How to Sharpen Your Omnichannel Inventory Management
Inventory is the single most important investment for your company. When your inventory works against you rather than for you, it leads to big problems. For retailers of all sizes, omnichannel inventory is growing in popularity. However, for midsized retailers, it’s a necessity to compete with the ecommerce giants.
Omnichannel customers are valuable and can offer a good boost to your bottom line, so you must strive for sharpened omnichannel inventory. Google found that omnichannel shoppers have a 30% higher lifetime value than those who shop using just one channel. What’s more, businesses that use omnichannel strategies have a 91% greater year-over-year customer retention rate compared to businesses that don’t.
The quest to deliver a seamless shopping experience is the goal for any player in the retail industry. Poorly kept inventory will only hinder the process and will have a big impact on profits. How much? Only 19% of top retailers say they can fulfill multichannel demand and still earn a profit. If you want to be among these retailers, it’s time to sharpen your omnichannel inventory management.
Give Your Process an Upgrade
Let’s start with how you actually manage your inventory. Do you still use the outdated software from when you first went online? Trying to shoehorn your old software into a modern process will only hurt your profits. Consumers can purchase products from a variety of channels, so you need a system that automates and simplifies every aspect of the omnichannel fulfillment cycle.
Let’s think of all of the steps of the supply chain for a simple pair of sunglasses:
- Suzy sees a Twitter ad for a hot new pair of red sunglasses
- She clicks the ad and is delivered to your website
- The sunglasses must be in stock for Suzy to order them, and in her chosen colour, red
- The website has to accurately show red sunglasses in stock
- Suzy has a few options for receiving her order: she can pick up in store, have a regular delivery or rush two-day delivery; she chooses to pick up in store
- Suzy completes her transaction and gets a notification about her pending order with a pickup date and time
- The system figures out the best location for retrieving the sunglasses
- The order is fulfilled either by a warehouse or another store
- Suzy receives a notice that it’s time to pick up her order from the store
As you can see, the desired product must actually be in stock and you need accurate inventory numbers to ensure you can fulfill the order. From there, you must retrieve the product from the store or warehouse, ship it to a processing centre or store and/or deliver it to the customer.
Your complete sale occurs only when your customer actually receives the product. What happens when there’s a bottleneck in the chain? You may risk losing a sale. Your customer’s order can be misplaced. Your inventory numbers may be off, and this creates a chain reaction ending with profit loss.
The solution? Put a system in place that handles every facet of the supply chain and inventory management.
Enhance Your Omnichannel Approach
According to Knexus, today’s consumer uses an average of nearly six touchpoints and nearly 50% of consumers regularly use more than four for a purchase. Look at what you offer and see how you may build upon it. For instance, in the example we gave above, Suzy had several ways to retrieve her order.
What options do you have? BOPIS (Buy Online Pick Up In Store), home delivery, two-day delivery and ship-to-store are all growing options in the omnichannel world. More channels can improve your sales, especially as consumers become accustomed to the fast delivery through Amazon Prime.
Consumers love the BOPIS experience. The National Retail Federation found that 70% of customers have tried it, and of that group, 65% said it improved their shopping experience. The same survey found that 75% of online shoppers expect free shipping. By addressing your physical and digital offerings, you can identify the best profitable choices for your business.
As you move to offer more channels for customers, you need a dedicated inventory management system that meets the demands of the modern consumer and adapts to the various product distribution methods you may offer, from store-to-store to the warehouse. Any update you add to your channels has the potential for better sales but also requires a more precise inventory.
Anticipate, Forecast and Meet Customers’ Goals
Inventory is a large investment in the health of your business, and your stock numbers must meet demand. How do you anticipate what your customers will need? Demand forecasting, or making purchase decisions based on current trends, historical data and other relevant information.
This data will help guide your inventory purchase decisions and make sure you have the right inventory numbers for optimum profits. Uninformed inventory purchase decisions can lead to extra or stale inventory, higher costs and lower cash flow. Practice demand forecasting at the macro-level (larger picture, total sales of all stores, etc.) and the micro-level (specific segments or areas) to improve inventory utilization across the board. You’ll be able to meet consumer demand and anticipation without risking profit losses with your inventory.
Find a Solution That Works for You
Streamlining and simplifying your business is the way to ensure you can meet the demands of today’s consumer. As such, you need a solution that can be tailored to every aspect of your business and lets you manage it more efficiently by reducing leaks, expensive mistakes and outdated processes.
With Magstar Total Retail, you can do all that and more, while offering a consistent omnichannel experience to your customers. If you’d like to check it out, Magstar President Steven Greenwood would love to give you a quick demo at NRF 2020 (Jan. 12-14).
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