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November 5, 2012

Guest blog: How IT can help the High Street capitalise on the m-commerce boom

Andy Lloyd, general manager of commerce at NetSuite, writes for CBR on why tighter integration is vital if retailers are to profitably add mobile and social-commerce offerings.

By Cbr Rolling Blog

We’ve seen a burst of UK High Street retailers embracing multi-channel retailing and especially mobile commerce. The NetSuite Retail & WD Trends Report 2012, which surveyed 200 UK High Street retail managers, including seven of the top 10 retailers in the UK, found that three quarters of retailers are already running a mobile-optimised e-commerce site or a smartphone app, rising to 80 per cent when you include those that are planning to deploy in the next 12 months. Retailers expect m-commerce to grow at a rate of 23 per cent over the coming year, far outstripping the overall rate of growth expected within retail, which stands at a positive 12 per cent (and is way above the latest UK GDP growth figures of 1 per cent).

If you think how long it took many traditional retailers to fully embrace e-commerce, it is startling to see the speed at which m-commerce has been adopted. But then again, when you consider that the first true smartphone – Apple’s iPhone – only hit the market in 2007 and that now over half of the UK’s population owns a smartphone and a fifth own a tablet, you can see how quickly consumers are adopting these technologies. Retailers are well aware of the dangers of losing out on this sales channel opportunity, with over half (52 per cent) viewing rivals’ mobile offerings as a threat.

Furthermore, companies should also consider the importance of thinking ‘socially’ about their business and start growing their social presence online. Our research has shown that sales from social network promotions and direct sales already account for 18 per cent of the value of sales. Whether it is responding to customer queries through Facebook and Twitter or offering social media specific promotions, many retailers have been dabbling in the social media sphere with some success. Whilst it remains to be seen whether social media platforms, and in particular sites such as Facebook, will deliver on their dream of becoming fully fledged virtual shopping malls, extending customer outreach and engagement to these channels is increasingly vital. Valued-added functionality such as social ratings, reviews and conversations and social CRM will help to capitalise on this.

Three hurdles
The fundamental IT challenges for retailers in developing a successful e-commerce strategy which incorporates mobile and social commerce lie in managing integration, finding budget and thinking social. Because the retail industry evolved rapidly and companies were typically running their back-end operations on legacy systems, retailers were forced to implement disconnected solutions for selling online, resulting in fragmented business information – one set of applications dedicated to retail channel, a separate set of applications for e-commerce channels, and yet another for telesales operations.

This approach to managing different retail systems will no longer work. Integration is key. Margins are often so tight in retail that having to waste administration time re-entering data into multiple systems, or manually passing orders from an m-commerce system into fulfilment and ERP platforms based on another, can make the addition of new retail channels loss-making.

In the same vein, delivering a compelling, personal customer experience can be a very expensive undertaking in itself, with the average UK High Street retailer spending on average nearly £200,000 on their online presence.

To overcome these issues, retailers need to adopt a central system to manage all transactions and associated customer interactions with consumers and other businesses, regardless of the touchpoint (website, smart phone, social media site, in-store, etc.). Adding a mobile channel or social commerce capabilities is easier if it plugs into the same system. For many, getting the house in order first will make all the difference in delivering a new channel profitably.

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NetSuite research also suggests that many retailers are worried that their IT systems are too complex, costly, inflexible and difficult to scale. Deploying a cloud based multichannel commerce solution – otherwise known as an ‘as a service’ solution – will enable retailers to manage their interactions with other businesses and directly with consumers via any current device, with the ability to scale – adding capacity as it is needed in line with business growth.

We’ve uncovered surprising optimism about the year ahead with nearly nine in 10 retailers thinking positively about their growth prospects. However, the rate of growth of the new channels seems to justify this confidence and there is no reason why the High Street should not come out stronger from the current market uncertainty if they focus their innovation in the right way. We’ve seen retailers such as Debenhams and Sports Direct post strong results from using this strategy recently, so now it really is the time for IT managers to adopt best practice and buck the trend to utilise the growth potential of these technologies.

Andy Lloyd, general commerce manager at Netsuite

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