Is multichannel worth the money?

Investment in ecommerce and creating a multichannel customer experience is no longer optional according to the many retailers I’ve seen present at various ecommerce events in the past couple of weeks.

But getting this right costs money — normally lots of money — and big technology budgets aren’t the order of the day in the current economic climate.

The one stick that the multichannel stick-in-the-muds use to beat the progressives with is the issue of whether bells and whistles ecommerce or multichannel operations are actually profitable.

At the Internet Retailing event last week, John Lewis Direct managing director Robin Terrell answered the question with a resounding yes; but admitted that it had taken £113 million of online sales a year to get there.

Now John Lewis has expanded its ambitions from having a website that sells more than its largest store — which it achieved in 2008 — to developing an integrated multichannel operation that can break the £500 million annual sales mark in a couple of years. It is going to take a significant infrastructure investment, and business reorganisation, but Terrell recognises that continued profitable growth isn’t possible without it.

Meanwhile Marks & Spencer managed to leapfrog some of its multichannel competition last week with the launch of its new site. The site has come joint first in a website usability ranking undertaken by user experience consultancy Webcredible, up from 9^th place when the same research was done last year.

The news that M&S is reviewing store space to take account of the growth it expects in online retail suggests the retailer believes that this investment will be paying for itself.

And at a breakfast briefing hosted by Maginus yesterday morning, the room was packed with smaller retailers such as Oliver Bonas, Paperchase and Pets at Home talking about their multichannel challenges. They all have their pain points, but getting a return on investment from technology investment didn’t come up.

Back at John Lewis, the longer-term vision is to expand the assortment online in appropriate categories – the website stocks only 100,000 skus of the more than 250,000 skus that are sold through its stores. And the ultimate goal is to deliver personal service online so “contrary to current adverts, you don’t go home and buy it from someone else,” concluded Terrell.

Dixons be warned.