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Delivering Intelligent Fulfillment > BridgeSGI.com
Hidden Cost of Out of StocksHow to Recover from the
“72%ofconsumerssaidthey’dshopatacompetitorifyou’reoutofstock.”
ut ofstocks.Everyshopperhasencounteredthem.They’refrustrating.
Andaproblemofepicproportions.Howbig?Let’slookatsomedata.
In2016IBMsurveyed1,500U.S.consumersontheirretailexpectationsandtheiropinionsonoutofstocks.Itwasn’tpretty.Infact,72%ofconsumerssaidthey’dshopatacompetitorifyou’reoutofstock.Worsestillit’snotjusttheimmediatelostsale.Theystudyrevealedthatconsumerswouldalsoforfeitfutureshoppingtripsataretaileriftheyencounteredanoutofstock.Howmany?
ForfeitedShoppingTrips24%saidthey’dforfeitonetrip,30%saidthey’dforfeittwo,and13%saidthey’davoidshoppingattheretailerthreeormoretimes.Ouch!Butthereisasilverlining.Ifyoucanrecoverfromanoutofstocktheupsidecanbebiggerthanyoumightexpect.
Why?Becauseawhopping79%ofconsumerssaidtheywillbuyanoutofstockitemifyoucanlocateitforthemandeitherreserveitatanotherstore,orshipittotheirhome.Butthere’smore…71%ofthosesaidthey’dalsobuytheiroriginallyintendedattachmentitems.Whatdoesthatmean?
Sayacustomerisbuyingclothes.Theychooseanoutfittheylike.Shirtandpants.Butyoudon’thavethepinkshirtintheirsize.Thesurveyrevealedthatifyoucanlocatethatshirtandgetittothecustomer,that79%ofcustomerswillbuytheshirt,and71%ofthosewillalsobuythepants.That’sabigpotentialrevenuelift.So,ifyouhaven’talreadyenabled
O
How to Recover from the Hidden Cost of Out of Stocks
“…thecockpitiswherethepilotcanseeinputfromallthesesystems,andtweakthemtoensureanoptimalflightexperience.AnOrderManagementsystemislikethecockpit.”
yourstoreassociatestolocateoutofstocksforyourcustomers,you’releavingmoneyonthetable.
HowcanIrecover?Thefirststepisinventoryvisibility.Yourstoreassociateswillneedtoseealltheinventorythat’savailableinyourstores,andyourdistributioncenters.Thatmightsoundominous,and10yearsagoitwas,buttodaytherearesimple,flexibleOrderManagementsolutionsthatcanintegrateeasilywithyourPointofSale(POS)andWarehouseManagementSystems(WMS),andtheycanbeaccessedfromamobiledevicesoyourassociatescaninteracteasilywithcustomersonthesalesfloor.
WhatisanOrderManagementsystem?Let’suseanairplaneanalogy.Therearemanysystemsonaplane:Flightcontrols,hydraulics,fuel,oxygen,navigation,communicationsystems,etc.They’reallcriticaltothesafedeliveryofpassengerstotheirdestination.Butthecockpitiswherethepilotcanseeinputfromallthesesystems,andtweakthemtoensureanoptimalflightexperience.AnOrderManagementsystemislikethecockpit.
Youhavemanyordercaptureandfulfillmentsystemsinyourbusiness:eCommerce,PointofSale(POS),EnterpriseResourcePlanning(ERP),WarehouseManagementSystem(WMS),etc.AnOrderManagementsystemletsyouseeinventoryacrossalllocations,customerdata,andorderfulfillmentstatusfromallthosesystemsinasingleinterface.Italsoletsyoudefineandtweakfulfillmentrulestoprovideanoptimalcustomerexperience.
How to Recover from the Hidden Cost of Out of Stocks
essentialcomponentofmodernomni-channelfulfillmentoperations.
Isn’tOrderManagementexpensive?Today,youhavemanyoptions,fromfull-blownon-premise solutionsthatrequireadditionalconfigurationandmaintenance,tolightweight(butstillhighlyscalable)SaaSsolutionsthatcanbedeployedinweeks.Thekeyistochoosethesystemthatbestfitsyourbusinessandbedisciplinedinyourapproach.Why?
ThebiggestcosttoanOrderManagementsystemimplementationiscustomizations.Ifyou’reopentochangingyourbusinessprocessestomatchthesystem,ratherthanchangingthesystemtomatchyourbusiness(unlessneededforstrategicdifferentiation),youcankeepcostsmanageable.Luckily,
How to Recover from the Hidden Cost of Out of Stocks
WarehouseManagement
Systems
POSSystems
ERPSystems
OrderManagementSystem
Becauseitintegratesdatafrommultiplesystemsyougetasingle,real-timeviewofyourcustomerordersandfulfillmentoperationswhichenables:
• In-storepickupofonlinepurchases• Shiptostore• Shipfromstore• Real-timeorderstatus• Real-timereturnsprocessing,and• Promisingagainstinboundinventory,notjuston-handinventory
Itcanalsoprovideamobileinterfaceforstoreassociatessotheycanlocateoutofstockitemsforacustomeratanotherlocation,andprovidebettercross-sellandup-sellrecommendations.
Inshort,anOrderManagementsystemisan
Sayyouhave100stores,andeachstorehas2outofstocksadaymultipliedby362daysperyear.That’s72,400outofstocksacrossyourstorenetworkeachyear.
Nowtheconsumerstudyindicatesthat79%ofcustomerswillbuyanoutofstockitemifyoucanlocateit.So,say,youraverageitemcosts$40.Ifwemultiply79%x$40x72,400outofstocksacrossyourstorenetworkeachyear,that’s$2,287,840 inlostsaleseachyear.That’sabignumber.Anditdoesn’teventakeintoaccountforfeitedshoppingtripsduetoanoutofstock,norattachmentitempurchases.Canyouaffordnottorecoverthatrevenue?
How to Recover from the Hidden Cost of Out of Stocks
today’sOrderManagementsystemsmakethateasierthaneverduetotheirhighlyconfigurablebusinessprocessengines.Configurationratherthancustomizationkeepsyourlong-termtotalcostofownershiplow.Butalsoremember,thereisalargefinancialupsidetoOrderManagement.Howbig?
What’stheROIonOrderManagement?Therearemanywaysanordermanagementcanreducecostsanincreaserevenue.Buttokeepitsimple,let’sdothemathonbasicoutofstockrecovery.
79% of customers will buy an Out of Stock item if you can locate it for them
Delivering Intelligent Fulfillment
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Howcanwehelp?OrderManagementisourspecialty.Andwithanomni-channelretailcustomerslistthatincludesUrbanOutfitters,BareEscentuals,andIKEA,wehavemanyyearsofexperienceinordermanagementstrategy,solutiondesign,andimplementation.
Whetheryourstrategicobjectiveistoenhanceyourcustomers’fulfilmentexperience,increaserevenue,increaseinventoryturns,orreduceshippingcosts,we’llworkwithyoudevelopaplan.Onethatincludescustomerjourneymapping,businessprocessdevelopment,andthephasedrolloutofsupportingtechnology.
So,ifyouneedassistancewithyouromni-channelstrategy,orhowtooptimizeyourorderfulfillmentcapabilities,please contactus.
Want to learn more about out of stock recovery?Pleasecontactustoday:
+1.877.245.4347
Source:IBM2016U.S.ConsumerExpectationsStudy
