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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.

Related posts:

• 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

1. Brand Building: in high engagement categories, brands can interact with their customers on topics they are passionate about.
2. Deals: Facebook can replace email as a way to distribute deals.
3. As a Platform: we look at Facebook as an emerging platform/operating system that can host online stores with built in traffic.

In The Geography of Transport Systems, Hofstra University’s Dr. Jean-Paul Rodrigue, along with colleagues from Canada and around the world, examines how the emergence of ecommerce has affected logistics. Effectively, they say online retail has changed the supply chain by deemphasizing the importance of location, and the online retailer needs to function both as the retailer and the distribution center. This is all well and good for easy-to-ship items, but what are the ecommerce logistics for bigger ticket items, like furniture? Not to mention that as of yet, these academics have not addressed how mobile commerce, with its emphasis on localization, will affect transportation and logistics, or how this change in logistics impacts the customer experience.

At Blueport Commerce we've been practicing localization - not just theorizing - for over a decade, while making ecommerce work for big-ticket purchases for over a decade. Learn more about the Blueport model here.
 

E-commerce 1.0 = World Wide Web (only):  Typical e-commerce does not accurately reflect how multi-channel chain retailing is done in-store.  Just as “all politics is local,” all big ticket chain store retail is local, too.  Through local selection, local prices and local promotions, stores battle local competitors for local customers.  Most e-commerce solutions aren’t built for localization – one site offers the same thing to every visitor, regardless of where a customer resides.   Retailers who adopt this approach for big ticket e-commerce hamper both their online efforts and their stores.

Big Ticket E-commerce = Localize!  Remember that e-commerce supports your overall multichannel retail strategy and your websites should be as localized as your stores.   Some big ticket retailers have hundreds of localized, micro-branded sites with content that resonates with local consumers.   Others use IP mapping to localize prices, offers and product selection, directing customers to local stores with products on display.  All have checkout processes that reflect that delivery times may be 48 hours in one area, two weeks in another.  Make sure your e-commerce platform embraces the complexity of local e-commerce – when done correctly it’s a powerful sales tool online and in your stores.


Copyright 2010, Official Blog of Blueport Commerce

E-commerce 1.0 = E-commerce Rules!:  Inhabitants of E-commerce Island often focus solely on one metric - online sales - to the point of becoming competitive with the “rest” of the multichannel retail operation.   Internal competition may work for first wave markets where multichannel upside is limited, but this strategy hamstrings big ticket ecommerce efforts.

Big Ticket E-commerce = Multichannel Impact:  Take a more holistic view of the potential the e-commerce channel has for your retail chain.  Set multichannel key performance indicators (KPIs) and track interactions across every channel.  It’s every bit as big a win for your big ticket e-commerce efforts when a customer sees your TV ad, goes to your website and is convinced to buy in your bricks and mortar store as when someone clicks “Place Order” online.   It takes additional coordination to drive multi channel results, but in big ticket categories they represent the majority of your upside.  Recognize this, and measure and reward a holistic set of metrics.
 

E-commerce 1.0 = Duplication:  Stranded on E-commerce Island, e-commerce teams often build redundant staff, processes and infrastructure.   Perhaps through lack of understanding of a chain’s existing processes or thinking they have a better way, they create new e-commerce processes and strategies for critical multichannel retail operations.   For first wave categories, this may not be so bad – the processes are simple and the risk of customers seeing multichannel inconsistencies minimal.  Capturing the potential of big ticket e-commerce, on the other hand, requires an integrated rather than duplicative approach.

Big Ticket E-commerce = Integration:  Leverage existing people and their retail expertise wherever possible for your big ticket e-commerce strategy.  Use the same data and processes as the rest of the retail chain, simplifying coordination.  Once you’ve identified existing assets, then (and only then) evaluate and augment these assets, adding resources only as needed to fill e-commerce-specific gaps.

Copyright 2010, Official Blog of Blueport Commerce
 

The rules for big ticket e-commerce differ from first wave, ecommerce 1.0 practices.   More often than not, big-ticket ecommerce problems occur when retailers apply first wave e-commerce solutions to second wave challenges.

E-commerce 1.0 = E-commerce Island:  A common mistake occurs at the outset of many big ticket e-commerce efforts – big ticket retailers organize their e-commerce business as an ‘island’, isolated within a department or wholly outsourced.  A departmentalized approach, isolated from a company’s overall retail operations, is typical of (and may work for) simple ”first wave” e-commerce categories, but the local, multichannel complexity of big ticket e-commerce makes this structure at best ineffective, and more likely detrimental to the chain.

Big Ticket E-commerce = Embedded E-commerce Strategy:  Launch your e-commerce operation as a coordinated, multichannel commerce effort, ideally with the head of e-commerce having a seat at the management table.  This structure allows e-commerce to become what it should be in big ticket categories– a force multiplier for chain-wide initiatives – and optimizes e-commerce results.

Copyright 2010, Official Blog of Blueport Commerce

The term ROBO (Research Online, Buy Offline) was coined by Yahoo! to describe the growing number of consumers who research online, but buy offline.  Online ‘pre-shopping’ has become a common activity prior to a variety of purchases.  According to Forrester, online research will influence $1 trillion in offline sales by 2012, making it imperative that retailers understand the full impact that their online presence—as well as those of their competitors—may have on consumer in-store behavior.

Understanding Research Online, Buy Offline (ROBO) behavior is particularly important when selling ‘big-ticket’ items - online or in-store.  Big-ticket purchases require more research and consideration due to higher price points and their high degree of personalization.  Furniture, mattresses, appliances, flooring and home décor are all examples of products that consumers are spending a significant amount of time researching online prior to purchase.

What should multichannel retailers be doing to better understand and meet the needs of ROBOs while they are in this ‘pre-shopping’ mindset?  Whether the ultimate purchase is made at ecommerce store or at a local store, a multichannel retailer needs to take the necessary steps to ensure they are providing a seamless cross channel customer experience that ultimately makes a sale.  When executed well – and with ROBOs in mind – ecommerce sites can become a critical tool to help stores compete both locally and chain-wide.

By understanding how the ROBO shops, and synchronizing your online presence with your local stores, retailers can provide the seamless cross-channel experience these shoppers seek and capture their business - through whichever channel they ultimately choose to buy.

Put focus on these key areas:

1. Localize online merchandising to match local stores
2. Build credibility through rich, synchronized information
3. Provide accurate, local delivery information
4. Integrate local in-store and online offers and promotions

There’s no shortage of e-commerce conventional wisdom - sweeping pronouncements that online is growing at a certain rate. That one tactic works, another doesn’t.   That a multi-channel strategy is increasingly important. 

I love such analysis and opinion – back in the day, as a consultant at McKinsey, I performed and provided my fair share.    However, I will point out the need to dig deeper. What is loosely called “e-commerce” is dramatically different in its application depending on what you are selling. 

A few things to keep in mind as you digest the latest e-commerce wisdom or evaluate a vendor:
 

E-commerce expertise correlates with where money has been made to date, not where it will be made.

Well known e-commerce experts, agencies and technology companies become so because they’ve been doing it for a while and have been well paid for their work. As such, their experience tends to be in those categories that went online early and successfully, yielding enthusiastic clients and customers who could pay.

There’s nothing wrong with that, as long as you are also in those categories. If not, think about whether what you are being told makes sense for your business.

One example: It’s been said that 65% of e-commerce keyword searches include a manufacture name and/or model number. Most online agencies build keyword strategies around that fact. And, it works well in those categories that have dominated e-commerce in the past.

But, say you’re a furniture retailer. 

Most of your prospective customers have no idea who manufactured the sofa they already own, much less the one they are thinking about buying.   Model number? Forget it. Conventional wisdom is out the window - how will your agency react to not being able to rely a favorite approach?
 

Beware sweeping pronouncements and general statistics. Dig for what’s happening in your market.

I’m an e-com stat addict. There are outstanding analysts out there providing the pulse of e-commerce on a regular and accurate basis. That said, it’s important to pull apart e-commerce statistics and trends to find those that apply to what you do. 

Some recent examples:

E-Commerce Growth Statistics

Pundits seem to be in general agreement that in 2009, e-commerce grew or shrank by single digit percentage points. In the face of brick and mortar declines, this is touted as strength – ecommerce holding its own despite significant economic headwinds.

All true – but there’s more to the story. Big ticket online took off in 2009. 

Big ticket (think things that cost more and can’t ship via UPS…consumer durables like furniture, appliances, flooring) is 45% of the US Retail Economy, $550B in annual retail sales.  It’s never done much online – until now.

Consumers are online and big ticket retailers are now meeting them there. Forrester reports customers feeling comfortable buying furniture and appliances online just in the last 18 months. Big ticket players Blueport works with are seeing monstrous comp increases for online sales and even bigger benefits in stores. 

If you happen to be in big ticket markets, this is an opportunity you can’t miss…but easily could, if you just look at broader online growth stats.

E-Commerce by Channel Statistics

Similarly, stats show roughly 45% of e-commerce transacted by Web-only players and catalogers (i.e. pure plays), 15% by manufacturers, and 40% by retailers.

Beneath this stat is a dramatic big ticket vs. small ticket schism in who is winning in e-commerce. 

For traditional (small ticket) e-commerce, pure plays have tremendous cost advantages. With no store costs, they can price low. Their products are well known, approaching commodity status, and the shipping is fast, cheap and risk free. In categories from books to shoes, pure plays are cleaning up.

Not so in big ticket. Here, consumers know less about the product. They want to touch and feel in a store. They look for trusted brands – not only for the product, but for the retailer who can deliver and service it. And, they are highly focused on delivery times and costs. Here, retail chains, with trusted brands, local stores and fast, cheap local delivery have the upper hand. 

Combine these advantages with the growth noted above, and it’s a good time to be going online if you’re a big ticker player. And, if you’re a retailer in these categories, there’s certainly more than 40% of the online marketplace available to you.

The Importance of Cross-Channel Commerce

There’s significant recent buzz about “multi-channel” or “cross-channel” commerce as the next big thing. We couldn’t agree more – with emphasis on the “big”.

For small ticket items, I don’t think cross channel is that important. Anyone think that opening Zappos bricks and mortar stores is on any of the whiteboards at Amazon?

Conversely, in big ticket, cross channel is critical. The key differentiating factors in big ticket online are store based. Big ticket online and offline channels must be synchronized, as consumers move between them constantly. 

This is why we’ve architected our platform to be localized. Big ticket commerce comes down to the local relationship between a consumer, a store, and the inventory in her area. If you’re in big ticket and you’re not reflecting this reality online, you’re missing the point.
 

Balance online conventional wisdom against what you know about your customers. 

Ultimately, e-commerce comes down to a combination of persuading and enabling consumers to buy, using the internet.

Here again, how your consumers do this may not be the same as in “traditional” e-commerce categories.

To grossly over simplify traditional e-commerce shopping, it comes down to finding a product and deciding you like it. After that, the assumption is that UPS takes it from there - you will have your product cheaply, quickly, and some nice brown-shirted gentleman will take it back if things go awry.

As such, most e-commerce wisdom is focused on search and merchandising, helping consumers to find and buy (maybe getting a deal).

These areas are critical (and unique) in big ticket as well, but there’s more to the story – specifically, the part of the story that UPS takes care of in traditional, small ticket e-commerce.

With a sofa or a fridge, more goes into the shopping process than features and price. Customers want to touch and feel in a store. They may want to speak to an expert. They want to know how fast they can get something, and that delivery is as cheap as it can be. They may want financing options. They want to be sure the product can be serviced, and that, worst case it can be returned.

If these are questions your consumer is likely to ask, be sure to push beyond UPS-based ecom conventional wisdom. If you’re a retailer, you’ve got some of the best possible answers to these questions – be sure your online presence takes full advantage (see localization above).

*             *             *

As consumers look to buy more products online, and e-commerce pushes beyond the simple, UPSable products that were the first wave of e-commerce, the importance of disaggregating e-commerce increases. The opportunities online have changed. E-commerce conventional wisdom soon will too.

• 80 percent of online consumers indicated they will likely research their next kitchen appliance online, and 30 percent said they will likely make their purchase online as well
• 77 percent of online consumers will likely research online their next laundry home appliance and 26 percent will likely purchase that appliance online
• Overall, 65 percent of consumers will research big-ticket home furniture purchases online as well

What’s the next wave of e-commerce? Here’s a hint –it represents the 45% of retail that doesn’t fit in a UPS box.  We call it “big ticket retail” and it includes large purchases that often require more consideration than traditional online purchases.

For these reasons and more, big-ticket retail is fundamentally local. Stores play a critical role. E-commerce becomes a powerful tool to help stores compete in their local markets rather than a national channel that bypasses them - essentially making it local e-commerce. Online efforts serve to drive store traffic, generate leads and consummate online transactions, cost effectively and measurably, creating a true multichannel retail supply chain.
 
Many e-commerce providers shy away from selling these types of items, as big ticket retail presents unique challenges. It involves more expensive, less well-understood products — furniture, appliances, TVs, flooring, construction materials, etc. Prices are higher and consumer confidence is lower. Inventory is bulky, expensive to move around the country and more expensive to return.

If you are a retailer who thinks your business is too complex for e-commerce transactions, there are solutions available to help you reach your big-ticket retail goals. Fundamental to these technologies and the services is the understanding that enabling big-ticket purchases online is different than traditional e-commerce, long typified by consumers purchasing inexpensive, simple products online and receiving shipment via parcel service.