In “Omni-channel Retail”, It’s Still About Detail | BCG

“As omni-channel retail increasingly moves from concept to reality, consumers are sending a clear message : Convenience is king…”

But the days when convenience could be defined solely in terms of drive times and the in-store experience are long gone. In today’s reality, “convenience” means letting customers decide when, where, and how to shop. They want to order anytime, anywhere, and from any device; to get their purchases in the store, at a separate delivery location, or through home delivery; to determine their own shopping and delivery or pick-up windows to fit their busy schedules; and to be able to return items at any of the store’s retail locations, hassle-free..

The Rise of Click-and-Collect Retail:

The emergence and growth of click-and-collect retail—which allows shoppers to order an item online and then go get it at a nearby store location or pick-up point—is evidence of the power of convenience in the omnichannel world. For many shoppers, the click-and-collect experience offers a more convenient mix of speed, quality, and flexibility than either traditional shopping or standard home delivery…

Already, 35 percent of shoppers who buy items online have used click-and-collect retail to pick up their purchases, and that proportion will increase to more than 75 percent of shoppers by 2017, according to retail researcher Planet Retail. Shoppers in France can pick up their groceries at more than 2,000 “click and drive” facilities. On the basis of our experience with leading retailers, we expect substantial growth in the use of such services.

Done right, click-and-collect retail can be a way for brick-and-mortar retailers to differentiate themselves from pure-play e-tailers by leveraging their existing store assets to offer fast delivery, low prices, and even greater convenience. That’s why many traditional retailers are eager to capitalize on this opportunity..

But click-and-collect retail can also pose real risks for retailers that fail to execute it flawlessly. A recent survey by market researcher E-consultancy.com found that as many as 60 percent of online consumers in the UK and U.S. said they would not shop at retailers that failed to deliver on their promises. This is as true for click and collect as it is for home delivery—particularly when it comes to apparel, a sector where customers expect to pick up the exact size and color they ordered and not a close substitute. In a hyper-competitive retail environment, an annoyed customer is likely a lost customer..

Supply Chain Imperatives:

So, for retailers that seek to make click-and-collect retail a core component of their omni-channel #RetailStrategy, many specific #Supply-chain capabilities are required. (See Exhibit 1)..All are important, but in our experience, it all begins with providing shoppers—and store associates—with accurate, real-time information on product availability…

One way to manage this critical capability in a click-and-collect retail environment is to deliver the customer order from a distribution center to the store, as UK retailer John Lewis does. Centralizing click-and-collect fulfillment in distribution centers concentrates and simplifies the inventory management challenges. But it also adds precious time to the order-to-pick-up cycle, putting off impatient customers who might simply buy the item elsewhere next time. And many retailers’ legacy distribution networks are ill equipped to fulfill customer orders from existing distribution centers, which are typically designed to pick large orders for stores.

For many retailers, then, a better solution is to pick click-and-collect orders from store stock. But getting the basics of in-store inventory management right presents a real challenge in terms of meeting customers’ expectations about availability. In our experience, a store’s balance-on-hand accuracy can be as low as 60 percent, which would be disastrous for click-and-collect customer satisfaction. Search online for “click and collect” for many big-name retailers, and you will see a slew of messages from customers describing poor experiences and products not being available when buyers turned up to collect them, even though the website had indicated that the goods were in stock. That’s why at Best Buy, for example, clerks physically doublecheck the availability of every item in every click-and-collect order in the stores themselves to overcome unreliable in-store inventory.

Why the poor performance? In support of their initial omnichannel offers, many retailers have chosen to focus first on building new infrastructure—pick-up points, distribution centers, delivery networks, IT systems, and even new stores. No doubt, these solutions can be critical components of a successful long-term omni-channel strategy, but getting the basics right, including in-store inventory, is often the most important first step to creating immediate impact and options for the future…

Back to Basics:

Best-in-class players focus on making in-store processes efficient, rigorous, and self-correcting; their processes are consistent with our six “golden rules” of inventory management. (See Exhibit 2.) No IT system can account for products mistakenly left in the back room, inaccurate distribution-center deliveries, removal of damaged goods from shelves that is not captured by the inventory system, check-out errors, and theft. These unavoidable issues, and their consequences, must be accounted for and captured, accurately, by the inventory system. This often needs to be done by a real person, properly incentivised and managed. Ideally, every touch of inventory at every point in the process should validate, correct, or improve inventory accuracy. In our experience, major retailers with such self-correcting systems and processes can achieve balance-on-hand accuracy of greater than 95 percent; at that level, the impact on items popular with customers is marginal…

Building such an approach, however, requires getting all the details right: understanding where errors occur, why they occur, and what solutions can be implemented consistently and effectively by store employees. In this endeavor, the devil really is in the details…

Eventually, emerging technologies will likely become a key part of the solution as well. Radio frequency identification, or #RFID, for example, has the potential to dramatically improve the accuracy of the information that supply chains depend on. Unfortunately, the ability to tag individual items economically and to scale up the technology to the needs of large retailers is still several years away. In-store cameras are a promising alternative for monitoring store stock, but they will require further developments in high-quality processing and image recognition if they are to make a difference. But even the most advanced technology will never entirely substitute for the disciplined in-store behavior needed to drive true inventory accuracy…

Thriving in an #OmnichannelRetail environment will require a host of different fulfillment capabilities. Retailers must design and execute the best possible customer service across all retail channels, build the infrastructure needed to ensure consistent pick-up and return processes, and continually capture and analyze the data needed to understand their customers and customers’ expectations of each channel so that stocking and flow strategies can be adjusted accordingly.

But that’s a longer-term goal. Near term, #Retailers, that seek to capture their fair share of the growth in click-and-collect shopping should focus first on getting the basics of stock accuracy right. Doing so will deliver near-term benefits to the #Bottomline and position them for success, no matter what #OmnichannelStrategy, they decide to pursue…

Does Your “Retail Inventory-Management Processes” Need an Overhaul ?| ArcherPoint

As the Retail Industry adjusts to the needs of the #ChangingConsumer, stores must look at whether their #InventoryManagement processes meet those demands :

Identifying optimal inventory levels is integral to minimizing Losses & Maximizing Profits. Start by examining these three inventory management areas to find room for improvement :

1. Receiving and Tracking : Retailers can better track stock deliveries by gaining more visibility into their processes. Does your retail or warehouse manager know which purchase orders are outstanding and the expected shipment arrival date ? Are the orders going to the warehouse or the store ? Ideally, retailers should have the answers to these questions, and every aspect of their receiving and tracking..

It’s especially important to have clarity into one of the key-facets of the Receiving Process — location…When retail buyers or planners determine the quantity needed to replenish inventory at store locations, they must also decide the delivery location. Should the vendor send the inventory directly to the store, or should the product go to the warehouse to serve as safety stock for multiple stores ??

To determine where to send the inventory, consider THREE Scenarios :

First, for the vendor to send the product directly to the store, retailers must ensure that store management knows there are outstanding purchase orders and what to do with the inventory when it arrives.

Second, consider the shipping process to your multiple stores. If you have one truck that delivers to each of your 10 retail locations, it’s inefficient to ask your vendors to split the purchase order among those locations. Instead, ask the vendor to ship items to your warehouse, where the products will be sorted by cross-docking. That means warehouse workers receive the products at the receiving dock, where they’re immediately sorted and ready to be transferred to the stores. Essentially, the products pass through the warehouse instead of being stocked at the warehouse.

Third, say your buyer estimates that your stores will sell 1,000 items of a particular product, but the buyer doesn’t know the exact quantities each store should carry. In this situation, the vendor should ship the order to the warehouse. Later, when the reorder inventory point is calculated, you can issue a transfer order from the warehouse to the store.

2. Assist on the Store-Floor : Retailers can use mobile point of sale (POS) or mobile inventory tracking to better manage inventory and provide more accurate inventory information on the sales floor…!!

It’s important to know the difference between each. A mobile POS system is customer-facing, meaning it’s used to assist customers with checking out at the register, and includes some inventory status tracking features. Mobile inventory tracking is the mobile interface for managing inventory. It’s possible for mobile inventory apps to record and track quantity on hand, automatically reorder inventory items, display store pricing history for each item, and carry out other #InventoryManagement functions..

To determine which technology is best to manage inventory at your store(s), decide the primary role of your store employees. For example, consider equipping cashiers with mobile POS technology, and equipping other store associates with mobile inventory tracking devices to help them record and restock items..

3. Track inventory as it moves throughout the store: Retailers should think of their store as having multiple inventory locations. One area of the store should be a place for customers to pick items off the shelf, another area designated to hold special orders and a different area for the stockroom or backroom. Modern technology, like bar-code scanning or radio-frequency identification (RFID), can help pinpoint the exact location of inventory items…

Evaluating these THREE Areas of your #InventoryProcesses is “Vital to helping you to identify the Right #InventoryLevels” for your business..

After all, inventory-management plays an integral role in determining your Bottom-line & Profitability…!!

 

“Marketplace-Model(Infographic)” in Indian “Online Startups” landscape| by: Chaitanya Ramalingegowda,Subodh Kolhe | Your Story

” For the uninitiated, a ‘ Marketplace-Model’ is where a Retailer (Modern / New-age), simply creates the platform for sellers and buyers”…

This is in contrast to the standard inventory model, where the retailer owns the entire inventory that is listed on the website. Obviously, a marketplace model results in a more agile company since inventory, warehousing and fulfillment costs are borne by the seller directly.

Post mid-2013, various Marketplaces have emerged in India…Amazon, Flipkart, Quikr, OLX, Snapdeal, ebay, etc” are trying to create the marketplace ecosystem in India..

While a Marketplace Strategy may be a boon for some Retailers, it could be a bane for others. But how it affects a business depends on a number of variables.

MarketPlace.Model.in.IndianStartUps.Ecomm.graphic2

This includes the type of products one sells, the kind of market one is operating in, intensity of competition in a particular category, marketplace fees and restrictions, and a dozen more factors…

Many E-commerce players are slowly moving towards a marketplace model for various different reasons. Better inventory management, wide range of inventory or lower logistics support might be a few reasons for e-commerce players to shift to marketplace model. Starting a two-sided marketplace is becoming incredibly challenging with the growing competition in India.

Most marketplaces face the “chicken-and-egg” problem while scaling as interactions between buyers and sellers increase… Less buyers – more sellers OR more buyers – less sellers is a classic economics supply and demand mismatch problem.

Here are a few “key insights” we derived from our interactions with E-commerce/Marketplace Entrepreneurs :

  • 13% startups trust in getting users to rate for entries to democratically bring up great quality entries while 15% trust in seeding the initial network with very high quality entries
  • 33% of the E-Commerce and Classified startups consider Supply Chain Management as the most difficult problem to tackle
  • 41.03% of the E-Commerce and Classified startups also feel the heat of not good access to seed funding for their ventures
  • As users, 36% participants wish current market place model businesses to have better curation of entries (no fakes, no duplication) while 33% expect better search and discovery on their websites
  • 25.64% start-ups believe that organic SEO has the highest ROI
  • 26% startups believe that they can solve the Chicken-Egg problem by constantly curate and maintain genuine entries using technology while 23% startups get traffic by making the site free, making revenue on transactions
  • 18% startups believe in Google Adwords where as 13% believe in Facebook Ads when it comes to highest ROI
  • 11% believe in spending on content marketing where as 18% believe in online ad banners to increase startup’s visibility.