Retail Business Networks: The Key to Omnichannel Integration

For some time, the titans of general merchandising — Costco, Target and Wal-Mart — have been transforming how they do business. Recognizing that the consumer is king, they are putting more emphasis on their supply chains and working with their suppliers and other trading partners to reinvent shopping from the ground up. It’s omnichannel on steroids, and it features the “Amazon effect.”

This effect, which extends beyond Amazon, refers to how digital shopping has shaped consumer expectations of the entire shopping experience. And it’s the new normal: consumers expect to buy what they want, how they want, when they want. They also expect their purchases to be delivered quickly to wherever they want them.

If you feel behind the times, don’t panic—you’re not alone. Even big-name retailers are struggling with the transition to omnichannel. According to the fourth annual Retail Insight industry benchmark report, 96 percent of retailers, distributors, suppliers and logistics firms surveyed haven’t executed their long-term omnichannel strategy, and 37 percent don’t even have a strategy.

However, that’s not stopping consumers from developing ever-higher expectations—they love their smartphones and tablets, and their enthusiasm for these devices shows no sign of waning. Neither does their emphasis on price, but today’s consumers—whether shopping in stores, at their computers or on their mobile devices—will quickly go elsewhere if they also don’t get:


  • Robust product information
  • Real-time inventory information
  • Reliable reviews
  • Effortless returns


And unlike in the past, when consumers were happy if they could find this information online and then go shopping, they now want to access it while shopping. What’s more, they want to do so via their phones, tablets and the emerging category of wearables.

This puts enormous pressure on merchants, who must offer a seamless, integrated shopping experience across all channels. The most successful are taking a twofold approach: they are using their online presence to augment merchandise selection and broaden their markets, and they are sending buyers to their physical stores for purchase pickup to reduce costs and increase traffic.

Building this integrated experience for consumers requires redesigning business processes so that retail organizations can:


  • Add and curate expanded product assortments
  • Collaborate around item information, including digital assets and product details
  • Connect to and onboard trading partners
  • Manage orders, shipments, payments and returns within the organization and across trading-partner relationships
  • Access, analyze and act upon analytics to drive sell-through velocity, margin improvements and customer loyalty


Reinventing Retail Requires a New Architecture

In addition to redesigning business processes, many merchants that used to rely on separate systems for their e-commerce, retail and catalog channels have merged those systems. Doing so has enabled them to own significantly less inventory and to manage purchase orders as a unified, comprehensive process.

The most nimble and forward-thinking haven’t been content to stop there: They’re adopting a “networked” approach to business. It’s the only way to successfully navigate the complexity of the omnichannel landscape. By starting now, they are developing an important competitive advantage.

Just as social networks such as LinkedIn have changed how individuals, brands and companies connect with one other, communities of retail trading partners—known as retail business networks—are transforming retail.

These network-based retail architectures provide greater visibility between retailers and prospective vendors, making it easier to establish win-win relationships that deliver the integrated experience shoppers expect.

In addition to benefiting consumers, integration also benefits merchants by:


  • Increasing store and other channel sales
  • Reducing lost sales
  • Expanding products and product assortment
  • Improving customer satisfaction
  • Increasing customer loyalty


Anywhere, Anytime Shopping Require Endless Data

Developing an integrated shopping experience —and doing so profitably—requires answering three important questions:


  • Which items should be sold in stores?
  • Which items should be sold online?
  • Which items should be sold via multiple channels?


While answering these questions requires experimentation, one thing is clear: Real-time visibility into a vendor’s items, inventory and capabilities is quickly moving from nice-to-have to must-have.

Along with that comes the need for a much faster vendor onboarding process, one that can be completed in hours or days, not months. According to Enhancing the Retail Omnichannel Experience, a study conducted by Forrester Consulting on behalf of SPS Commerce, 26 percent of those surveyed have already completed this step, while another 42 percent are in the process.

Faster and increased vendor onboarding requires more efficient item management, especially as it relates to item attributes. These attributes have grown exponentially in recent years. Now, in addition to the basics—price, color and SKU—item attributes include descriptions, dimensions, photos, videos, consumer ratings, consumer reviews, warranty information, shipping information and more.

Managing this massive amount of data for one vendor is a challenge. Managing it for an entire vendor community can seem impossible. Yet, doing so is a must: more item data is a proven revenue driver. In fact, there is a direct correlation between sales and data robustness. Data is also critical to customer acquisition, merchandising and fulfillment.

Collecting, sharing and maintaining this data needs to be driven by the automation that retail business networks provide. That’s what makes it possible for vendors to automatically publish up-to-date item information, for merchants to use that information to automatically update their own sales channels and for consumers to make well-informed buying decisions.

Peter Zaballos is the vice president of marketing and product at SPS Commerce. @SPS_Commerce