In February, when TJX announced its plan to nearly double its annual sales, we here at Blueport took notice, especially since e-commerce is a crucial part of the plan to get there.
For the fiscal year ending January 28, 2012, TJX, parent company of T.J. Maxx, Marshalls and HomeGoods in the US, had $23.3 billion in net sales. The goal is to reach $40 billion by investing in technology and e-commerce. While the company has a web presence with a combined 4 million visitors per month for all of its properties, they do not sell merchandise online in the US and have not since their last attempt at e-commerce in 2006.
“E-commerce is clearly in our future,” said TJX CEO Carol Meyrowitz in a recent conference call as reported by RIS News, Internet Retailer and others. “We believe e-commerce will open up a greater landscape for categories. Just think about the potential for us to carry categories online that we wouldn’t carry in our stores.”
At this point, TJX is building a team of e-commerce experts with a focus on developing the new initiative.
My Advice for TJX
Working at a company with more than 10 years of e-commerce experience, I have some thoughts on the possible tact TJX could take in growing its online retail business.
As I understand the retailer’s overall business, much of the merchandise it sells comes from opportunistic buys, like when a distributor liquidates 900 name-brand sweaters or 500 sofas in a discontinued upholstery pattern, or from program buys, when items are manufactured specifically to be sold by discount chains. Most, shall we say, Maxxinistas, go to the stores to land the opportunistic merchandise, which is harder to find because of the limited supply. So not every store carries the same merchandise, and much of the more sought-after stock moves very quickly. How does this translate to an online retail business?
Option 1: The Gilt Model
TJX and all of its properties could follow in the paths of Gilt Groupe, Fab.com and the like, selling the best stuff online, perhaps even following the invite-only model. Then, items could be shipped from a central location, which tends to work best for smaller items that can be packed in a Fed Ex box.
The challenge here is that their retail websites would directly compete with their stores rather than creating a beneficial and seamless multichannel retail experience for consumers. (Hint: Don’t do this.)
Option 2: Localized Cross-Channel Commerce
TJX could go for a truly localized e-commerce solution that ties into real-time inventory data would provide the best results for their overall bottom line. Customers would be able to get their purchases inexpensively and quickly or even see items in a nearby store. The web presence would continue to improve the overall bottom line without jeopardizing any individual location’s own fiscal health. (Hint: Do this!)
Based on the e-commerce solution we’ve created for our own clients, we think the second option and offering customers a localized cross-channel e-commerce experience would be the best for any retailers’ long-term growth. After all, we’ve already proven this model in the home furnishing industry for stores just like HomeGoods.
- When Charging Online Customers for Shipping, Localized E-Commerce Helps Make the Price Right
- Hyperlocal Beyond Marketing -- Think Localized E-Commerce
- Online Advertising: Now Delivering Local Shoppers -- Is Your Website Ready for Them?
- Consistency Is Key in This Multichannel Retail World
Copyright 2010, Official Blog of Blueport Commerce