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Channel Integration - How REI Scaled E-Commerce Mountain

By Megan Santosus

May 15, 2004 — CIO — When outdoor equipment retailer REI wanted to boost in-store sales, the company looked to its website. In June 2003, REI.com launched free in-store pickup for customers who ordered online. The logic behind that thinking: People who visit stores to collect their online purchases might be swayed to spend more money upon seeing the colorful displays of clothing, climbing gear, bikes and camping equipment.

REI’s hunch paid off. "One out of every three people who buy something online will spend an additional $90 in the store when they come to pick something up," says Joan Broughton, REI’s vice president of multichannel programs. That tendency translates into a healthy 1 percent increase in store sales.

As Broughton sees it, the mantra for any multichannel retailer should be "a sale is a sale is a sale?whether online, in stores or through catalogs." The Web is simply not an isolated channel with its own operational metrics or exclusive group of customers. As the Web has matured as a retail channel, consumers have turned to online shopping as an additional place to interact with a retailer rather than a replacement for existing channels such as stores or catalogs. According to Jupiter Research, while its online sales prediction for 2008 of $117 billion represents only 5 percent of total retail sales, the company estimates that 30 percent of offline sales will be influenced by the research that consumers conduct online. Essentially, that means retailers will need to leverage their online properties in ways that are synergistic and complementary to their offline operations.

Adopting a complementary strategy means focusing on "the continuum of the shopping process," says Jeff Schueler, founder and CEO of Usability Sciences, an online usability-testing company. The Web has evolved to become an important part of the shopping continuum, and smart retailers such as REI have mixed IT and marketing to maximize its complementary role.

To effectively leverage the channel continuum, companies must pay close attention to why people are coming to their websites. Most shoppers, Schueler says, follow a predictable sequence of steps before they make a purchase. Making a purchase is really the culmination of the shopping process. The first steps?information-gathering and price comparisons?are ideally suited for the Web. In fact, 86 percent of people go online to gather information, comparison shop, get coupons or conduct self-service tasks such as paying bills or checking the status of an order, according to Schueler. Only 14 percent go online to purchase. Any given website should therefore not be considered an endpoint for shopping.

 

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