The Forrester Wave™: Order Management Systems, Q2 2023

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5 Reasons Retailers Need a Single View of Product Availability

Don’t lose customers through inaccurate inventory

Grandaughter receives birthday gift on time due to accurate product availability
For time sensitive purchases, like a birthday gifts, if you can’t show a customer where and when they can get their order, they’ll shop somewhere else.

By Alan Jackson

Jan 10, 2020

As if brands didn’t have enough to worry about with the retail apocalypse, there’s also the inevitability of the ‘Now Economy’. Today it’s the customer who controls the marketplace, not the business. To serve the customer who wants something *now*, retailers require a single view of product availability. They need to know where products are, and how soon customers can receive (or collect) them. Otherwise customers will shop elsewhere. But that’s not the only downside.

Poor inventory visibility leads to overbuying of inventory, overselling, canceled orders, and ultimately, more markdowns. And the impact of markdowns can be huge. In fact, a 2018 study by Coresight and Celect “estimated that markdowns cost US nongrocery retailers approximately $300 billion in revenues in 2018, equivalent to around 12% of all US nongrocery retail sales.” That’s a lot of missed revenue. What’s more, markdowns are a symptom of overall inefficiencies in inventory management—an issue cited by Lowe’s executives in response to their 2018 performance.

In Q4 2018, Lowe’s overall sales lagged behind Home Depot and their online sales grew just 11%. Home Depot grew more than double at 23%. Ouch. While there are many factors that can influence online sales—like merchandise assortment or customer service—a single view of product availability across all channels can help solve some of these challenges so retailers minimize markdowns. Let’s look at five use cases.

1. Maximize conversion through an aggregated, real-time, accurate view of inventory

Even though we’ve been in the Now Economy for a number of years, many retailers still don’t have real-time (or near real-time) inventory visibility. Sometimes it’s because they’re using a customized ERP or eCommerce platform for distributed order management—something those systems weren’t designed to do. Or they’re stuck with a legacy Order Management System (OMS). It’s 2020 and it’s still not uncommon for retailers to update their inventory feeds on a daily or weekly (!) basis. This means they have a stale view of inventory and overselling is a constant danger. And Hell hath no fury like a shopper who clicked the Buy button—only to get a canceled order email a few hours later because an item is out of stock.

2. Increase basket size and reduce fulfillment costs with dynamic product recommendations

eCommerce platforms offer great recommendation tools. As a customer browses, they see lots of related items on the Product Detail Page. But all too often, these recommendations don’t factor in fulfillment. What if you could prioritize which upsell products were displayed on the PDP based on which items were in stock at the same locations as the main product? That way, if the customer adds an additional item to their cart, they can pick it up from the same store at the same time if they choose Click and Collect. Or you can avoid a split shipment if they choose home delivery.

3. Reduce delivery time and cost by leveraging store fulfillment and automation

In the Now Economy speed matters. Conditioned by Amazon Prime’s two-day “free” delivery, consumers expect to get any item they want within 48 hours. This is a challenge for retailers who fulfill only through Distribution Centers, especially because physical stores are retailers’ main differentiator from Amazon. The automated order routing offered by a SaaS OMS lets retailers implement a sourcing strategy that allows them to deliver faster and maximize profitability by using in-store fulfillment. This means that the customer who lives near a store might be able to Click and Collect an item same-day, or get it delivered next day. They no longer have to wait several days for the item to ship from a DC across the country. Take that, Amazon.

4. Recover from in-store out of stocks

While the goal is to minimize out of stocks, sometimes they are unavoidable. Unfortunately though, this leads to customer disappointment. But if your store staff can view inventory across all locations, they can recover a sale that would otherwise be lost. With product availability provided a purpose-built scalable OMS, you can expose your inventory to store staff via, say, your Point of Sale (POS) system, eCommerce platform, a clienteling app, an in-store kiosk, so they can have the item shipped to the customer, or reserve inventory for the customer to pick up at another store.

5. Serve and retain customers by facilitating the unexpected during the order lifecycle

In a perfect world, if a customer receives their order in a timely manner, all is good. That’s the happy path. But the order lifecycle can include many exceptions that are difficult or impossible to handle without a dedicated OMS. For instance, a shopper may want to revise an order before it’s fulfilled, like change the ‘ship to’ address. Post purchase, they may need to make a return or request a refund. Or a retailer may want to appease a disappointed customer with a discount on their order. But they might also need to exchange a product or want to add a line item to an order. Without a single view of product availability, this can be a challenge. Yet in the Now Economy, the ability to make these changes quickly can mean the difference between customer frustration and long-term loyalty. So how do you achieve it?

Leverage a SaaS Order Management System that auto scales to volume demand

Offering a single view of product availability is no small matter. Neither monolithic legacy systems nor eCommerce platforms were designed to process real-time or near real-time inventory updates from multiple sources at scale. Let alone use that data to calculate Available to Promise (ATP) inventory that factors in safety stock buffers, or other complex business rules such as sell through rate, proximity, depth of stock, etc. It’s a complex task. Yet in a world where shoppers demand instant-gratification, accurate, up-to-date inventory is essential. What’s the best way to achieve it? With a  SaaS Order Management System, driven by flexible business rules, that can auto-scale to meet high volume demand.

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