Rob Shaw, MD EMEA at Fluent Commerce

Optimising Order Management for the Evolving Retail Landscape

Rob Shaw, MD EMEA at Fluent Commerce argues that to foster memorable and profitable shopping experiences in the ‘post-Covid’ era, retailers should consider implementing certain strategies for intelligent, flexible order fulfillment

In the past 12 months, the COVID-19 pandemic and resultant national lockdowns have prompted a seismic shift in the retail landscape. Acting as a hyper accelerant on forces that have been reshaping retail in recent years, managing inventory throughout these changes has proved a serious challenge for retailers.

With consumers compelled to shift to online channels, retailers have had to supercharge their operations to respond efficiently to demand. That includes unlocking the power of their store network to create mini distribution centres while leveraging stock, no matter where it resides, to fulfil online orders.

One thing is for sure: delivering stand out memorable post-COVID shopping experiences in a way that is both profitable and sustainable will be a mission critical priority. Which means retailers need to be able to discover and deliver available stock fast and find smarter ways of managing inventory to maximise margins.

Initiating strategies that support intelligent flexible order fulfilment will be the key to unlocking the optimised order management capabilities needed to respond to real-time consumer demand. To achieve this, retailers will need to be able to easily connect their ERP, eCommerce, POS and warehouse management systems to gain greater visibility, agility and control of their inventory.

Giving customers the full story
With more customers shopping online, nimble inventory management is becoming a must have. Because there is nothing that 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.

Many retailers still rely on customised ERPs or eCommerce platforms that were not designed for real-time inventory management. Without accurate inventory visibility across all locations, it is difficult, if not impossible, to reduce cancelled orders, out-of-stocks or manage margins more effectively. It’s also impossible to easily ship inventory directly from stores to fulfil online orders or to offer customers contact-free click and collect options, as these tools (ERPs & eCommerce platform) are not aimed at managing inventory.

Today’s retailers need to be able to show customers exactly what is available, where, and when. Put simply: to be transparent to their customers. That means giving customers real-time inventory visibility and utilising a distributed order management system to route products from the most optimal inventory location. Leveraging these capabilities, retailers also gain the ability to initiate the auto-replenishment and subscription services that offer unprecedented consumer convenience.

Minimising the impact of seasonality
At the start of a season, brands tend to be well stocked online. But as the season progresses, popular styles, sizes and colours sell out. Meanwhile, other stock is sitting in store shelves in smaller stores where footfall is lightest. Typically, this unsold inventory is marked down at the end of the season, when it could have been sold online earlier in the season and at the initial price.

Aggregating all stock, including inventory, and making it all available online significantly increases the number of products Available to Sell, which in turn reduces the amount of stale stock that has to be discounted. To avoid cannibalising inventory at stores where it is more likely to sell, retailers can use sell through rates or inventory age in the fulfilment logic used to optimise order fulfilment.

By applying some smart thinking to how they integrate inventory and order management across all channels, retailers can eliminate the need to consolidate stock, return it to the warehouse or offer heavy end-of-season discounts. Plus they can replenish stores via store transfer rather than by warehouse to respond faster to seasonal geographic weather variances or demographic demand patterns at a more controlled cost.

Boosting Average Order Value
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. By adopting this strategy, one fashion brand was able to increase its average line items per order from 1.2 to 1.6 lines.

Other 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 fulfilment, 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.

Looking to the future
Post-COVID, merchandisers will be rethinking how they source and place stock. With industry pundits predicting that consumer online shopping behaviours are becoming increasingly normalised, optimising the online channel will be a top priority. For many, especially those brands that have reduced their store count, this will mean keeping more stock in warehouses. That said, retailers that are able to make all their inventory globally online will be the best place to boost sales and AOV through achieving an uplift in product availability and reduced stockouts – without having to spend more money on stock.

Utilising a single platform that integrates both inventory and order management will be the key to successfully orchestrating an enhanced and engaging customer experience in multiple channels. 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 fulfilment experience according to the personalised needs of customers.

For the future, giving customers a personalised view of product availability, communicating when products will arrive, and delivering on their fulfilment promises will enable retailers to keep the lights on by offering the best customer service and avoiding the costly pitfalls of overselling and returns. To thrive and survive both online and instore, retailers will need to implement intelligent and flexible distributed order fulfilment strategies that make it easy to maximise margins. Initiating advanced sourcing strategies that enable retailers to control what they sell, when and where – adapting fast in line with changing market conditions and demands.

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