Building Alignment on and offline – Part 2
In my last article (yesterday) I discussed the value of aligning your online business to your offline physical business. Today I want to talk about the key things which need to be in place in order to accurately achieve alignment.
Senior Management support. I touched on this yesterday. If the Senior team support the web channel, facilitating change, acquiring budget and cap ex becomes a simpler hurdle to overcome.
Supply Chain. Many retailers fall down due to Supply Chain support and struggle to manage and maintain a consistent range of products over both online and offline channels. In the physical world, if products are sold out, it is less space on the shelves; however, when selling products online, the issue of charging customers for items not in stock arise. If it takes time to replace or reorder this product life becomes very difficult. Backorders equals cost and degrades margin.
Fulfilment Infrastructure and Processes. Achieving the 3 R’s is point of difference in the online world (getting the Right product, to the Right place, at the Right time). Inventory management is a fundamental killer and one of the single biggest reasons business alignments are not achieved. One of Exceed Online’s clients is the largest Shoe retailer in New Zealand. Two years ago they wanted to go online but could not go transactional because their systems and processes were not ready. Two years later they are still not transactional. Some of the main concerns centred on picking orders. They did not want a “Web Warehouse” and deciding which store (or stores) to fulfil from became too hard. The inventory management system was not adequately equipped for eCommerce but was only part of the problem. The physical processes which support the inventory management system had discipline challenges to overcome.
Luckily, this Shoe retailer owned all the retail outlets, but what happens when you have a Franchise operation where there are individual store owners spread throughout the country for a single brand?? And don’t forget, each store owner wants a piece of the web business. Exceed has seen this model regularly hinder the web channel and makes it nearly impossible to build alignment for two main reasons:
1. If one of the individual store owners takes over the website, they don’t have the ability to carry the entire range of products.
2. If the Head Office takes over the website they don’t have the fulfilment logistics to cope with single item orders.
Both problems can be overcome, but it is more the politics around the Franchise business model which hampers the move forward and is why building alignment in a Franchise business model adds considerable complexity.
Good luck, and you know who to call if you get into trouble.
