retail

NetSuite Takes Omni-Channel Commerce to the Great Outdoors

What do camping gear, nutrition bars, portable ultraviolet water purification systems and surfboards have in common?

  1. All are consumer products, consumed by outdoor enthusiasts
  2. All are sold by national retailers like REI, Bass Pro Shops and Eastern Mountain sports
  3. All are also sold online
  4. All are manufactured by companies that once ran QuickBooks but today use NetSuite to manage their businesses

These companies were among 33 exhibitors at the Outdoor Retailer Summer Market 2013 show in Salt Lake City, Utah that run NetSuite cloud-based solutions. NetSuite of course capitalized on this event to highlight its recent wins in the outdoor industry. Featured prominently in NetSuite’s press release was the concept of omni-channel commerce. Omni-channel is all the rage amongst retailers, but if you don’t follow retail closely, you might be asking, “what’s that?” In short, omni-channel retailing “is a seamless approach to the consumer experience through all available shopping channels.” And what are these different channels? Stores you visit in person, catalogues you get in the mail, 800 numbers you call after seeing an advertisement on television, websites you visit from your computer or your mobile device.

Have you ever bought something online and wanted to expedite delivery by picking it up at a nearby store? Or maybe when it arrived it didn’t fit and you wanted to save the shipping cost and just bring it back to the store? How about when you go to the store to make a purchase and the item is out of stock? Maybe you’d like it shipped directly to you from a regional warehouse or directly from the manufacturer. As a consumer, these all sound like logical alternatives and perhaps you get annoyed when you can’t “mix and match” your channels. If you can’t, then it is probably because manufacturing, distribution and each of those retail outlets are all running separate systems that don’t (or can’t) “talk” to each other.

So if you think omni-channel commerce is just a retail issue, think again. It also impacts wholesale distribution and even manufacturing. While many struggle with this even today, others have made the leap to fully integrated solutions that support the omni-channel experience.

NEMO Equipment, for example, is a designer of innovative tents, sleeping bags and pads and other camping gear. Its products are sold both online through its own custom-built web storefront, as well as through about 300 retailers including REI and Eastern Mountain Sports in North America, and internationally in Europe and Asia. Up until recently (January 2013) it was trying to piece all this together with QuickBooks, but today uses NetSuite for financials, inventory and order management, CRM and PCI-compliant credit-card processing. Consolidated inventory management allows NEMO to also compartmentalize inventory, virtually segmenting direct-to-consumer, B2B and US military sales channels while cutting pick, pack and ship time in half.

Liberty Bottleworks is another example. The company prides itself in making the only metal bottle on the market that is entirely made in America. Therefore it can’t rely on off-shoring or other low-cost country means of reducing costs. It relies instead on operational efficiencies to create a strong bottom line. It uses NetSuite financials, manufacturing, inventory, order management, CRM and eCommerce, with a direct-to-consumer website powered by NetSuite SuiteCommerce to manage its business end-to-end while also expanding its retail network to about 1,400 including REI, Whole Foods and L.L. Bean. But its omni-channel commerce has a bit of a unique twist.

In addition to its B2C online sale of standard metal bottles and its distribution through regular retail outlets, Liberty Bottleworks also offers custom bottles. Want your logo and company name on a bottle? No problem. Liberty Bottleworks can do that for you. In fact it does just that for corporate customers like Coca-Cola, the Seattle Seahawks and even NetSuite itself. While the company expected this to be about 10% of sales, this part of the business has recently exploded, which has added a level of complexity that would be unmanageable without an integrated solution to support it. NetSuite supports Liberty Bottleworks in managing up to one million components (who would have thought?), including recycled materials.

These are just a couple examples of companies manufacturing consumer products that face a level of complexity added to a business that once might have been relatively simple. As consumers expect and demand more choice, merchants, distributors and manufacturers require an added level of seamless integration that is impossible to achieve with spreadsheets and desktop-bound solutions.  In order to manage the relationships between consumers, retailers, distributors and manufacturers, you need seamless integration of financials, ERP, CRM and eCommerce. Yes, it’s a tall order, but consumers demand it. And with the right solutions, the opportunity for companies like Liberty Bottleworks and NEMO Equipment is as big as the great outdoors.

Tagged , , , , , , , , , , , , , ,

NetSuite Acquires OrderMotion: Bringing Omni-Channel Products and Expertise

Earlier this week NetSuite announced its latest acquisition: OrderMotion, Inc., a provider of cloud-based Direct-to-Consumer (D2C) order management solutions. The acquired company is located in Burlington, MA. NetSuite’s go-to-market strategy is to take a suite-based approach, providing an end-to-end solution, which addresses the full quote-to-cash life cycle. The customer order is at the very core of this process and therefore the SaaS ERP company has always carefully guarded any function that touches the order. No alliances or marketing partners here. When it comes to customer orders, NetSuite wants to own the functionality.  In this regard, an acquisition makes perfect sense. But given OrderMotion is not embedded in the suite and NetSuite already fancies itself as having an industry-leading order management system, what value does it hope to gain from this addition?

NetSuite is buying OrderMotion for its expertise as well as its products. OrderMotion’s products are typically sold stand-alone and that will continue. The target is not current NetSuite customers. So this is more a market share play than it is one that goes after an increased share of the customer’s wallet. NetSuite intends to continue selling the OrderMotion product but it also hopes to apply some very specific expertise to further strengthen its own current order management capabilities. The OrderMotion engineering team will continue to innovate the acquired product but NetSuite also hopes to have them contribute to the order management modules of its ERP suite.

NetSuite already has a strong order management solution with capabilities that include distributed order management, fulfillment from multiple locations and return merchandise authorization (RMA) as well as strong back-office integration with billing and cash collection. It provides standard integration to major carriers like United Parcel Service (UPS), Federal Expres (FedEx) and the United States Postal Service (USPS). It can deal with multiple currencies and multiple sales and use tax structures. OrderMotion will add more depth of functionality in orders “direct” from the consumer and trends in the industry towards omni-channel commerce.

Omni-channel refers to the ability to use different channels simultaneously. Consumers might purchase online, but pick up, or return merchandise at a physical store. Retailers may use retail stores as distribution hubs. As consumers make online purchases, it may be advantageous to ship from a store location where the item may be overstocked, thereby drawing down surplus inventory. Or the choice of ship from location may be made to minimize cost and lead-time. Combining all these options requires a level of expertise and feature functionality not typically included in your traditional ERP software suite.

This is definitely an issue for retailers today. But more and more manufacturers and distributors find themselves also selling direct now, so it is just a matter of time before they need to deal with omni-channel supply chain issues as well.

In continuing to sell OrderMotion stand-alone, I would expect the acquisition to be accretive. But behind the scenes I would also expect to see the OrderMotion team lending a hand to further extend distributed order management and omni-channel supply chain capabilities in NetSuite’s ERP suite. Both solutions have a strong technical architecture that supports multi-tenant SaaS, so business models are consistent. But they are different architectures. While I don’t expect them to be sharing code, I would expect them to share designs.

NetSuite ERP will benefit from the expertise of a team dedicated exclusively to order management, one that has specific omni-channel expertise. OrderMotion engineers should also benefit from having to blend this functionality into an integrated suite, something they have only done at arm’s length previously.

Overall NetSuite winds up with a new product and a better way to attack the retail market that is already forced to deal with this omni-channel phenomenon. And it has the opportunity to further strengthen its existing product as the omni-channel commerce begins to invade the world of manufacturing and distribution.

Tagged , , , , , , , , , ,

SYSPRO: Changing the Way Products are Bought and Sold

 

By Manufacturers, Distributors, Retailers & SYSPRO Too

On June 28, 2012, SYSPRO, a developer of award-winning enterprise resource planning (ERP) software, made two announcements, seemingly unrelated, but both driven by an undercurrent of change. The change is in the way products are bought and sold. More and more today manufacturers and distributors have at least one sales channel where they eliminate the middleman, by-passing the retailer and selling directly to the consumer.  This places new demands on the business at the point of sale, demands typically not addressed by ERP. SYSPRO’s response is a fully integrated Point of Sale (POS) solution that will provide manufacturers and distributors a single solution to manage business information, store operations, customer-focused POS, inventory optimization and merchandizing along with ERP.

At the same time, SYSPRO itself is engaging in a new way of selling. In a world where you hear more and more, “There’s an app for that” SYSPRO is opening its own SYSPRO App Store: an open marketplace where eventually thousands of solutions will be available to extend and complement the value of its ERP solution. Partners benefit from a broader reach with minimal investment in infrastructure and customers benefit from the easily accessible added value.

Two Worlds Converge

When it comes to managing the sale of goods, retail and manufacturing are typically worlds apart. In retail, at the point of sale you deal with cash, check or debit/credit card; the customer walks away with goods in hand and inventory is depleted. In manufacturing you process your customer’s purchase order, create a sales order and subsequently ship and invoice, relieving inventory and creating accounts receivable. Later you receive cash and apply the cash receipt against accounts receivable either on an open item or a cash balance basis.

Receiving cash in a traditional point of sale (POS) system in a retail environment is easy. Managing an open account is more difficult. For a manufacturer or distributor using an Enterprise Resource Planning (ERP) system, managing accounts and accounts receivable is standard practice. Processing a cash sale is more difficult.

In a retail environment, the cash in the drawer is reconciled against the sales recorded at the end of the day. In a manufacturing or distribution environment shipments, invoices and cash receipts are reconciled at the end of the month. Yet in all cases, everything must be posted to the general ledger in order to create a balance sheet and profit and loss statement.

So what happens when a manufacturer or distributor sells directly to a consumer? It happens more and more today in showrooms and factory outlets, as well as online. In eliminating the traditional retailer, does the manufacturer need to invest in both a retail POS solution, as well as a back office ERP solution and interface or integrate the two in the hope they will one day all work seamlessly? Not if you are a SYSPRO customer.

SYSPRO is not the first ERP solution provider serving manufacturers to offer a retail POS solution. Yet typically these are two separate products. Most often when POS is part of an ERP solution provider’s product portfolio, that solution provider is targeting retail with its POS solution and manufacturing with its ERP solution.  SYSPRO isn’t going after the traditional retail sector. It is still focused primarily on manufacturers and distributors, but offering additional features and functions to support these companies as they reach out directly to consumers.

SYSPRO Point of Sale for Manufacturers & Distributors

As a result, the SYSPRO Point of Sale solution offers features specifically designed for manufacturers that might not be available in a POS solution designed first and foremost for retailers. These features include support of a “make to order” environment, complete with complex product and pricing configurations and supply chain transfer, a feature that supports tracking of shipping and in-transit inventory. It also includes support of lot tracking and serialized products and inventory locations down to the bin level. And yet these manufacturing-specific features are blended with features necessary to fully support a retail environment. Features like:

  • category and catalogue browsing
  • customer and loyalty programs
  • store management
  • exchanges and returns
  • touch screen interface and mobile access from a tablet
  • scanner and cash drawer functions that allow the use of any personal computer with a “locked” cash drawer
  • credit card limits for individuals in addition to an overall account limit
  • end-of-day cash reconciliation (“cash up”)

To make the solution more scalable, SYSPRO has uncoupled the ERP and POS user counts. A manufacturer might have 10 named users for ERP and 1,000 POS users. Or a SYSPRO Point of Sale user might also be linked to an existing SYSPRO ERP user. While accessible through a web-based interface, the system has been designed to be “always on.” This means the store can continue to operate even if the connection back to the central server is lost, a necessity because you can’t afford to have a customer walk out the door for lack of service. When the connection recovers, data is synchronized transparently and seamlessly.

The goal is to provide manufacturers with retail operations a single solution to manage business information, store operations, customer-focused POS, inventory optimization and merchandizing along with ERP. It has several customers currently running both SYSPRO Point of Sale and ERP including:

  • Coricraft Furniture, a fully integrated furniture retailer in South Africa. Its manufacturing facility produces a diverse range of high quality, full grain leather and fabric couches in a variety of styles and colors. Coricraft has 80 SYSPRO ERP users ad 370 Point of Sale users
  • Lesel Research, a beauty product manufacturer and retailer with 48 SYSPRO ERP users and 40 Point of Sale users

SYSPRO is Preparing for Change Too

But manufacturers aren’t the only companies experiencing a change in the way product is bought and sold. Consumers today are quite accustomed to hearing, “There’s an app for that.” In response they go online to purchase and download those apps, and they start using them immediately. Many of those consumers also work for manufacturers and distributors. So why not bring the same convenience and buying experience to the corporate world?

The SYSPRO App Store is SYSPRO’s response to its customers’ growing appetite for expanded functionality and the consumerization of Information Technology (IT). It is an online marketplace for the global SYSPRO community where partners can offer new products and customers can search for solutions. In fact it is a public site, so anyone will be able to browse and search, but a secure login will be required to either purchase or publish.

So the SYSPRO App Store is a way for partners to add value to the SYSPRO solution. Any registered partner can publish to the site, making applications or content available using one of three licensing models:

  • free and unlimited usage
  • perpetual license with one-time payment
  • protected license with an initial payment, followed by a recurring annual fee

Publishers can make a free trial version available in addition to a full commercial version. This feature and the App Store in general will be a very cost-effective way for the partners to market their products globally, potentially reaching a far broader audience than their own immediate sphere of influence. And they can use SYPRO’s licensing technology to protect their intellectual property (IP) while also generating recurring revenue.

SYSPRO Takes Control

SYSPRO will evaluate and must approve all products, but as the volume is likely to grow over time (SYSPRO ultimately expects to host thousands of apps), this may wind up being rather cursory.  But there are two additional factors that will make the site somewhat self-selecting. First of all, the publisher of the app will be required to provide support and issues are logged right in the “store.” So SYSPRO would be able to monitor all. An unusual number of open tickets will help identify apps that might not be up to snuff or partners that are unable to provide adequate support. The risk of course is in giving SYSPRO a black eye before the problem is identified and corrected.

So perhaps even more appropriate is the consumer-like five star rating available for each app, along with customer reviews and comments. Poorly performing applications will not be able to hide, and will likely not produce many sales. In a reference-based business like software applications, the insight these ratings and reviews will provide can be priceless.

Managing the Process

SYSPRO will manage the eCommerce aspect, collecting payment from the customers and distributing payment to the partner on a quarterly basis, after taking its cut of course. This leaves the partners free to concentrate on the products themselves, leaving distribution, payment and sales tracking to SYSPRO.

The buying process is simple and straightforward but it is also a controlled environment, which will prevent purchases from individuals at SYSPRO customer organizations that are not authorized to buy.  And an administrator at a customer site can monitor what products have been downloaded. The App Store handles version changes and will inform consumers of the product when an update is available, one less thing for the publisher to worry about.

A full ERP solution still requires the due diligence of a comprehensive evaluation, careful planning and commitment from top management, right on down through the rank and file. But once an ERP solution is in place, companies continue to change and grow and many seek continuous improvement. Having the ability to easily expand ERP’s footprint to satisfy changing or expanding needs is a huge plus.

Key Takeaways

We live in a world of change. The way we buy and consume products is changing as fast as the technology that has infiltrated our lives. We demand instant and direct access to products and we expect the companies selling us these products to evolve and adapt to our demands.

SYSPRO Point of Sales, together with its ERP solution blends the manufacturing and distribution of goods with retail, providing a direct selling process in a single integrated solution. The SYSPRO App Store provides a direct purchasing process for SYSPRO customers, while maintaining control over that process. And it has the potential to aggressively expand the footprint of the solution.

It would appear SYSPRO has both ends of the spectrum covered.

 

Tagged , , , , , , , , , ,