September 14, 2012

Effect of Retail Channel Integration through use of IT

Most of the retailers now offer consumers with different channels to buy products. Consumers can buy products through traditional stores, online, mobile, call centres, kiosks etc. However these multiple channels have less integration with each other .For example, consumers dealing with the same organisation will find different pricing, inventories and policies depending on the channel being used. Moreover, the customer service personnel in the physical store may not be knowledgeable about the “in -store payment for online orders”, “in-store returns of online orders”, “online gift cards” etc for products brought through online. Since there is less integration with different channels, a consumer cannot pick the product from physical store which he/she has ordered through ecommerce site. These are the main issues faced by a consumer today due to lack of transparency between different channels within an organization. So it is the need of the retailers to provide consumer with cross-channel convenience.

IT is becoming one of the critical resources in multi channel service operations management as it provide share ability and reusability of information which is  necessary for business process integration. So it is important for the multi channel retailers to use IT effectively in integrating their activities. With retail chain integration, companies can provide advertising and publicity of one channel through another channel. This will encourage customers of one channel to use the others, and increase awareness of the different channels .For example, the physical store can be used as an advertising medium for the Website through brochures, receipts, carrying bags and posters. Likewise, the Website can provide contact information about the physical stores and announce in-store promotions.

 Some of the other major effects of retail channel integration through IT are as follows.

1. Offering customers to choose their preferred channel to buy and complete their purchases. In South Korea, Tesco’s Home Plus has found a way to help time-pressed commuters to shop on the go using their smart phones by building virtual stores on the platform of subway stations. Home Plus displayed images of food items  across the walls of train platforms and every item has a corresponding QR barcode associated with it. People waiting on the platform can scan the QR code of the required item using their mobile and adds products directly to their shopping cart. When the online purchase is done, it would be delivered to user’s home within hours.   

2. Ensuring the consistency of product and pricing information across different retail channels. This can be achieved by integrating product catalogues and ensuring that product descriptions, product categories, prices, and discounts are consistent in the various channels. It ensures the transparent flow of information between processes and reduces confusion arising from information inconsistencies

3. Providing customers to access information available in one channel from another channel. For example, the Website can allow customers to search for products available in the physical store through an integrated database. Likewise, information kiosks at the physical store can help customers search for product information, availability, and the store location of products from the Website. Information on real-time inventory can be made available online so that customers will not make wasted trips to the store when the product is not in stock.

4. Collecting customers online and offline transaction information and making it available across multiple channels. This increases the richness of the information available and the quality of services that can be provided. It allows the retailer to provide many value-added services such as personalized Web pages to users.

5. Providing services for customers to access service support in the channel of their choice. Support can be offered at physical stores for problems related to online purchases, such as allowing customers to return goods ordered online at a physical store and vice versa.


Lih-Bin Oha,Hock-Hai Teob, Vallabh Sambamurthy. The effects of retail channel integration through the use of information technologies on firm performance.

The article has been contributed by Thousif Mohammed, who is presently a first year PGP student at IIM Raipur. He has worked with TCS for 2 years. His areas of interest include Supply chain management & customer service.

No comments:

Post a Comment