Retail Management 12th Edition by Barry Berman ,Joel Evans

Exercise 3

Case 3: 1-800-Flowers.com Teams with IBM's E-Commerce Platform
1-800-Flowers.com (www.1800flowers.com) is the world's largest floral and gift shop, with annual revenues of about $670 million. 1-800-Flowers.com was one of the first retailers to brand itself, and it did so based on its easy-to-remember toll-free phone number. It was also one of the first retailers to partner with AOL, at the inception of the Internet.
A major part of 1-800-Flowers.com's overall retail strategy is its sale of multiple brands of gift items. This strategy provides consumers with a choice and appeals to multiple market segments. Among 1-800-Flowers.com's brands are Cheryl's (gourmet cookies), Popcorn Factory, Fannie May (chocolates), Winetasting.com, and Celebrations (party ideas). Because many of these brands involved acquisitions, business processes and information management systems were far from integrated in the past. This lack of coordination was costly for 1-800-Flowers.com due to the complex requirements necessary to coordinate these systems. Each brand used different methods to record shipping and warehousing data, which were hard to integrate into a single companywide report. Some acquisitions were for products that were sold primarily by catalog. The information systems for these brands were not directly applicable to Web-based businesses.
Even though the firm's basic information system worked well, it was not designed to handle a portfolio of 14 brands. Under the old system, 1-800-Flowers.com would have to individually revise product descriptions, add new product reviews, or record price changes for each brand platform. Under its new integrated system, the changes would only have to be recorded once. A single platform also enables 1-800-Flowers.com to more easily apply its best practices in one brand, to complementary brands.
1-800 Flowers.com chose IBM WebSphere Commerce as a unified technology platform to replace its multiple, diverse, and independent E-commerce systems. According to Steve Bozzo, the retailer's chief information officer:
Being competitive today means being a lot smarter about all facets of commerce, from initial marketing efforts to customer interaction in the buying and selling phase to the product delivery and subsequent service that ensures customer satisfaction. We are optimizing our entire order life cycle and improving the customer experience with a comprehensive solution from IBM that manages information from multiple channels in a timely and accurate way. With WebSphere Commerce, basically you've got a single Web site that handles all of the transactions. This central engine supports as many customer-facing Web stores as you like, and it's easy to add new ones or roll new features across brands.
For consumers, IBM's E-commerce platform provides a seamless cross-channel customer experience. The system uses one shopping cart, one user ID, one password, and a single bill regardless of how many categories a purchase spans. For the retailer, the platform provides cross-selling opportunities. Consumers buying one type of product can be offered specials on another. Data on customer purchases could also be shared across all brands. Order confirmations can also be standardized across brands.
Since 1-800 Flowers.com placed Popcorn Factory on its new platform, the number of site visitors who make a purchase has improved. Customer experience ratings about the Web site's ease of use and appearance have also increased.
Questions
1. Discuss the potential cost savings in inventory management arising from a single integrated system.
2. Describe how customer data from one 1-800 Flowers.com division can be shared across divisions using the single platform.
3. What are the pros and cons of 1-800 Flowers.com's outsourcing software development, training, and implementation
4. Develop a checklist to judge the effectiveness of the single integrated system versus the previous 14 separate systems.