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Microsoft Readies New Dynamics 365 Commerce to Ride Omnichannel Retail Wave

Microsoft CEO tells retailers using all channels effectively is critical.

Jeffrey Schwartz

January 24, 2020

5 Min Read
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Microsoft has transformed its Dynamics 365 retail offering into an omnichannel solution with a common platform for e-commerce and physical store inventory, point of sale processing and customer management.

The new Dynamics 365 Commerce, set for release on Feb 3, was among several advances that Microsoft showcased at last week’s National Retail Federation (NRF) Big Show in New York. Microsoft was among hundreds of tech providers that traditionally have a major presence at the retail and consumer goods industry’s largest annual gathering, which show organizers claim drew 40,000 attendees, consisting of customers and partners.

At this year’s event, Microsoft was in the spotlight because the company has emerged as the key alternative to Amazon — the nemesis of retailers large and small. Given Microsoft’s stature among retailers and manufacturers, the NRF tapped CEO Satya Nadella to give the opening keynote. Nadella used the prime speaking slot to tout its work with the world’s most influential retailers including Kohls, H&M, Kroger, Ikea, Neiman Macrcus, Starbucks and Walmart, among others.

As many retailers continue to shutter, Nadella touted how creating personalized, multichannel digital experiences online and in the stores, is critical.

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Microsoft’s Satya Nadella

“Every retailer needs to build their own tech intensity,” Nadella warned. “It’s not about taking away the art of retailing; in fact, if anything, it’s about reinforcing that core art of retail — that core operational excellence of retail.

“We are learning in terms of how we think about omni channel retail, and really taking all that learning, but more importantly, as a platform company, as a digital technology company, we’re engaging with all of you,” Nadella said, noting that 92 of the top 100 retailers use Microsoft’s cloud platforms and that retail drives 31% of global GDP. “That’s teaching us a ton about how to build technology so that we can serve your needs.”

E-commerce sales of $3.5 trillion worldwide accounted for more than 14% of all retail purchases in 2019, according to a recent forecast by Statista, which estimates the percentage will rise to 22% by 2023. As consumers use multiple channels – their phones, websites and increasingly smart speakers such as Amazon Alexa and Google Home – they increasingly expect those different modalities to become seamless and tied to with their experiences with a retailer’s physical store.

Yet, only 37% of retailers say they are using advanced technology such as IoT and AI to automate their supply chains, inventory management and autonomous checkout, according to results of a srecent survey conducted by Forbes Insights and Microsoft.

“The ability for you to be able to use all of these channels effectively is key,” Nadella said.

Last month’s holiday season reinforced that notion. At Microsoft’s own stores, 15% of customers who ordered online opted to pick up their merchandise at the retail location, Nadella noted.

“The expectation has changed where they really want that seamless experience,” he said.

The rebranded Microsoft Dynamics 365 Commerce will extend the existing retail offering and will allow partners to deliver a unified multichannel platform for retailers. It combines back-office, store and digital experiences that can engage across those channels with personalized capabilities. It comes with its own recommendation engine using Microsoft’s AI technology, which measures a customer’s purchase patterns. The offering also can interface with third-party recommendations.

“We’re taking everything we had in retail before and adding in a native digital channel,” said Brandon Sullivan, Microsoft’s Dynamics 365 product manager, during a demonstration at the company’s booth at NRF. “We brought an e-commerce solution natively into the product, so that you can interact with customers in a true omnichannel fashion.”

RSM was the first Microsoft partner to deploy Dynamics 365 Commerce. RSM helped Woodinville, Washington-based Chateau Ste. Michelle Estates, the largest U.S. wine distributor, implement the omnichannel platform for …

… its e-commerce site, wine clubs and call centers. Chateau Ste. Michelle previously had siloed systems, said Garrett Lee, RSM’s Dynamics 365 enterprise delivery manager.

Lee said RSM was able to implement the new Microsoft Dynamics 365 Commerce solution within a few months.

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RSM’s Garrett Lee at NRF 2020

“They wanted to get all of their stores, their websites and their back office where they all take credit cards and payments and things like that they needed to get them on one platform that was compliant across all their channels,” he said. “To date, they say their direct to consumer sales are up 26%.”

A new fraud detection feature also is coming to Dynamics 365 to help improve loss prevention and account protection. Microsoft said a preview release of Dynamics 365 Fraud Detection is slated for release on March 2. Microsoft also introduced Dynamics 365 Connected Store, which will let partners implement AI from various Azure solutions to sensors and cameras, letting retailers measure activity and performance in their stores. A preview release is planned for later this year.

Microsoft also emphasized new capabilities for first-line workers in retail, an initiative the company launched at last year’s NRF show. In the forefront, was Microsoft Teams and a version targeted at workers in stores. Among the new features coming to Microsoft Teams for first line workers include the “walkie-talkie” feature to be included natively on Samsung’s forthcoming Galaxy XCover Pro, as reported last week. But the “walkie talkie” feature for Microsoft Teams will be available on any device and will appear in private preview during the first half of this year.

Also coming to Teams will be the ability for managers in stores or at corporate locations to manage daily workloads for workers in the stores using a feature called “tasks targeting, publishing and reporting. It will let managers create prioritized lists and create reports. Microsoft is also enabling Teams integration with retail workforce management systems, notably JDA and Kronos, to bring functions such as scheduling and attendance. Microsoft’s JDA connector for Shifts is an open source tool available on GitHub with a Kronos connector for Shifts slated to appear on GitHub this quarter.

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About the Author(s)

Jeffrey Schwartz

Jeffrey Schwartz has covered the IT industry for nearly three decades, most recently as editor-in-chief of Redmond magazine and executive editor of Redmond Channel Partner. Prior to that, he held various editing and writing roles at CommunicationsWeek, InternetWeek and VARBusiness (now CRN) magazines, among other publications.

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