Editor’s Note: The following story was originally published in All Things D on Oct. 23, 2012.
By Tricia Duryee
Retailers that have both online and offline stores are trying to find new ways to compete against Amazon this holiday season.
“In the next 12 to 24 months, I think to survive and to compete against Amazon, they will have to leverage the store in a way that they thought they never could,” said Chris Saridakis, the president of GSI Commerce.
The eBay-owned company powers Web sites for such retailers as Calvin Klein, Levi’s, Sports Authority and Radio Shack. It does everything from taking pictures of the company’s inventory to coming up with marketing strategies to shipping the orders.
Saridakis said one of the big trends this holiday season is to use technology to tie together both the virtual and physical shopping experiences — something that is increasingly being referred to as “bricks and clicks.”
“One of the biggest trends this year is how do we help our clients take the inventory in the stores and connect it digitally,” he said. “What’s the best way for that local store to ship out the item instead of the distribution center? Or the best way for a consumer to pick it up, so they potentially buy more items? We are leveraging the physical store by using technology that was meant for the online site.”
Last year, he said, Toys “R” Us experimented with connecting the two channels, and more retailers, like Dick’s Sporting Goods, are implementing it this year. The efforts will be supported by advertising campaigns that will send people to buy online or have items shipped to the home from the store. Shipping from the store — and not the distribution center — has a number of benefits: It’s cheaper because the merchandise will be sent through fewer zones, but also it leverages retail employees who can put downtime to use packing and shipping items. “Thirdly, you’ve actually increased satisfaction because a customer will receive the package in a day, or two days, at the latest,” he said.
This holiday season, Chase Paymentech says, retailers are expecting 51 percent of their holiday sales to come from online, and 45 percent of the retailers are expecting to see a lift in e-commerce sales over last year. The study surveyed 178 retailers in September.
The retailers’ efforts to create a cross-channel approach come a year after Amazon launched a controversial one-day promotion that gave consumers up to $5 off on purchases if they compared prices using the online giant’s mobile phone application in a store. The idea was to encourage consumers to treat local stores as showrooms.
Saridakis said that it showed that Amazon was going to try and come up with something that will challenge the industry, and that retailers should be on alert. “It awoke a giant, and not one, but many giants,” he said. GSI mostly works with very large retailers, but in conjunction with eBay, it is trying to provide tools to small- and medium-size retailers, too. “I’m not sure how the numbers worked for [Amazon's promotion],” he said, adding that it was “a warning shot across the bow to everyone.”
Clearly, the online channel is worth fighting for. Even though it still makes up only about 10 percent of overall sales, Saridakis said, it spikes during the holidays. For most of its clients, a normal day means that 8 percent to 10 percent of revenues occur online, but on peak holidays, it will hit 16 percent to 20 percent. “Many clients do more business online on Cyber Monday or Black Friday than they do across all of their physical stores combined. Last year, we had two to three clients cross over the line, but this year we’ll have a lot more.”