Best Practices for Integrated Omnichannel Commerce - White Paper Updated: May 2020 - ZOKU ...

Best Practices for Integrated
                      Omnichannel Commerce
                                    White Paper

                              Updated: May 2020

Zoku Retail Integrated Commerce White Paper – May 2020   1

Winners and Losers in the New Hybrid Commerce Paradigm

With the surge in the last two decades of online and mobile commerce, some have speculated that
brick-and-mortar retail was going the way of the dodo. Spectacular collapses of flagship global
retailers fueled speculation that online interactions would soon mostly replace the in-store shopping
experiences. But rumours of the extinction of retail have been, to paraphrase Mark Twain, greatly
exaggerated. On the contrary: from 7-11s to Zara to Apple Stores, retailers are applying smart
software to create a unified branded customer experience by integrating all marketing and sales
channels. They are leveraging mobile, social media and web presence to drive shoppers into stores.
They are encouraging in-store shoppers to stay in touch and shop via online channels.

The new paradigm reflects a hard-won awareness that online does not live in splendid isolation.
There is a deep human need to stroll in stores and shop, to see products unmediated by LCD
screens, to touch them without the keyboard or mouse as intermediary, and to take their new
gadgets or apparel home with them. What seems to be happening, and fast accelerating, is a
process of integration that is leading to the long-held dream of a seamless multi-channel experience
for consumers and businesses. The problem for most retailers is that integrating seamlessly the
latest and greatest technologies in to retail operations, online and offline, has been prohibitive
complex and costly. At least until now.

Point of Sale systems are, true to their name, taking a point position in this neo-brick paradigm,
leading the way as the primary means for bridging between physical and online presence and
dataflow, becoming increasing relevant to both the consumer’s experience and the business’
interactions with the consumer. A key takeaway is to recognise that any channel can be a point of
sale, and to leave no buying opportunity unexploited. However, the growing relevance of POS
comes with its own risks, as reflected in what we might described as an overreach by some vendors
to retrofit back-end functionality to what is, at least by definition, a front-end, customer-facing set of
functions.

Worst- and Best-Case Scenarios: Is Your Business Future-Proof?

What we want to do here is to approach the issue of integrating retail systems both in their physical
and online incarnations, considering best practices for creating a seamless and highly efficient
solution for creating a lean, mean multi-channel operation, bridging the front and back ends of
retail, from a mom-and-pop shop to a multi-national, multi-currency, multi-site chain. We will look
at what works and what doesn’t, trying to identify practical steps for building in a scalable and
future-proof manner.

First, the good news for retailers is that, according to Statista, global retail sales revenues are steadily
creeping up, year over year, from 3.2% annually to 3.4% in 2018. The bad news is for companies
which rely primarily on sales at physical outlets. While 87% of US sales in 2017 were still in stores,
that number is steadily declining, year after year. In the US, according to Department of Commerce
statistics, brick-and-mortar retail sales rose just 1.9% in 2017, compared to growth of 16% for
ecommerce retail. Retail centre footfall in the UK declined every single month, from 2017 through
the end of 2018. From Toys R’Us to Maplins to the High Street flagship Marks and Spencer, stores
are closing left and right, and whole companies that seemed invincible just years ago are careening
toward bankruptcy (or “administration”, if you prefer that euphemism).

 Zoku Retail Integrated Commerce White Paper – May 2020                                                2

The M&S case has been extensively studied. Experts blame the company’s failure to improve its
online game as an essential strategy for reviving its sagging brick-and-mortar fortunes. The smack
on this former High Street standout was that its website and social media were drab and
unintegrated with the customer experience in stores. It never truly embraced multi-channel, but
rather looked down on online as a poor stepchild, a necessary-evil promotional venue for its massive
High Street department stores.

Consumers today, especially on the younger end of the demographic spectrum, expect truly
integrated multi-channel. It’s all about demographic trends: according to Statista, 67 percent of
millennials and 56% of gen-xers prefer shopping online, while the numbers decline to 56% for baby
boomers and a mere 28% for senior shoppers. Efforts by M&S to appeal to younger shoppers with
environmental and social do-gooding fell flat. The old-school retailer could never match the online
and social media cool factor of brands like Zara or John Lewis.

Specifically, M&S was flamed for royally flubbing their loyalty program. Younger consumers,
especially, expect their loyalty to a brand to be rewarded with points, rewards, and a seamless
shopping experience, online or in the shop. There are plenty of loyalty system options out there,
each with its strengths and weaknesses: cash back, store credits, store voucher, points, etc. The key
point for an ecommerce platform is not to impose a specific loyalty system on the customer and to
allow points to be redeemable in any channel. Customers should have a “free market” for choosing
the points and rewards system that fits best with their business and their brand. Loyalty should be
the naturally result of optmising the customer experience, because that’s what will deliver your
competitive edge.

Some examples from the US illustrate roads to ruin…. and paths for a successful turnaround.
Electronics retailers CompUSA and Circuit City, which just a decade back seemed to be nationwide
retail institutions, rapidly collapsed under the unrelenting price-pressure from online competitors
and the failure to provide a satisfactory multi-channel experience. Best Buy on the other hand,
previously on the precipice of failure, showed how a turnaround can be engineered in style. While
online sales at Best Buy are skyrocketing, offline growth at 5.6% is none too shabby. A key factor, of
course, is the company’s unique position (at least currently) as the only retail in-store shopping
outlet for Amazon. Best Buy has the massive presence to provide both warehousing and distribution
for a massive quantity of product. But Best Buy would best not rest on its recent laurels. Wall Street
speculates about a possible acquisition of the retailer by the Bezos-run Big Brother even as Amazon
acquired Whole Foods in 2017 and mulls the building of brick and mortar malls.

The Hidden Success Factors of Multi-Channel Retail Integration

Let’s look at practical steps that retail operations should be looking at to join the multi-channel
winners and avoid the calamities that can befall a retailer slow to adapt and adopt best practices.
The first step is expanding our perception of what retail has become.
Retail can be anywhere. Airlines and cruise operators are now devoting focused attention on retail.
Most travel and transport providers now have retail divisions; consumers have not changed:
consumers are consumer whether they are in planes, on ships or in a mall. Even as consumers’
attention increasingly starts with the screen that is in their hot little hands, retailers need to broaden
their minds to be wherever customers are, and devise solutions designed form the get-go to be
consumer-centric.

Consumers are increasingly accustomed to interactive retail experiences that look-and-feel the same

 Zoku Retail Integrated Commerce White Paper – May 2020                                               3

wherever they are. They won’t accept bulky and mechanical cash registers: their smart phone and
their preferred smart store should be one and the same in terms of UX and in-store CX. The
experience in the checkout lane and mobile in-store browsing should be similar if not identical. A
shopping cart is a shopping cart, whether physical or virtual, offline or online.

However, Magento and Shopify also exemplify a risk that has accompanied the growth of online
shopping platforms evolving into POS systems. The companies tried to reach beyond what they do
best or hardwire solutions that did not really account for the complex reality of retail operations.

Both realised that ecommerce alone could not sustain their growth. Each turned to retail POS as a
way to grow their market. It was obviously not feasible to create ERP and warehousing systems of
their own. But instead of building bridges to these complex back-end systems, they over-
optimistically expected their own “lite” product and transaction databases to serve as an adequate
replacement. Maybe for mom and pop stores that can suffice, but not for SMEs and larger
enterprises who expect to scale up their operations.

Magento, Big Commerce, Shopify and other eCommerce platforms have enabled retailers of all sizes
to quickly sell their products online. However, these engines typically work in isolation of all other
consumer channels, operating on their own product and consumer databases. Why would a retailer
want a source of data other than their ERP – unless of course they had no ERP and didn’t want to
pay the price? And speaking of paying the price: often POS systems will take a hefty cut in
transaction fees, cutting deep into the retailer’s margins. And the need to create a custom
integration each time a POS needs to connect with an ERP or other external system, the costs
mount, and not just on a one-time basis! Working with commission-taking third-parties is a kind of
death by a hundred cuts!

The reality is that ERP and warehousing systems are the beating heart of an ecommerce operation.
Instead of a POS forcing its own database down its customers’ proverbial throats, wouldn’t it make
more sense to use a lightweight, cloud based API to bring together these disparate modules in the
commerce workflow, in both the sales and supply chains? Instead of “one size fits all”, wouldn’t it
make more sense for an integrated omni-channel solution to basically make itself agnostic as far as
both hardware and software goes? Wouldn’t it make more sense to rely on a lean, flexible system
that simply and efficient connects the various system to create a seamless workflow from back to
front and back again?

 Zoku Retail Integrated Commerce White Paper – May 2020                                           4

Zoku: Toward a Value-Based, Fast ROI, “Single Source of Truth”

Instead of “one size to fit all”, a more cost-effective solution to supporting the retail ecosphere
should be “right-sized to fit all”. At least one multi-channel integration solution is taking this
approach. Zoku is a new provider that has built its lightweight, relatively low-cost, cloud solution on
a “lean, mean, flexible” architecture. Hardware agnostic and connecting disparate systems via
modular API connectors, the Zoku approach is to adapt its solution to where each retail operation is
right now.

Instead of forcing retail customers to replace all its system with something monolithic and
monstrous, Zoku gets out of the way of the core software components. It focuses on streamlining
workflow, letting data stream seamlessly from one system to the next, bridging between front and
back ends. What that means in practice is that changes at one point in the overall ecommerce
system can ripple through automatically to every other point, automatically synching data and
unifying flows.

Ultimately, the advantages of Zoku’s agile, value-based approach to omni-channel retail integration
tends to translate into much faster ROI. There is both a lower upfront cost and faster realisation of
operational-savings, especially relative to solutions requiring expensive, time-consuming, and risky
upgrades or replacements of back-end legacy systems.

The Zoku multi-channel Commerce suite API has real-time integration connectors with ERPs like
NetSuite as well as the most widely used eCommerce engines. It also has the smarts to cache ERP
data to ensure your ecommerce site is not hostage to your backend. Especially with legacy systems,
there is downtime – scheduled and unscheduled - that can’t be allowed to interfere with a seamless
and continuous customer experience 24/7.

Zoku enables you to have customised and flexible designs for your UI, both online and at the POS.
You want a consistent look and feel across all consumer channels, with fully connected workflow:
POS, web stores (such as your Amazon shop) mobile apps, ecommerce; social media pages and
more. The API layer intelligently manages the integration of data flow system-wide.

This approach handles the complexity of disparate commerce systems, keeps pace with change, and
delivers that elevated and branded customer experience in harmonious, seamless, and powerful
ways. The system also lets you leverage AI and automation to take full advantage of business
intelligence in a practical way without breaking your budget or becoming dependent on any one
hardware or software supplier. The key is to stay lean and agile - simple, modern and powerful -
while hooking all your systems together and future-proofing your business.

This lightweight and relatively lower-price option focuses on helping retailers up their commerce
game across front and back-end system, in both online and in-store channels:

1.     Reach customers across multiple channels seamlessly, owning channels and data
2.     Optimise operational excellence by leveraging a fully integrated infrastructure
3.     Future-proof and innovate by integrating internal and external data sources via API
4.     Harnessing analytics, visualisation, and BI recommendations to improve services

Let’s take these goals one-by-one to explore what implementing them can mean for you.

 Zoku Retail Integrated Commerce White Paper – May 2020                                            5

1. Reach customers across multiple channels seamlessly, owning channels
and data

Your primary focus when envisioning a comprehensive solution should not be on software or
hardware, but rather on creating the kind of intuitively satisfying customer experience that shoppers
today expect in every channel of your brand that they encounter. Customers expect to deal with a
single branded entity that takes complete control over their orders and history, across all channels,
no matter where they entered. All channels should have the same ‘look and feel’ to them – color
palette, typography, imagery – whichever front-end system should make that part easy and
impressive in the visual and experiential outcome.

Whichever technologies you employ, we strongly advise that you own your mobile channel rather
than rely on 3rd party providers who lend their “platform” for reaching customers but usually at the
heavy price of your yielding control to them and forking over a hefty fee for their mediation. You
should retain ownership of customers and data, free to cultivate loyalty and make use of that data to
build your business.

Don’t neglect website and social media hooks as marketing but also sales channels. More and more
services allow for direct ordering from Facebook and other channels. Make sure your platform is
flexible enough to add these kinds of services as they come down the pike. But be careful not to
sacrifice customer ownership out of convenience or try to save up-front costs at the expense of
profit-killing commissions.

Leverage multiple channels to cross-pollinate campaigns. Focus attention from one channel to
another and from one promotion to another. That way you maximise customer brand awareness.
Aim to offer a kind of keyring solution with a spectrum of interconnected, interchangeable channels.

 Zoku Retail Integrated Commerce White Paper – May 2020                                          6

2. Optimise operational excellence by leveraging a fully integrated
infrastructure

With all the power of the modern Point of Sale offerings, resist what we may be called “POS creep”
into the backend. Don’t buy into a soup-to-nuts “comprehensive” solution that imposes a front-end
POS with “hard-wired” connections to back-end systems or vendors which force you to use their
database rather than your own ERP.

The POS should be hardware agnostic, and cover the main software operating systems: Windows,
iOS, and Android. Avoid dependency on the peripherals of a specific vendor, or dependencies on a
single-vendor software as is the case with the popular Revel, Magento, Shopify and other commerce
solutions. Your software should be adaptable enough to achieve your operational goals: your
operations should not need to be adjusted to fit their software.

These days, of course, localisation is a key factor. Regional and global operations need to provide
support for multi-currency, multi-lingual, multi-store, to work scalably and seamlessly across
borders, with full support for both franchise and owned stores.

The key point is to avoid being locked in to any specific system in your retail workflow, from selling
to warehousing and back again. While there are no shortage of vendors peddling proprietary
solutions, the next generation approach is to leverage cloud software to remove dependencies on
specific hardware or software. Instead of aiming to replace infrastructure, the goal should be to
empower you to connect your existing systems (or new systems they choose) to the maximum
extent possible.

Your solution should be cloud-based, and hardware-agnostic, so there’s no need for servers on-
premises. The reality is that businesses inherit legacy systems too expensive or time-consuming to
migrate. So the ecommerce solution you seek needs to handle that scenario, too.

 Zoku Retail Integrated Commerce White Paper – May 2020                                            7

3. Future-proof and innovate by integrating internal and external data
sources via APIs

A next generation, multi-channel integration platform is built on a lean, thin-client connective layer
that hooks in both internal data sources and external systems and SaaS solutions, or legacy ERP or
CRM systems. It relies on the power of a RESTful API to provide modular connectors to various third-
party systems (e.g. Netsuite or Microsoft systems). That way, you don’t need to reinvent the wheel
or undertake expensive and risky migrations. Better to use lightweight API calls to do the
authorisation, connect to data sources, and create a seamless workflow. The integration layer also
powers the consumer channels using these same back end systems, ensuring delivery of a coherent
and reliable multi-channel consumer experience
Instead of hard-wiring the connections by proprietary code, your goal should be to employ an API
based “data platform”. New generation vendors like SandPalm (producer of the Zoku Commerce
suite) provide this kind of lean, agile approach to modular connectivity. The same holds true for
payment processing. In new generation platforms, you should not be locked into specific payment
gateways (and accompanying rates). Rather you should have the ability to integrate with the
payment gateway of your choice, auto reconciling across payment methods. A single workflow
should unite consumer channels and back end systems.

Don’t be seduced by “hard-wired” solutions forcing you to accept fixed data flows that prevent you
from making changes to input or output formats. As you scale, you will need maximal flexibility in
transforming, storing, communicating and synching data across your systems. The key point is to
ensure scalability with a single lightweight platform connecting all your data sources, so you never
need to rewrite legacy code. Rather, you can work via API or simple ODBC connections to access and
manipulate all data from all connected sources. Having all your data in one place also means

you can run queries and analytics across all of it at once, synch pricing, or connect directly to your BI
and analytic tools.

By default, new generation solutions should never delete data. They use versioning so you can
always trace back exactly what happened, and when. This approach is also great for structured
backup on an enterprise scale.

 Zoku Retail Integrated Commerce White Paper – May 2020                                              8

4. Leverage the power of data analytics and visualisation with business
intelligence on top

Retailers increasingly recognize the need to “know the customer” on a deeper level than has been
possible until now. How do customers react to signage, story layout, product presentation? This
heightened awareness is being driven by the availability of methodologies and technologies for
better gathering customer behavioral data, interpreting it, then delivering results rapidly and
understandably to management. Be careful to capture all the data you need. When working with
third party platform, make sure they share all the fields you need – they don’t always. Knowledge is
power to improve your internal and customer-facing operations.

There is a need to build in analytics into each module of the operation, front and back, then pull
together interpretation of the data so KPIs and problem areas are identifiable to management.
Artificial intelligence components are generally layered on top, extracting the analytics and
translating the raw data into high resolution visualisations and clear recommendations.

In addition to traditional Business Intelligence -- which draws its data from surveys, AB-testing, CRM,
ordering and delivery processes – AI-driven recommendation engines are becoming critical to
smooth, high performance retail operations. This graph database uses property graphs to extract
added value from the gathered data in an agile, flexible and scalable way, performing significantly
better than relational (SQL) and non-relational (NoSQL) databases. Advanced Algorithms and a
comprehensive data strategy ensure that the recommendations are extremely relevant, adding value
to the consumer by recommending a product that he or she will likely buy and enjoy, and at the
same time increasing the retailer’s revenue.

Recommendation engines can be customized based on retailer requirements. For example, systems
can recommend products or upsell according to various purchasing parameters, or based on
customer data derived from past purchases or buying patterns. In general, the more intelligent
integration of data from various sources the better, including ordering, delivery, CRM and more. The
key point is to have an API-driven integration layer that can pull together disparate data from
various sources and pass it up for AI-powered interpretation. The Zoku retail solution makes that
possible.

An innovative approach gaining traction is anonymous crowd analytics with cameras installed at the
POS or other locations inside a store. You can retrieve and visualise real-time statistics about your
audience: People count, Viewer ratio, Gender, Age brackets, Mood, Attention. Using low-cost
cameras, facial recognition and analysis tech captures audience images, collects the data, and
presents the processed results in a cloud-based dashboard – anonymously and subject to strict
privacy protection policies.

 Zoku Retail Integrated Commerce White Paper – May 2020                                              9

Microsoft Azure Emotion API can take a facial expression in an image or a video as an input, then
return a confidence score about the likely emotional meaning of each face displayed, accounting for
cross-cultural factors. Integration solutions like Zoku for Commerce can integrate this capability,
providing unique insights into a customer’s experience of your offerings.

Ultimately these modules are all about using AI and BI to acquire and retain more customers, sell
more to each, streamlining operations to increase profitability.

 Zoku Retail Integrated Commerce White Paper – May 2020                                               10

Summary

Zoku Retail Integrated Commerce White Paper – May 2020
         Zoku Retail Integrated Commerce White Paper – May 2020   11

Summary

The Zoku Commerce integration suite stands out as a top new generation SaaS cloud product for
retail commerce. It pulls together POS, Kiosk, Mobile, Web, Social Media and chatbots into an agile
and versatile unified solution. The retail-specific integration layers facilitate front- and back-ends
working together harmoniously and more efficiently than the one-size-fits-all generic solutions
offered by many legacy vendors, or by POS providers that want to force non-POS modules and
databases down your throat Or provide underpowered “lite” product and transaction databases
that won’t scale as your operations grow.

Zoku lets you flexibly add Analytics and Business Intelligence layers, using AI-driven
recommendation engines to glean insights into making the customer experience more relevant
and your internal operations more cost-effective. It offers a thin-layered one-stop retail solution
less costly than hard-wired legacy systems or “heavy POS” approaches. Ultimately, retailers of all
sizes, from any vertical, to incorporate the latest smartest technologies as the industry giants do,
but at a fraction of the cost.

On the bottom line, Zoku offers the kind of open, lightweight, value-based solution consistent with
the spirit and processes of the resurgent retail paradigm: simple, fast and cost-effective to deploy
in the cloud, producing rapid results and faster ROI for the full spectrum of commerce operations,
from smaller SMEs to multi-brand, multi-national groups.

 Zoku Retail Integrated Commerce White Paper – May 2020                                                12

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