As I’ve noted in my two previous columns, last month I attended the Home Delivery World, Click & Collect Show USA, and ETail Show USA joint conference in Atlanta. It is always interesting to see presenters give differing viewpoints on a given subject. Today’s column is one example from the show. As I wrote about last month, Tom Barone, VP of North America Operations at eBay Enterprise, presented on the changing nature of commerce. Tom basically outlined three key strategies for omni-channel success: ship from store, in-store pickup, and in-store associate ordering. Tom’s advice was to prioritize, and start with ship from store.
Later on during the conference, I had the pleasure of watching a presentation by Raman Mangalorkar, CEO of Jubilant Retail (which was acquired by Aditya Birla Retail (ABRL) yesterday). Jubilant Retail is a traditional Indian brick and mortar hypermart. Raman noted that retail in India is fragmented – only 8 – 10% is organized modern retail. Typically, retailers in India face low margins and high capital costs. But the e-commerce market is gaining traction. According to estimates, over the next five years, the Indian e-commerce market is expected to grow close to 35%. That makes it nearly a $70 billion market.
Raman pointed out that there are a few reasons why the e-commerce market is poised to grow. First, there is significant funding by large online players with significant funding. In the recent past, for example, Flipkart’s funding valued the firm at nearly $15 billion, Snapdeal looked at valuation of $5 billion, and Olacabs valuation was at $2 billion. That is a lot of clout pushing into the e-commerce market. Second, there is greater penetration of internet and mobile capabilities. As more consumers are able to connect via the internet, e-commerce is bound to grow. And third, the concept of cash on delivery (COD) is an enabling phenomenon. This clears the hurdles for people who do not possess credit cards.
During his presentation, Raman made note of the advice from Tom, but noted that the logistics behind home delivery in India present too big a challenge. Instead, Jubilant retail decided their first step towards an omni-channel experience would be click and collect. Raman made note that there were two main drivers (besides the logistical nightmares of ship from store) for click and collect. First, customers are demanding more options. This is true for consumers across the globe – there are higher expectations for commerce options (in-store pick-up, home delivery, curbside pick-up, etc.). As Indian consumers demand more options, retailers need to respond. Secondly, click and collect can generate incremental sales and improved profitability. Getting the customer in the store automatically increases the odds of additional sales. Also, by having the customer pick up the item, overall costs are decreased, as there is no shipping charge.
Looking at the other side of the coin, Raman did identify several key challenges with implementing click and collect. First, is pricing. Retailers need to identify if their in-store and online pricing will be the same. If it differs, this can cause problems for click and collect orders. Second is picking and packing capabilities. The store associates must be able to handle the influx of business, and preform these tasks while still addressing the needs of in-store customers. And third is marketing and branding. The online experience needs to be deeply rooted in the overall brand image and promise. If not, click and collect will never catch on.
At the end of his presentation, Raman laid out a roadmap for retailers to execute on a click and collect strategy, according to the planning that Jubilant Retail went through. The roadmap consists of seven key strategies that can guide retailers in launching a click and collect initiative.
- Gain organizational commitment about the opportunity. This needs to come from the top down. If senior management is not invested in the strategy, it is doomed from the beginning.
- Create a separate, but aligned, team to assess and pilot the program. By having a separate team that is solely dedicated to the task, they will not be bogged down in other details. The team must be aligned with the overall goals of the organization.
- Obtain the capabilities. This can be achieved either in-house or by outsourcing. This is where the pilot team needs to assess the internal capabilities, opportunities, and constraints, and decide whether it is something can be tackled in-house, or if it needs to be outsourced in order to be done effectively.
- Pilot the program and measure performance. Performance measurement is the key to the pilot. There has to be quantifiable results to see if the pilot is worth the investment across the company.
- Invest in branding and market the concept. Your customers have to know that you offer the capability. This goes beyond simply offering pick up from store at the check-out screen. Click and collect has to be engrained in your organization’s DNA as a core capability.
- Refine the model if required. This is one step in the omni-channel play. The pilot program and results should alert you to what is working and what is not. The company needs to use these results to implement change.
- Stay committed. Abandoning the program too early is a recipe for disaster. Click and collect is a viable business option, but only if your organization is committed to making it work. If you stay the course, you will reap the rewards.