Ironically, as commerce becomes increasingly digital, physical stores actually become more important. Why? Managing complex distribution networks becomes even more challenging with the increase in sales channels, increased rates of returns and demanding fulfillment expectations. Progressive retailers are starting to leverage their physical stores as the warehouses and distribution centers of the future — reducing inefficient inventory management practices of old.
The Power of Instant
Amazon.com is dominating online retail, in part because it guarantees free, two-day shipping. In combination with providing a highly competitive price environment through its marketplace sellers, it’s tough to beat.
But you know what’s better than two-day shipping? Instant gratification. And today’s generation of consumers holds that capability in high esteem. So if you want to beat Amazon, Walmart or any other big name price leader, make it easy for consumers to take nearly instant ownership of the item or items they’re searching for, and you can win the sale.
Flexibility Is Key
Whether you sell groceries, toiletries, jeans or electronics, or some combination of these categories, consumers expect the flexibility to buy those items how they want and receive them how they want. Providing options like click and collect — also known as buy online, pick up in store (BOPIS) — means that consumers don’t have to stress over finding a few items in a big store or worry about keeping track of energetic children. Instead, they can do their browsing online and have their order ready for pickup on the commute home from work or after soccer practice. This is a perk that no online retailer can match: Exploit it!
Inventory Visibility Leads to Better Management
But providing these options can be convoluted and, if not managed correctly, can lead to expensive inefficiencies. Retailers need near real-time inventory visibility to monitor, analyze and predict demand signals, which allows for smarter inventory management. By accessing real-time or near real-time stock levels and comparing them to predicted demand, better decisions can be made on where to ship items from. Whether that is the regional warehouse or the local store or a store across the country will change based on established rules and signals.
These indicators and case-by-case responses will ensure that retailers are parting with inventory from locations that need help with inventory turnover, reducing any risk of overstocks that result in discounting while still protecting those stores with limited stock.
Make Returns Your Friend
For better or for worse, the sale doesn’t end when the consumer swipes their credit card. Customer satisfaction and consumer loyalty often hinges on how well a retailer can manage returns. Although returns are inevitable in every retail segment, they don’t have to be a curse. In fact, if you’re ready for them, they can be a blessing in disguise.
If consumers aren’t sure they will like an item they buy online, they might not buy something they don’t really need or want. Online returns simply aren’t that easy, no matter how many return lockers are in the neighborhood. Printing labels, retaping boxes, tracking the mail and hoping for a refund or new product in the right size isn’t an ideal process.
However, when consumers can go to a physical store, even when an item was purchased online, the process becomes much simpler. Instant returns, refunds and exchanges, along with the chance to engage with a customer service representative for any additional advice can go a long way toward promoting customer loyalty.
As an added bonus, once shoppers set foot in a store to return or exchange an item, retailers have a far greater chance of producing an upsell than if that person had gone through an online portal to manage their return.
Use the Power of the Store
Physical stores have received quite a bit of bad press recently as major chains shutter and scale back their expansion plans. But that does not mean that physical stores have lost their value. As more and more retail goes online, shoppers will continue to enjoy and demand an in-store experience. Customer service, instant gratification and easy returns are great drivers of brand affinity and loyalty. And managing inventory more efficiently while ensuring more consumer touchpoints can create a lasting model for business growth.
Nick McLean is the chief executive officer of OrderDynamics, a leading global provider of omnichannel order management systems.