Retail Begins to Understand Seamless Integration

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It’s one thing to read about the use of data integration in a technology journal, but another thing altogether to see it in line-of-business publications.  That was the case when I read an article from Multi-Channel Merchant, which covered the business reasons for retailers to leverage data integration.

“Modern software tools allow brick and mortar businesses to transition online without introducing a new business that must be managed separately.  Seamless data integration and order fulfillment bridge the gap between physical and virtual channels, allowing all orders to be processed from a singular platform that accesses inventory.”

While I’m sure this seems revolutionary to those in retail, it’s actually a concept that dates back many years, and includes technology that supports the integration of retail channels.  The problem is that those in retail typically did not hear about data integration, or understand its value, and they are just beginning to figure out how much of a game changer it is.

The article describes “a system architecture that allows for live transactions with a single and centralized database is the primary driver for a successful approach to seamless omnichannel fulfillment.”   This configuration allows retailers to leverage and manage inventory across all channels and locations.  The results are a more simplified and productive operation, and the ability to leverage the economies of scale across each channel.

Key benefits from data integration in this vertical, as covered in this article, include:

  • The ability for the retailer to leverage inventory across all locations.
  • The ability to simplify operations.
  • The ability to leverage economies of scale.
  • Faster order fulfillment.
  • Centralized inventory control.

“This integration provides customers from every channel access to the same inventory, minimizing sell outs and preventing lost sales resulting from backorders and other fulfillment delays.  Retailers that eliminate inventory access issues from the sales funnel are better able to position each channel in a way that most heavily capitalizes on its inherent advantage; customers no longer must worry about which channel is most likely to have a product in stock when they all draw from the same inventory.”

The objective with data integration is to create a single logical entity from many entities that may be outside of the direct control of the retailer (such as a channel), or integrating entities within a retail company (such as inventory, sales, fulfillment, etc.).  The objective in a channel scenario is to present a single set of items that are for sale and can be directly fulfilled, no matter where the items, or the data about the items, exist.  An example would be to tie Costco’s online inventory to its in-store inventory.

The best examples of well integrated channels are the many innovative retail Web sites out there that are only front-ends for hundreds, sometimes thousands of companies that sell goods.  Amazon.com is the most obvious example.  As the Web site user, you don’t have a clue, nor do you care, who is actually storing and shipping your product.  That is, as long as it shows up on your doorstep ASAP.

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In these days of more competition, retailers are becoming very creative about how they manage channels, including cost minimization through the use of distributed inventories and distributed fulfillment.  Without a sound data integration strategy and technology, this approach would not be possible.

What I find interesting is that it took the retail vertical such a long time to figure this out.  Back in the early days of data integration, it was always confounding to me that those in retail did not take the same or more interest in data integration technology as the other verticals, such as healthcare and finance.  Indeed, the benefit is rather obvious, including the ability to increase sales and customer satisfaction.

Now that the data integration cat is out of the bag for those in retail, it’s up to them to figure out their own integration strategy for both their data, and their channels.  The good news is, data integration tools are now better and more cost-effective.  With the use of cloud-based platforms, even storage and management of the data is much less risky and expensive.

The path to well-integrated retail channels leads directly to more profit.  That issue unto itself will drive most retailers to use data integration technology, or perhaps upgrade and rethink existing data integration approaches and mechanisms.

When data integration drives sales, then data integration becomes a priority.  That’s certainly the case here.

About David Linthicum

Dave Linthicum is the CTO of Cloud Technology Partners, and an internationally known cloud computing and SOA expert. He is a sought-after consultant, speaker, and blogger. In his career, Dave has formed or enhanced many of the ideas behind modern distributed computing including EAI, B2B Application Integration, and SOA, approaches and technologies in wide use today. For the last 10 years, he has focused on the technology and strategies around cloud computing, including working with several cloud computing startups. His industry experience includes tenure as CTO and CEO of several successful software and cloud computing companies, and upper-level management positions in Fortune 500 companies. In addition, he was an associate professor of computer science for eight years, and continues to lecture at major technical colleges and universities, including University of Virginia and Arizona State University. He keynotes at many leading technology conferences, and has several well-read columns and blogs. Linthicum has authored 10 books, including the ground-breaking "Enterprise Application Integration" and "B2B Application Integration."

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