New and Improved - Multichannel Merchant

To say that catalogers would be lost without technology is an understatement. From merge/purging mailing lists on the front end to tilt-tray sorting SKUs in the warehouse, marketers have come to rely on technological advances to run most aspects of the business.

Many catalogers today are looking to technological innovations to solve problems and improve processes; others are waiting for new features on software and systems to become standard so that prices come down enough for them to get in on the action. Because there are so many advancements continually occurring, we’ve asked the experts about better picking and packing systems, improved Internet protocol telephony, and the newest generation of campaign management software. So whether you’re ready to make an investment now or are just beginning to survey what’s available, you’ll be better prepared to assess how technology can help enhance your catalog business. with catalog management software (CMS) systems, which manage the entire process from the moment the order is taken until the product is shipped out, warehouse management software (WMS) focuses exclusively on the picking, packing, and shipping of orders.

Among the technology developments showing the most promise for catalogers:

Pick-to-light systems display mountings

Pick-to-light systems can be equated to a residential neighborhood at night, wherein each product (like a house) is clearly marked with a corresponding numerical code (akin to a street address) and has a light in front of it. When a picker goes through the warehouse to pick an order, software turns on the lights in front of the appropriate products to show the picker where they are. While pick-to-light itself isn’t new, improvements are being made in the buss bars — the solid metal bars used to transmit signals from the main terminal to a remote location.

Buss bars allow individual displays to be positioned anywhere along the shelf, greatly easing reslotting and reconfiguration, says Tom Guschke, a principal with Palm Beach Gardens, FL-based warehousing consultancy Keogh Consulting. “The busses carry both power and communications. The displays snap into place and are easily set up on the software.”

Guschke notes that several pick-to-light vendors are developing wireless, individually addressable, battery-operated pick displays that can be placed virtually anywhere — on pallets, racks, or shelves — and addressed via a radio frequency (RF) network. Pick-to-light systems vendors include Real Time Solutions, a division of Danville, KY-based FKI Logistex (www.fkilogistex.com) and Germantown, WI-based Professional Control Corp. (www.pccweb.com).

Radio frequency identification (RFID) tags

RFID and radio frequency data communication (RFDC) integrated with a WMS “are the most revolutionary” use of technology, Ellis says, because they significantly increase accuracy and reduce the paper flow in the warehouse. They use wireless technology to manage inventory, monitor pick/pack accuracy, and control product movement in real-time.

To maximize the impact of the technology, Ellis says, catalogers have to tag every product as soon as it is received. Every time a product is moved, stationary scanners located throughout the warehouse relay the information through the RF system.

Ellis equates RFID tags to “barcodes on steroids.” The difference, Ellis says, is that instead of pointing a scanner at a specific target, namely a barcode, the RFID tags emit radio waves, allowing scanners to continuously monitor the product and activity.

“In most warehouses today,” Ellis says, “the product is unloaded, counted, and entered into the system.” The location is entered either as staging or the storage location. If it is entered as staging, then when it is moved to storage, someone has to update the computer. If it is entered as storage, then anyone seeking that item will go to storage instead of staging to find it. “And if the item is placed in the wrong bin location, then there is a search to find it. RFID/RFDC integrated with WMS eliminates all of those variables,” Ellis says.

All that accuracy is costly. Ellis estimates that disposable tags cost about $0.60-$0.70 each and reusable tags run $2.40-$2.60. As for RFID scanners, the price depends on their range of depth, Guschke says. Simpler machines that can transmit up to 20 ft. can run $1,000-$2,000, whereas scanners with greater ranges can cost tens of thousands of dollars. Other variables that influence pricing include how much interference the scanner can handle. The myriad suppliers of RFID technology include Telford, PA-based Accu-Sort Systems (www.accusort.com), Atlanta-based MARC Global (www.marcglobal.com), Jacksonville, FL-based RF Depot (www.rf-depot.com), and Arlington Heights, IL-based Weber Marking Systems (www.webermarking.com).

Integrated voice technology solution (IVTS)

IVTS is an improvement in voice recognition systems in which pickers walk the warehouse with RF phones that enable them to communicate with colleagues who are in front of computers showing the orders to be picked.

IVTS “provide true paperless and real-time task direction,” says Keogh’s Guschke. The technology now extends from receiving through order processing, inventory management, cycle counting, replenishment, and packing — all seamlessly integrated with the WMS. Vendors include Murray Hill, NJ-based Lucent Technologies (www.lucent.com) and Vocollect in Pittsburgh (www.vocollect.com).

Microload automated storage/retrieval systems (AS/RS)

These fully automated, high-rise racking systems, created for storing small items such as CDs, hardware, medical devices, and electronic components, are integrated with retrieval devices that provide high-speed put-away and retrieval.

“These solutions greatly increase space usage without the previous compromises of lowered throughput capacity, higher cost, and complexity,” Guschke says. Manufacturers include Lewiston, ME-based Diamond Phoenix Co. (www.diamondphoenix.com), El Cajon, CA-based Greco Systems (www.grecosystems.com), and Cartersville, GA-based Knapp Logistics & Automation (www.knapp.com).

SO YOUR COMPANY has been generating online sales for several years now, and your Web business seems to be going fine. If you think this is the time to sit back and relax, think again. Most online marketers have yet to truly capitalize on the Internet’s potential.

A recent study by the Chicago-based E-tailing Group reveals that shopper conversion rates fall below 3% for about one-third of Web merchants. So not only do you have to lure visitors to your Website, once you have them you still have to convince them to make a purchase.

A range of new technologies, however, can help you accomplish these goals, taking your online business beyond “fine” to “fantastic.”

Offering an e-commerce portal

A growing number of e-commerce merchants are offering shoppers what’s known as a “portal” environment, says Steve Gatto, a Portland, OR-based market manager with IBM’s WebSphere Commerce. The portal software ties into the data analysis software that contains customer order and promotion history. So customers of a Website are greeted with several boxes, or portlets, containing information relevant to them. One box may contain promotions on products in which they’ve already expressed an interest, while another box shows their order history, and yet another identifies products currently on order. “In one screen, they get all this information,” Gatto says.

Pricing for portal software can vary widely. IBM’s WebSphere product, for instance, is available to smaller retailers on a per-user basis. A more robust version for larger e-merchants can cost five or six figures.

Enhanced caching

To improve Web visitors’ online experience, a number of companies are experimenting with different ways of caching, or storing, information, says Alan Rimm-Kaufman, Ph.D., vice president of marketing for Crutchfield Corp., a Charlottesville, VA-based consumer electronics marketer. Some marketers are pushing a portion of their online content to dedicated caching sites. Invisible to the site visitor, these caching sites take copies of the master site’s pages and store them in servers across the Web. When someone requests one of these archived pages, it’s sent from a server near him, reducing download time.

Akamai Technologies, Mirror Image, and Xperience are just a few of the myriad providers of caching services. Services are priced by the megabyte and range from $500 to $1,000 a month per megabyte cached, according to Rimm-Kaufman. Prices are beginning to come down, however.

Blogs

Blogs, or weblogs, have proliferated during the past year. Catalogers can use these online journals or forums as a marketing tool. For instance, a merchant of camping goods might set up a forum on camping and the outdoors. “So many Websites are drowning in marketing-speak that a blog is a great way to give the company a human voice,” says Brian Klais, vice president of e-business strategy with Madison, WI-based consultancy and Web design firm Internet Concepts.

Most blog entries have nothing to do with the merchant’s products, notes Steve McKenzie, senior vice president of marketing with CFM Direct, a marketing agency based in Oak Brook Terrace, IL. But contributors to online forums tend to passionate about the topic at hand. “And every so often, someone will say, for instance, that Company X’s tents are the best,” says McKenzie. “It’s a new type of public relations, where customers do the PR.”

To start a blog, catalogers can turn to freeware or inexpensive tools, says Klais. Many applications can be downloaded from the Web. Companies that offer blog software include Greymatter, Movable Type, and Radio UserLand.

Taking advantage of broadband

According to Boston-based research and consulting firm Strategy Analytics, 25% of household with Internet access use broadband rather than slower dial-up connections. (CFM Direct’s McKenzie estimates that 70%-80% of U.S. households have Web access.) The shift from dial-up to broadband offers marketers new opportunities to tell their story online. “When people have broadband, you can do more-robust things and be more entertaining,” says McKenzie. “Online retailers will have a better opportunity to tell their story faster and more vibrantly.”

That’s the case with Crutchfield. “For folks who can support it, we give them a different kind of online experience,” says Rimm-Kaufman. For instance, visitors to the Crutchfield site who have broadband access can download and view a video showing how to install a car stereo. Internet telephony (the customer clicks an icon to place a call to the cataloger, for instance) and online music are also more practical now that more users have broadband access.

Product enhancement tools

Product enhancement technologies, such as features that enable viewers to zoom in on images or to “spin” the product photos to see the items from all sides, aren’t necessarily new. But they are now affordable for smaller merchants, says Lauren Freedman, president of The E-tailing Group.

Companies that specialize in product enhancement technology, such as RichFX, Scene 7, and Viewpoint, usually charge on a per-product basis. Jonathan Taqqu, a product manager for New York-based RichFX, says a typical fee is about $50 per product per feature. In addition, there’s an initial fee (usually in the thousands) to integrate the software on the site.

“For any one with a visual category, this is an important focus,” Freedman says. The tools create a more appealing user experience. What’s more, anecdotal evidence suggests that when consumers have a more precise picture of the items they’re purchasing, returns drop. Further, conversion rates tend to head up, says Taqqu, who adds that RichFX’s customers typically see conversion rates just about double.

Shifting to XML

Another change affecting online marketers is the shift in computer programming languages from HTML to the more flexible Extensible Markup Language, or XML. “It’s great for sending information internally and externally. It’s agnostic as to platform and operating systems,” IBM’s Gatto says.

Say you have data about a customer’s online purchase history in one database and information on offline purchases in another. “XML is a protocol to let machines speak to each other in a systematic way,” explains Rimm-Kaufman.

The cost of developing what McKenzie calls the “vocabulary” — the language that will communicate among the data systems and the programming that will allow them to query the databases — can range from the low five figures well into hundreds of thousands of dollars. While this obviously isn’t dirt cheap, it’s less expensive and easier than the alternative, which is to put all data from the various databases into one master data warehouse — an enterprise-level project that can run into the millions of dollars.

Data analysis

Once customers are on your site, you need to know what they’re doing if you’re going to capture and retain their business. As is the case with product enhancement technologies, the news here is that analysis programs are now cheaper and easier to use. “People are coming up with innovative ways to show the marketing and IT teams how individuals and groups use the site,” says Rimm-Kaufman.

For instance, ClickTracks, based in Scotts Valley, CA, offers reports that show screen shots of key pages; next to each link, the report will display the percentage of people who clicked on it and the percentage who subsequently made a purchase. Previously, the reports featured complex charts and graphs. Other marketers of analytics products or services include Coremetrics, Omniture, and WebSideStory.

Equally important, says ClickTracks CEO John Marshall, online marketers can divide customers into logical groups and see where each went. For instance, one group might consist of customers who found the site through a search engine, while another group is responding to some offline promotion.

Fees vary widely. ClickTracks charges $500 to purchase the software for one user and $2,000 for the version that allows up to five users. Other companies follow an ASP model and charge on a per-report-page basis, says Internet Concepts’ Klais. Depending on the size and complexity of the site, monthly fees can hit five figures.

Improved shopping carts

Online shopping cart applications are another tool that have come down in price even as they’ve become more robust, says Tom Antion, head of Antion and Associates, a Virginia Beach, VA-based Internet marketing consultancy. Features and functions that would have cost six figures a few years ago now are available on an ASP basis for several hundred dollars annually.

Antion and Associates, for instance, uses the KickStartCart shopping cart system, for which Antion pays less than $1,000 annually. (He also resells the software.) The application offers several important features that make it easy for smaller marketers to transact business online. For instance, an integrated auto-responder automatically sends an e-mail reply when a customer places an order. The system also tracks the number of products sold via different affiliate sites.

Minnetonka, MN-based Karen M. Kroll has written for Inc. and IndustryWeek, among other publications.