Retailers Continue Wary Embrace of E-Commerce

Fewer than half of the top traditional retailers in the United States sell online, according to a recent survey by consulting firm LakeWest Group.

The Retail Channel Integration survey contacted the top 164 U.S. bricks-and-mortar retailers based on revenue as cited in Stores magazine. It found that 47.6 percent have e-commerce channels. Home improvement retailers, automotive aftermarket retailers and grocers have the least Internet presence, while all office product, book, music and video retailers surveyed sell online. Just 13.3 percent of grocers sell online.

Of those retailers that do sell online, most integrate their e-commerce sites with their retail store operations.

“Customers can order on the Web and pick up in stores, look [on the Web] for inventory in stores and return Web purchases to stores,” said Terrence Foran, chairman/CEO of the LakeWest Group, Cleveland.

Fifteen percent of retailers that sell online do so through a separately owned and managed organization.

Kmart, Wal-Mart, Barnes & Noble and others that have not integrated their online and offline operations identified flexibility and speed to market as advantages for maintaining separate operations.

Foran said bricks-and-mortar firms that don't integrate their channels are running two separate organizations. “It leads to redundancy and duplication of physical assets like warehouses and computer systems. All of these things can be consolidated,” he said.

Seventy-four percent of surveyed retailers allow customers to return online purchases at their bricks-and-mortar locations. “It's being done to enhance customer service,” Foran said.

But while most retailers allow online purchases to be returned at stores, less than 9 percent allow customers to pick up online orders at stores. And just 3.6 percent of retailers allow customers to verify inventory at specific retail stores while they shop online. Difficulties providing real-time in-store inventory levels force many retailers to fulfill online orders in-store by shipping to their stores, even if the products are already in stock.

Retailers are not close to uniting pricing and product offerings across both channels. Seventy-five percent charge different prices for the same merchandise online and in stores. Additionally, less than 9 percent offer the same products in stores as they do on e-commerce sites.

Difficulties with offering full product lines online and offline can be partially attributed to vendor resistance due to exclusivity agreements and e-commerce efforts. Also, price consistency between channels could take away some zone pricing and in-store promotion tools that retailers use in stores.

The survey encouraged retailers to use the same physical infrastructure to serve customers across both channels and noted that 53 percent warehouse merchandise for the two channels in different places. The survey noted capacity constraints and the need for speed when launching e-commerce sites as the primary difficulties for integrating distribution centers.

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