Having trouble staying ahead of order fulfilment? Here are some creative solutions.
By Nicola Kinsella at Fluent Commerce
Nothing frustrates shoppers more than clicking on a product only to find it is out of stock, no longer available or will not arrive in time for a specific event or purpose. With endless time at home last year, crazed consumers were buying up everything from sanitizing spray to bakeware. USA Today even collated the top 24 things that sold out during the pandemic. Hair dye, yeast, board games, puzzles, bidets, fitness equipment, sewing machines and various office supplies all made the list.
Industry pundits predict that this abundant online shopping trend is here to stay, which means optimizing the online channel will be a top priority. As customers turn to online shopping for more of their goods, retailers will have to perfect their inventory management strategy to improve product availability and avoid stockouts. This means businesses will be expected to discover and deliver available stock fast and find new, creative ways of managing inventory to maximize their margins.
Why traditional stock management doesn’t work anymore
The way many retailers have traditionally approached stock management isn’t adapting very well to post-COVID consumer demand. Traditionally, many retailers rely on customized Enterprise Resource Planning (ERP) software or eCommerce platforms that are stagnant, rigid and simply not designed for real-time inventory management. Without accurate inventory visibility across all locations, it is difficult, if not impossible, to reduce order cancellations, out-of-stocks or manage margins more effectively. It’s also impossible to easily ship inventory directly from stores to fulfill online orders or to offer customers contact-free click and collect options, as these tools (ERPs & eCommerce platform) are not created to specifically manage the intricacies of inventory.
The main issue with traditional inventory systems boils down to a lack of flexibility, intelligence and transparency. Staying fluid and adapting to changes in demand is truly the baseline for retailers now – operating under the pre-COVID inventory model reduces a retailer’s ability to compete in the shifting global trade market. Below, we walk through ways retailers can creatively meet the current shift in customer demand in order to stay relevant and reputable with consumers.
Rethinking the Seasonal Sales Cycle
At the onset of COVID-19, when brick-and-mortar shops around the world were forced to close their doors, retailers experienced what we can call “blocked stock’ in their inventory. All of these goods were essentially collecting dust—even if there was a clear customer demand for them—because of the legally enforced shutdown. Now that most retailers have opened again, they have almost a years’ worth of goods from previous seasons that need to be sold. Without a smart sale strategy, these retailers will be left with massive amounts of aging inventory.
The solution to this is rethinking the way they optimize their order fulfillment moving forward. By aggregating all stock, including inventory, and making it all available online, retailers can significantly increase the number of products available to the consumer. This helps to reduce the amount of post-COVID stale stock that has to be discounted.
To avoid cannibalizing inventory at stores where it is more likely to sell, retailers can use sell-through rates or inventory age in the fulfillment logic used to optimize orders. This intelligent approach to integrating inventory and order management across all channels virtually eliminates the need to consolidate stock, return it to the warehouse or offer heavy discounts.
Boosting Average Order Value (AOV)
Retailers know that increasing average order size is the key to uplifting online sales profitability. To date, this has been done through the provision of complementary product suggestions. However, leveraging a single aggregated view of all inventory to further increase the range of products available to shoppers online is another way to boost AOV.
Savvy retailers are also applying additional logic to their cross-sell efforts and recommending items sourced from the same location as the primary item on the product detail page (PDP). By suggesting items that can be shipped or collected from a single point of fulfillment, these retailers have reduced the volume of split shipments and consolidated orders they have to manage—a move that not only keeps costs low but simultaneously elevates customer satisfaction through the faster delivery of orders.
Connecting Everything is Everything
Another huge issue with traditional inventory management is transparency. Introducing greater transparency into inventory management means giving customers real-time visibility into stock and utilizing a distributed Order Management System to route products from the most optimal inventory location. Leveraging these capabilities, retailers gain the ability to initiate things like auto-replenishment and subscription services that offer consumers the convenience they call for more and more. The more connected, intelligent and nimble an order fulfillment is, the better a business is able to respond to real-time shifts in consumer demand.
In order to get there, retailers will need to connect their ERP, eCommerce, Point of Sale (POS) and warehouse management systems to gain greater visibility, agility and control of their inventory. To be successful, retailers will need to invest in ingenious order management systems that can route products from the most optimal inventory location, deliver 360-degree real-time visibility of all stock and make it possible to tailor the shopping and fulfillment experience according to the personalized needs of customers.
To thrive and survive both online and in-store, retailers will need to implement intelligent and flexible distributed Order Management Systems to help optimize fulfilment strategies that make it easy to maximize margins. Initiating advanced sourcing strategies that enable retailers to control what, when and where they sell will allow them to adapt to changing market conditions and demands. Additionally, giving customers a personalized view of product availability, communicating when products will arrive and delivering on their fulfillment promises will be critical to maintaining healthy brand reputation and customer satisfaction in this new age.