In APIs Are Critical To Your OmniChannel Initiative, we continued our exploration of the crucial role APIs play in delivering OmniChannel experiences to your customers, through eliminating friction that impedes the buying process. Your APIs and services must deliver consistent information, consistent outcomes, and channel-optimized experiences in order to achieve friction-free commerce across all the touchpoints your customers use in their buying journeys.
Your Retail API Strategy is crucial to success with click and collect
The 2013 holiday shopping season showed just how crucial click-and-collect is to the survival of bricks-and-clicks retailers, driving increased OmniChannel investments. North American retailers call it “buy online, pick-up in store” (BOPUS), but I prefer the concise way UK retailers label it as click-and-collect – not only for its brevity, but also because it better labels the trend, which in more mature versions (e.g. Tesco) adds “collect” locations beyond stores. Click-and-collect is growing in popularity, driving an increase in store traffic. Retail expert Springboard predicts that visits to stores will grow by 2.6% yearly as customers collect products bought online.
Data for the 2013 season is still coming in, but data from 2012-2013 shows a clear upswing in click-and-collect, bringing a dramatic increase in sales:
- Next cited click-and-collect as the reason online sales increased by 11.2 percent in the 2013 season, while store sales fell slightly. John Lewis also credits strong results for the season to click-and-collect, in part.
- 19 percent of multichannel retailer sales were completed using click-and-collect in the third quarter (Q3) of 2013.
- Joining early adopter leaders Wal-Mart, Home Depot, and Best Buy, Macy’s tried click-and-collect in selected stores in the Washington, D.C. area in the 2013 season, with plans to roll out to 800+ stores in 2014.
- A study from A.T. Kearney found “consumers spend the majority of their time shopping in stores (61 percent), followed by online (31 percent), catalog (4 percent) and mobile (4 percent). The physical store is the channel of choice across all ages (from Millennial to senior citizens) and household income levels (from less than $25,000 per year to more than $100,000 per year).”
- The same study found that “40 percent of consumers spend more money than they had planned in stores, while only 25 percent reported online impulse shopping. Strategies that drive consumers to stores whether it is to shop or pick up a product purchased online will drive impulse purchases.”
- According to The Economist, “bricks-and-mortar retail … remains more profitable. …  online sales of … American shops grew by 29%; those of online-only merchants grew by just 21%. Apart from Amazon—which has long spurned profits in favour of growth—most pure-play online retailers are losing market share, says Sucharita Mulpuru of Forrester Research.
- “Between 15% and 20% of sales at Dixons are online, depending on the season, and the proportion is rising. But … online firms … pay more than retailers to acquire customers … and spend on shipping. So instead of doing away with shops and sales staff, Dixons is trying to get more out of them.”
From my conversations with several architects at a number of different retailers (both bricks-and-clicks and online), I’ve seen a pattern emerging in what all this means for the design of the retail API strategy and service catalog needed to win at executing click-and-collect:
- Reuse has a huge impact on time-to-market for new, competitive capabilities. For example, one retailer was able to repurpose the services it had exposed to enable click-and-collect, quickly delivering a mobile shopping cart app for use in stores, thereby driving up cart size for large purchases, while adding convenience and speeding checkout for customers.
- Logistics still matters, but things are different now: warehouse and store inventories in a region must be seamlessly integrated, ideally on the same inventory system, with services exposed to support everything from standard click-and-collect to ordering on a mobile device while in one store, for delivery of inventory from a nearby store to the home the next day.
- The key to consistent information is twofold: back-end systems must rally around a canonical model for data moving among them, and the APIs that deliver that information to front-end touchpoints must be lightweight while mapping to canonical information in the middle tier.
- The key to consistent outcomes and friction-free commerce is shared services, no matter their source. Whether touchpoint apps consume APIs that invoke services in retail store and warehouse inventory apps, or the firm builds new common services then migrates touchpoints onto them over time, the end goal is the same.
- The key to channel-optimized experiences is an API façade, mapped consistently through the middle tier to common services. Taking this approach increases the overall size of the API portfolio, which can drive development and maintenance costs too high unless teams collaborate using effective tools, like ignite, that speed and automate managing the façades.
- Consistent outcomes also drive better business results. Firms that have suffered the pain of siloed channel experiences often find it hard to consistently implement business policies, pricing models, and product assortments in all channels. With assortments becoming an increasingly complex source of retailer differentiation, this is another important reason to bring all touchpoints onto the same portfolio of common business services.
The ignite Service Design Platform is uniquely qualified to support retailers looking to implement these practices, for a more effective API strategy. Since click-and-collect and OmniChannel typically have the full attention and backing of CIOs and CEOs, retail IT leaders should learn how ignite can accelerate your path to success.