The last few years have transformed consumer shopping habits, making omnichannel retail strategy a priority for retailers. Indeed, with today’s customers expecting the same high standards of delivery they’ve experienced online across multiple touchpoints, brands are responding to this demand by selling from more places than ever before.
From purchasing directly on social media, via mobile or on the company’s website, as well as in physical stores, and in-store kiosks, stock data is stored in various locations. Aside from disparate data storage, the stock itself may actually reside in completely different locations, such as warehouses, 3PLs, drop ship vendors and distribution centres.
With stock sitting in different locations, fulfilment has become a critical issue for today’s retailers. One of the biggest threats to brand loyalty is customer disappointment, not receiving their purchases once purchased or unanticipated major delays. In addition, inventory distortion – overstocking, understocking and the issues accompanying them – costs a massive $1.1 trillion world-wide, according to IHL Group.
Without careful stock and inventory management of their complex ecosystems, serious challenges regarding product availability emerge. While retailers are unable to sell more of something unless it’s available to be purchased, over-promising is also a big issue. Therefore, success all comes down to product availability. Being truly omnichannel means being able to see and manage product availability across all sales channels, which allows retailers to create better experiences for their customers’ ever-increasing needs and, linked to this, increase profits. Retailers are looking for a solution to gain control over what is sold where and segment their stock by channel, market, or region.
How inventory catalogues work
Order management and virtual inventory catalogues can give retailers control and improve this critical product availability. Retailers can create virtual pools of inventory so that stock data can be segmented in many ways – including by channel, market, region and product. In addition, they can set up inventory rules such as buffers or safety stock levels to categories, products or locations to ensure they don’t oversell and have to cancel orders.
Virtual catalogues are essential to minimise customer disappointment and optimise the overall customer experience. They give retailers insight when adding sales channels or expanding into new markets, allowing them to strategically grow and scale internationally.
5 ways retailers can benefit from virtual catalogues
Gaining more control of what is sold and where unlocks more benefits than retailers expect, generating crafty opportunities to cross and upsell. Here are some ways retailers can optimise their sales funnel and create opportunities on an international scale:
- Increase focus on marketplaces or social channels
The trend for the connected customer is purchasing via social media. But it doesn’t make sense for every product to be sold via this channel as what retailers offer on marketplaces or channels may differ to what is sold elsewhere. Virtual catalogues enable a retailer to control which products or categories are made Available to Promise (ATP) in their preferred marketplaces or social channels. They can set specific buffers and safety stock levels for each channel, meaning they will sell more of the right products in these spaces.
- Cross and upsell across segments
If a retailer has multiple banners or brands, they’ll want to maximise visibility of these brands to appropriate target markets. The market leaders are already getting creative with cross brand experiences and shopping, by making products from one brand accessible in the online store for another. But it’s not as easy as all products being suitable for this kind of cross promotion. Virtual inventory segmentation allows retailers to carefully manage which products are made available to each brand and then set custom buffers or safety stock for each.
- Manage product availability by region or country
Similarly, not all products are viable for international sale, particularly from a shipping perspective, such as heavy or fragile items or restricted items. Or retailers may only want to ship international orders from locations set up to handle customs processing. With virtual catalogues, retailers can easily manage product availability by region and easily set rules to manage product or category exclusions. For instance, a luxury retailer may sell in many countries, but want to focus products in one specific region. Only virtual catalogues offer this flexibility to adapt to business needs.
- Test new markets
Retailers are often enticed by new markets, but they’re also unknown in terms of what products will be successful. In this situation, virtual inventory catalogues can help by enabling easy segmentation of a retailer’s inventory to test certain products or categories in this new market. Once proven, retailers can make more intelligent, fact-based business decisions. By testing out products before investing hook line and sinker, retailers have the agility to adjust as per the demand.
- Reserve inventory for VIPs
Virtual catalogue can also help improve sales to a key customer group: VIPs and top customers. By creating a special pool of inventory that is only available to a few, the brand’s most important customers are kept highly satisfied. For instance, VIPs can be offered different delivery options or perks based on their preferences, and it’s possible to control back-end sourcing to expedite their orders. In leveraging and prioritising all pools of stock internally or with third parties, rapid fulfilment of orders will support customer loyalty goals.
Product availability governs retail success
If a retailer has multiple sales channels, being able to manage product availability in each one of these is essential. Virtual inventory catalogues provide the right information on product availability shared across all customer channels meaning stock can be more easily controlled and sales fulfilled. This builds efficiencies within the business and meets the needs of customers who expect increasingly rapid and convenient purchases. Ultimately, delivering the most products through the right channels into the hands of the right customers will mean omnichannel retail success.
Rob Shaw, senior vice president Global Sales at Fluent Commerce