, on-time delivery of sales orders generated by these customer interactions through fully integrated back-end solutions, including order processing, inventory management, physical fulfillment and warehousing. Not only must these applications handle traditional direct commerce fulfillment activities, but they also must be able to support customer in-store pickup and Web order returns. This, in turn, requires your OMS to have visibility into each store's inventory.

Recent Software Company Mergers

Following are two recent examples of partnering between leading direct commerce software organizations with their Web and retail counterparts. Last May, Ecometry Corp., a Delray Beach, Fla.-based direct commerce OMS software supplier, merged with Blue Martini Software, developer of a well-known e-commerce platform along with other retail sales optimization applications. The opportunity for these two technology organizations to jointly develop enhanced integration points, in particular between the Blue Martini Web engine and the Ecometry OMS applications, along with complementary functionality across two product lines, should make the combined offering stronger than that of the individual parts.

John Marrah, Ecometry's president and CEO, commenting on the benefits of tightly integrated end-to-end solutions, notes: "More than 80 percent of IT implementations are late, over-budget and under-featured because of the hidden challenges that lie in the discrepancies in business logic and data between cobbled-together, disparate systems."

Ecometry's Blue Martini software suite modules include relationship marketing, catalog and content management, e-commerce, contact center, guided selling, and business intelligence and reporting. As of December, multichannel merchants such as Nordstrom, Saks Fifth Avenue, Ross-Simons and Levenger are using the Blue Martini software to build customer relationships and optimize revenue, according to Ecometry.

Then in February, Commercial-Ware, another leading direct commerce systems provider best known for its order management, fulfillment, customer service, collaboration and analytics applications, was acquired by Datavantage Corp., a subsidiary of MICROS Systems, a leading provider of retail technology for the specialty and general merchandise retail industry. Although CommercialWare does not market a Web platform technology, it does have a powerful direct commerce management system, allowing Datavantage to extend its applications into the direct-to-customer channel and round out its retail solution with cross-channel offerings.

Jane Cannon, CommercialWare's chief operating officer, addressing the need of software suppliers to tailor their solutions to a changing marketplace, says: "As merchants are expanding their growth mix to include additional media — whether it be Web sites, marketplaces, retail stores or direct response TV — they're looking to simplify their infrastructure with fewer vendors who can offer a broader suite of integrated solutions. These dynamics are driving software vendors to align and bring complementary and integrated solutions that take the headache of integration away from merchants, in order to deliver real-time inventory, customer and channel management across the merchants' enterprise."

A slightly different approach to this end-to-end solution is the utilization of a third-party fulfillment service. Although this alternative doesn't typically include either Web- or retail-based software capabilities, it does give you a fulfillment outsourcing opportunity that's tightly integrated into your Web solution. As an example, FillTek, a fulfillment service provider that operates a fully integrated customer contact, fulfillment and outsourcing center in Cincinnati, expanded its traditional fulfillment-related services by establishing an integrated Web-to-warehouse solution through strategic partnerships with leading Web technology organizations. In this approach, FillTek's clients not only can access the company's OMS in an application service provider model as part of an overall e-commerce systems solution, they also can avail themselves of all or some of FillTek's product fulfillment services.

Web Technology Providers

Generally speaking, Web technology companies are in the business of designing, building, implementing, maintaining and hosting Web sites. Recently, however, several extended their service offerings to include outsourcing direct commerce OMS applications and fulfillment operations capabilities.

One of the first Web service providers to offer an end-to-end solution combining e-commerce-related technologies, services and processes with direct commerce physical fulfillment and customer service operations and systems was GSI Commerce, a leading provider of outsourced e-commerce services in King of Prussia, Pa. Based on their business requirements, GSI customers can integrate their existing internal fulfillment and customer care infrastructure with GSI's e-commerce services. Or they can utilize GSI's fulfillment operations and systems infrastructure that are tightly integrated into its Web platform.

Few other companies offer a Web-to-warehouse solution under one roof. But recently several Web technology service organizations established alliances with the previously mentioned direct commerce software and fulfillment providers to offer end-to-end e-commerce solutions. An alliance of this type allows a Web service organization to serve as a general contractor for its customers, providing not only its typical Web-based services, such as creative design, e-commerce platform, content management, site hosting and other related Web tools, but also the sophisticated back-end capabilities of a direct commerce OMS and physical fulfillment infrastructure.

For example, The Acquity Group, a Web services organization based in Chicago, employs the Ecometry/Blue Martini platform as an integral part of its On-Demand environment. While other top Web service organizations (e.g., MarketLive, Petaluma, Calif., and Fry, Ann Arbor, Mich.) added the CommercialWare application to their technology suites and — as with other Web software they might offer — will manage, host and interface it to their Web platforms.

Conclusion

Although these end-to-end, outsourced solutions are somewhat new and, as a result, currently have a relatively limited number of installed users, they could easily play a more significant role in the future of the software and services industry that supports the multichannel marketplace. Given that a seamless interface from the Web through order management to physical fulfillment has become an operating imperative for marketers and customers, it seems inevitable that more and more merchants will take advantage of the end-to-end approach.

Bill Spaide is a partner in the management consulting firm of Spaide, Kuipers & Co., which provides operations management and information technology consulting services. He wrote this article at the request of Catalog Success editors. Contact him at (610) 668-8296, or e-mail: spaide@spaidekuipers.com.