12 Order Fulfillment Along the Supply Chain

Multichannel Experiences at REI

Even today, the various sales and marketing channels of most retailers are managed as sepa- rate silos rather than an integrated whole. Like Nordstrom, another well-known exception is Recreational Equipment, Inc. (or REI for short). REI was started in 1938 and is headquartered in Kent, WA. They have 129 stores in 22 states and are the largest consumer co-op with over 10 mil-

lion members. Since the late 1990s, REI has pro- vided a number of multi-channel options for customer sales and service including:

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  Web-Based Kiosks – Like many other retail- ers, REI got its online start in the late 1990s. However, unlike most retailers, they brought web-based kiosks into their stores shortly after that. In this way, customers can order from their portfolio of over 40,000 products. Obviously, this is many more items than are stocked in the average store.
  
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  In-Store Pickup – Customers can shop online and have the item shipped to a local store of their choice. The main benefit of this service is that once customers are in the store they are much more likely to purchase other products.
  
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  Gift Registry – Many retailers provide online gift registries. Like their other services, REI’s registry can be established, followed, and updated online, in the store, or through their call center.
  

REI’s multi-channel capabilities are built on top of IBM’s WebSphere Commerce platform. Over the years this platform has enabled REI to integrate the disparate systems from the individ- ual channels into a set of cohesive supply chain capabilities, such as order fulfillment or the prod- uct catalog, that are uniformly available to all the channels.
Like Nordstrom, REI has enjoyed strong revenue growth since the inception of its integra- tion multichannel capabilities. In 2011, revenues were around $1.7 billion making it one of the leaders in outdoor equipment and apparel. In addition to their bottom line growth, all of the multi-channel capabilities enjoyed immediate growth and rapid payback. Customers who par- ticipated in two channels spent 114% more and those using three channels spent 48% more. Also, REI’s In-Store Pickup capabilities increased sales by 1% within the first year of operation.
What Nordstrom and REI recognize is that the key to multichannel support is the customer. Retailers need to concentrate on providing uni- form sales and services to customers where, how, and when they want them, regardless of the channel.