Back-End Systems for Multichannel Retailers

It’s no surprise that retail channel silos are disappearing as traditional brick-and-mortar retailers heavily invest in their web stores, seeking to create seamless web-to-store customer experiences. Formerly web-only retailers like Fat Brain Toys are now mailing catalogs in an effort to build their brand and drive traffic to their website. Catalog retailers were early adopters of web stores, and are now building more and more brick-and-mortar locations.

While direct marketers and their suppliers have been preaching multichannel retailing for years, there's been a singular lack of attention given to back-end operations designed to support this new and more complex retailing environment. Direct Tech participates in a number of retail industry events each year and surprisingly has noted little to no discussion of back-end operations.

This could be the year that changes things. At the recent NEMOA Spring Conference, Bernadine Wu, CEO of FitForCommerce, gave a marvelous keynote address describing the shift from investment in marketing support systems to back-end operational systems. To substantiate Wu’s findings, Forrester’s 2011 Online Retail Technology Investment Outlook indicated that 62 percent of e-tailers plan to increase or significantly increase their technology budgets in 2011. Nearly 64 percent of those e-tailers indicated that the integration of back-end systems is a likely focus for increased investment. Notably, in Forrester’s 2010 study, only 31.6 percent of all respondents planned to integrate their back-end systems.

We're seeing the trend firsthand here at Direct Tech. One of the most frequent inquiry calls we receive is from multichannel retailers seeking our tools to address the challenges of merchandise and demand planning by channel, then consolidating inventory purchasing across all channels in order to optimize their inventory investment.

With inventory remaining the single largest expense for a retail organization, it’s easy to see that integrated back-end systems that can optimize inventory planning while simultaneously supporting the unique needs of merchandise planning in each channel simply make sense.