As Good as It Gets

Nov 01, 2003 10:30 PM  By

Let’s say you’re in the market for a computer and walk into a Best Buy, Circuit City, or Office Depot store. Chances are, you’ll find the most popular PC configurations for your home or small business on the shelf. But suppose you have questions about other features or accessories that might be available. Perhaps you have special needs, or simply want to see all the options. In the case of Hewlett-Packard and Compaq computers, the next step is simple. The retailer says, “Let’s walk over here,” takes you over to an HP kiosk, and helps guide you through the dedicated HP.com site. You’re able to access complete information on all the items available, and can then either opt for an SKU off the shelf or order your own configuration. Any one-off configuration is shipped directly to you. And if you purchase something out of the retailer’s stock, he then has complete reorder capabilities right through the kiosk. Since this appears to be an example of a multichannel retail strategy that actually works, we’re anxious to get Marius Haas, HP’s vice president of worldwide e-business, based in Houston, to talk to us. We try to get him to tell us about all the miscues, false starts, and blunders we’re sure HP has been through over the course of its multichannel e-commerce experience. But Haas won’t crack.

Haas

We have a two-pronged approach. Hot SKU items — fast movers — are on the shelf. That’s supplemented with a strong online kiosk integrated with the retailers’ own online sites. One-off configurations, which would of course be impractical for the retailer to stock, are shipped right to the end user. When a salesperson does lead the customer to what’s on the shelf, we’re focused on in-stock replenishment, with complete reorder capabilities on the kiosk. So we have complementary capability and partnerships with our retailers. That’s the nutshell of our holistic strategy, and it works well for all of us.

O+F

But naturally the retailers think you’re stealing their business, don’t they?

Haas

It’s really just standard management. Always default to your retail partners and what they say they should have on the shelf. We heard our retailers saying they didn’t want a whole lot of inventory of one-off configurations. It’s better for them, since they don’t need to keep these in stock not knowing when, if ever, they’ll move. Our target is roughly five days for special configurations to be shipped to the customer; we provide availability info right on the site. We want to be sure we’re under a ten-day shipping window.

O+F

But if it’s so easy and convenient to order direct, why would anybody bother to go into a store?

Haas

People still want to touch and feel products. Those who are into third- or fourth-generation PCs may go directly online, but those on a first or second PC still like to go into the local Best Buy, touch and feel the equipment, and talk to someone who can answer questions.

O+F

If the store personnel are putting forth that effort, they’re not going to direct anyone to a kiosk. That must be a real drag.

Haas

Actually, we made sure the people were well trained on how the kiosk is a value-added capability to sell products.

O+F

Surely, though, there were problems? Especially, back when you were just beginning?

Haas

When we started about three years ago, it was in fact pre-merger of HP and Compaq. The multichannel development went down as part of the merger; we integrated our kiosk programs into one. Our kiosks now do about $100 million a quarter in the U.S., with 4,000 physical kiosks.

O+F

But were you prepared to fill all those orders, especially during the merger?

Haas

We combined consumer supply chains as the merger went through. Our consumer CTO supply chain already had significant volume, so we just looked at how to incorporate different product lines into the same supply chains. And a lot of the kiosk functionality was expandable into the dot-com space.

O+F

Dot-com! (Snicker … ) How’s that working out?

Haas

We started with in-store kiosks, but moved out from there, made an early online investment, and expanded as the value proposition became clearer for our online partners. The architecture and configuration is a Web service that we provide; we can’t afford to build independent architectural silos for each partner. But we aim for consistency; we make sure that when a retail partner is doing a promotion they do the same on the Web.

O+F

Aha! All those different retail Web sites — what a mess!

Haas

Not with our partner integrations. For instance, we’ve integrated our online capabilities with those of Costco.com, so someone can go to their site, and the look and feel of the site is maintained. We have some 15,000 of those integrations as well. CDW, within CDW.com, is another. And HP works with Yahoo, appearing within the Yahoo shell.

O+F

That’s all well and good, but what about the pitfalls? Hazards? Snafus?

Haas

Well, there’s making sure we have the same focus on merchandising and content in both the kiosk and the store. And there’s the data integrity piece: Our partners have more information on what their customers are doing. So we work with them on data integrity. But I guess that’s more of a focus that needs to be there to be successful, rather than a huge pitfall to avoid.

O+F

Fine. We give up. Do you have any questions?

Haas

You could ask, “How do you align the technology investments on both sides of the fence?” And the answer is, it’s by spending the time — not only working customer-in, but also asking the sales teams, “What is the best approach to do this?” We make sure we have aligned online strategies; both sides have to have the same strategic vision and priorities.

O+F

Thanks for speaking with us, even though we couldn’t get you to acknowledge a single difficulty.

Haas

No problem.