The REI Path

Most merchants have had to adjust to the web, but a lucky few have found the web supercharges what they’d been doing anyway.

Dell Computer Corp. and Cisco Systems Inc. are two companies that have found this to be true. Dell had been building PCs to order for a decade before the web was spun, and Cisco was selling routers long before the Internet made demand explode. Adding and then nurturing the Internet channel were natural moves for both companies, and the benefits in both cases were enormous.

There’s a company like that in the retail space as well, REI.

“We’re a membership organization,” explained vice president online Matt Hyde from REI’s offices in Kent, Washington. Members pay to belong and earn other benefits based on their purchasing volumes. Managing this requires a large and detailed customer database, plus extensive permission from customers.

With one customer database, it was easy for REI to become what Lisa Allen of Forrester Research calls an “elastic retailer.” Hyde defined this as being “seamless to the customer.” Whether you reach REI through the mail, telephone, in a store or on the web, you’re linked to one database. It wasn’t easy to build that database – most of it is custom code, Hyde admitted – but the hard work was already done before the web was spun.

Hyde’s biggest decision came after REI put its catalog online, in 1996. Beyond the customer database, he figured REI needed an additional “value proposition,” namely a huge product database. “We had to do some things that were better than the catalog and stores.” Additional buyers were hired for the web site, and its product database is now the largest the company has.

Making all this work also required summarizing the commitment to employees in clear simple language. “It’s any product, any time, any place and any question,” Hyde said. With the customer and product databases in place, it was easy to meet the first two promises. Reaching the third goal meant an international strategy – REI now has large Japanese, French, German and Spanish sites. Reaching the fourth goal meant sharing FAQ databases generated by stores, calling centers and email.

This may not sound like your bowl of granola, as it did to Hyde, but it’s the essence of successful retailing today. You need extensive customer permission, a lot of data, a ton of selection, and you need to share databases across every channel. You also need a simple clear vision statement so everyone’s on the same page as you work toward the goal.

REI was lucky. When the web was spun, they were halfway up the mountain with a huge, shared permission database. But it’s not too late for you to follow their path.

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