Introduction
Three years ago, one of our clients struggled with its eCommerce operation. They were running four different marketplaces plus business-to-business (B2B) sales and business-to-consumer (B2C) retail operations, all simultaneously—hundreds of spreadsheets, plenty of meetings, chaos, and stress.
Updating SKUs, prices, and business rules for six different sales channels required too many hours every day. Inventory allocations created shortages in some channels while excess in others. Calls to customers offering a more expensive replacement product happened one-third of the time due to unreliable marketplace inventory information.
Dependency on a single third-party logistics provider (3PL) was a significant restriction to scalability and risk for the business. Chargebacks were four times the industry average for lack of accurate delivery information. Monthly and annual physical inventory and financial audits required a disproportionate effort.
Customers were unsatisfied, the operation was complex, and the team was frustrated.
We often see these problems when retail and manufacturing companies diversify their channels, particularly when eCommerce is added to a B2C or B2B operation. These initiatives are triggered by a genuine interest to make the lives of customers and teams easier and happier. However, most of the time, the result is the opposite.
The main problem lies in the assumptions and priorities. Many of these projects assume that the new channel is independent of the current channels; software limitations and applications development cycle guide others. Only a few realise that, from the customers’ point of view, each channel is an alternative outlet of the same company.
So, what to do?
Here is a compilation of the five proven keys to eCommerce Success. Some will be obvious for you, and others will seem to go against what “everybody knows”. Remember that to get a different result, you need to do things differently.
- All your inventory available for all channels
Your customers see your enterprise as one entity and expect the same service level and product availability from your physical outlets, call centres and digital marketplaces.
Recently, we analysed a nationwide beverage retail chain. Their eCommerce orders are fulfilled from their flagship store only, even when they have the products at a nearby branch. It takes two to three days to deliver the order, and the shipping paid by the customer is too expensive. Sales are lost against other eCommerce alternatives and nearby competitors.
The leading cause is in their IT. The on-premise retail point-of-sale (POS) software has determined the technology roadmap for years. There is no enterprise-wide system, and each store controls its inventory locally. There is no online access to the inventory information from the other channels. No wonder they chose the store with the most comprehensive inventory to supply eCommerce orders.
A common multi-facility inventory information system on the cloud is the first key to a successful eCommerce operation that coexists with your current physical B2B and B2C channels. Orders from customers can be assigned to the nearest facility with available goods. Operations can transfer items as soon as the inventory parameters trigger them. Time and costs reduce, and customer satisfaction improves.
An integrated global view of product consumption and availability allows better planning and performance. Precise forecast by season, store and SKU becomes a reality. Supply chain and allocation benefit from tools like DDMRP and machine learning.
Remember, your clients see your company and your brand as one and the same. Every interaction with your sales channels is a moment of truth and defines your customers’ perception. Technology should improve the customer experience, not otherwise.
…to be continued…
Rafael Funes
CEO
LOVIS