omni-channel retail: fashioning a new economics
TRANSCRIPT
Omni-channel Retail: Fashioning a New EconomicsMichael Ross, Co-Founder & Chief Scientist, eCommera
Kiosk Mobile app PC/browser Tablet
Product
Customer
Assisted sale
Store Distribution centre Drop ship
Store Anywhere Home
ROPO to BIMBO
Do you give credit to
online for an offline-
influenced sale?
Stop online marketing that isn’t
justified by online value - but is
justified by overall business impact
Potential issues
Research online, purchase offline
Do stores get penalised for
online returns?
Encourages antagonism between
channel teamsBuy Online, Return to Store
Is this an online or offline
sale?
Store sales/profitability decreases but
store is clearly critical part of journeyBrowse In-store on Mobile, Buy Online
Cost for store OR cheap
way to drive footfall?
Underinvestment in click and collect
experienceBuy and collect
Are high value offline
customers being targeted
with online
offers/discounts?
Easy to send online offers to what
appears to be a “lapsed” online
customer rather than focussing on
them as an offline customer
High value offline, lapsed online
Retailer question
Product
Product: before and after
Range
Inventory
Trading
Propositions evolved , constrained by store size
Own brand to drive margin
Sales rate per SKU and SKU densities per sq. ft.
Constrained by brand
Unique product critical
Long tail products
To
Managed by store
Stock in store owned A single view of inventory
New stock ownership and fulfilment models
Broadcast prices
Low variable cost of sale
Simple trading
Fixed discount schedule for sales
More dynamic prices
Revenue management
Product “next best action”
From
Product economics
Customer
Customer: before and after
Management
Marketing
Selling
Customers anonymous - insight from gut experience or research
Customers not measured - like-for-likes are good enough proxies
Single view of customers Customer centric planning Customer-centric input metrics
To
Customers not part of the conversation
Fixed rent = footfall Fixed costs of store staff Broadcast Segment-driven for insight and
action
Focus on most profitable customers Variable costs “Next best action” Personalised (segment for execution, not
insight)
Channel targets: both store and online
Transaction focussed Customers are anonymous Service is uniform
Customer targets Lifetime value/relationship focussed Service is differentiated Store staff are informed and incentivised
From
Customer economics
Expected 3 year purchases
Order
Order: before and after
Ownership
Timeline
Cost
Simple
Store staff incentivised/focussed on closing sales in store.
Complex
Transactions can touch many parts of the business.
To
Immediate: transactions initiated/completed in store
Delayed: separation of order from delivery
Longer gestation – interaction with all channels (particularly for high value purchases)
Low marginal cost – shopping bag, credit card charge
High cost to serve – home delivery, returns handling, email/phone customer service
From
Order economics
Service request pattern
Staffing pattern (8am-9pm)
Waiting times
