Macy's Ramps Up Online Operations

 
 
By Bob Violino  |  Posted 2011-01-27
 
 
 

Macy’s may be famous for department stores, but the big retailer knows that online sales are critical, too.

IT research firm Forrester Research predicts online retail in the U.S. will see double-digit growth over the next five years, from $155 billion in 2009 to nearly $249 billion by 2014. By that time, Web shopping will account for 8 percent of total retail sales, the firm says, and 53 percent of total retail sales in the United States will be influenced by e-commerce as consumers increasingly use the Internet to research products before buying them.

With so much at stake, retailers need to make sure their online sales and marketing operations are efficient, reliable and easy to use—or they risk losing customers to competitors.

Macy’s, which has more than 800 store locations in 45 states and a growing online business, relies on several technologies to ensure that its Web-based operations are running as smoothly as possible.

The company’s e-commerce business has become increasingly important—and continues to expand. In January, Macy’s announced it was adding about 725 new positions over the next two years to support the growth of its Websites. The company says its fast-growing online businesses are being fueled by an “omnichannel strategy” that allows customers to shop seamlessly in stores, online and via mobile devices.

In total, the company expects to add nearly 3,500 full-time, part-time and seasonal holiday associates in the next two years, related to the growth of its online businesses. This includes a new online fulfillment center to be built near Martinsburg, W.V., and the expansion of a fulfillment center near Portland, Tenn.

In the first 10 months of fiscal 2010, online sales at Macy's were up by about 29 percent compared with the same period of 2009. This follows growth of about 20 percent in fiscal 2009 and 29 percent in fiscal 2008.

Monitoring and Analysis

One of the key applications the New York-based company is using to support e-commerce is data monitoring and analysis software from Splunk. The software enables the retailer to monitor, report and analyze live streaming data coming in from the Web, as well as terabytes of historical data.

Macy’s uses the Splunk software to proactively identify network and systems issues that might lead to downtime of its Websites and prevent customers from researching products or buying online. It gathers data from sources such as application logs, Web access logs, call detail records, message queues, configuration files, database audit logs and tables and filesystem audit logs.

The software, which Macy’s e-commerce group began using in 2008, allows the company to proactively identify patterns that used to bring its sites down or take hours to find and fix, says Patrick McCaffery, director of e-commerce project delivery at Macy's. Since deploying the software three years ago, Macy’s e-commerce group, which oversees Websites such as Macys.com and Bloomingdales.com, hasn’t experienced any major site outages.

McCaffery says the technology has helped Macy’s avoid potentially damaging online failures. For example, late in 2010, the software quickly alerted technicians to a log file message they had never seen before and that McCaffery says would have been catastrophic to online operations if not addressed.

“Within 30 minutes, the support teams were able to understand how to react” to the message, McCaffery says. Prior to implementing the software, Macy’s relied on a manual process of examining log files to find correlations between online events and to determine the cause of a specific problem.

With the manual process, it would have taken at least 24 to 48 hours to resolve the issue, by which time significant damage might have been done. McCaffery says that if the system error hadn’t been identified quickly, it would have taken the Macys.com site down, which would have resulted not only in dollar losses but in negative impact to the brand.

“Our goal is to make our Websites the center point of contact for our customers who use the Internet—or even to drive traffic into the stores,” McCaffery says. “If your site goes down, you alienate some of your most important customers and that impacts the brand.”

The faster time to resolving issues is critical for a business that relies on repeat customers and providing top-notch service.

“Now we can identify issues much more rapidly” and address them before they have an impact on customers, McCaffery says. “It has allowed us to be more proactive when we see issues happening in the environment or a slow down in response time with a Web server or an application server. We’re able to see that trending up before it starts to impact users.”

One of the key benefits of the Splunk product is that it enables Macy’s to make available a variety of data points that dozens of executives and data analysts can use to run queries and analyze trends in how the Websites are being used.

“During the last year and a half, we started using Splunk to provide dashboards for various IT people as well as business people to [access] live information about how well the systems are doing, and whether we’re seeing different types of traffic than we’re used to seeing,” McCaffery says.

While the software is useful throughout the year, at no time is it more valuable than during the Christmas shopping season, when the control rooms that monitor Macy’s online operations are running 24 hours a day, seven days a week. “The technicians in that room use dashboards built mainly off of Splunk,” McCaffery says.

Performance Management

Macy’s has implemented other technology tools to help keep its online operations running well. One is an application performance management product from DynaTrace Software. The software enables the retailer to make “deep dives” into various e-commerce applications to resolve issues that can affect application performance.

The retailer is using the DynaTrace software to monitor Java application performance and capacity in development, performance testing and production for any new applications Macy’s deploys. “It has been useful in identifying performance bottlenecks in test environments before going live in production,” McCaffery says. “We are also using it to monitor production performance and alert our support teams of any degradation.”

Macy’s is also using an application from Coradiant called TrueSight. The software, which the company began using in 2010, integrates with the DynaTrace software and provides a glimpse of application performance from the perspective of users.

The software provides real-time visibility into performance and availability of Web applications by capturing and measuring information on user transactions as they happen. TrueSight collects detailed information on every aspect of each user's online visit by passively recording the application flow, providing an in-depth view of actual performance experienced by users.

“TrueSight has helped us identify user problems that were not being reported to our customer service department,” McCaffery says. For example, during the most recent holiday season, the product helped Macy’s find and quantify a sign-in issue during its checkout process that could have potentially had a major impact.

The software “has given us a new level of overview of the user experience, and that’s always very important to us,” McCaffery says.