Omnichannel inventory management in the new retail landscape
The concept of eCommerce is not new, as it has been an established way of buying and selling goods through an online or digital environment.
This could include all usage of any digital or electronic trading channels and platforms to buy and sell. It is important to mention that we shouldn’t limit the definition to solely the transactional part of the process, as pre-sale engagement with the consumer is also an essential part of any eCommerce business. Digitalization of the retail industry is way beyond just the transactional part, as digital transformation has become an essential part of the retail industry. A great example of this is China, where the digital retail space has massively grown and is intertwined with social media platforms, where users are enabled to buy and sell on a multifunctional platform.
The pandemic has forced global markets and many physical stores to temporarily suspend their operations, which has shifted the focus of both the consumer and retailers and brands to the online space. While we can see the light at the end of the tunnel is worth taking a step back and recognize the advantages of the new omnichannel retail landscape.
The pandemic has accelerated digital transformation
Many retailers and brands realized the importance of engaging with their customers through digital channels, such as social media advertisements, online showrooms, and live streams for product launches. As a result of this almost 2-year-long process, live streaming events for products has become standard industry practice. Once again, China has excelled in this field where retailers invested in social media presentations, in groups or through individual sellers, on platforms like WeChat.
Another product of the pandemic is the shift towards the direct-to-consumer business model. Leading brands and retail groups have started relying much more on D2C, as they realized the potential of an authentic and direct engagement with their customers through a digital platform. The direct-to-consumer model also enables brands to collect data directly from the consumer and learn from that interaction, ultimately aiding them to making better decisions on what and when to buy and creating more personalized product selections.
Therefore, Covid has accelerated the adoption of digitalization within the retail sector. Which has helped implement new industry practices such as digital showrooms and live stream events, while also aiding the shift towards the direct-to-consumer business model with all its advantages.
Omnichannel management in the new retail landscape
The rise of omnichannel business strategies is a lengthy discussion, but what does it really mean?
Omnichannel refers to any engagement and trading within the same infrastructure where the transaction can happen either online or offline. Therefore, the consumer cares less about the specific method or place of shopping, rather the consumer experience of the brand and product is much more important. This customer experience must be seamless, consistent, and similar across platforms or stores. It’s about engaging with the customer and nurturing them towards a transaction.
Yet the issue is that there is no common goal of collectively selling to consumers among retailers, rather just focusing on ‘individual’ success, resulting in ringfencing of inventory. The omnichannel world is still fragmented and separated, therefore it doesn’t help the supply flow ultimately to the consumer. This ringfencing of supply and separation ultimately leads to lower margins and wages, more waste, and consumers not being able to find the right product due to lack of supply.
Customer experience and engagement
The goal of customer experience or journey can be summed up easily: it’s about engagement, acquisition, and retention of customers in the digital or offline world, ultimately nurturing them towards a transaction. Therefore, it is essential for brands and retailers to ‘meet the customers the way they want to be met’, whether they prefer an online or offline shopping experience. An example of this could be a curation of assortments and personalized offers. When it comes to customer experience, the focus should be on ‘how does a company delight its customers, how are they able to authentically engage with them?’
Brand or product experience isn’t only important to consumers but also to employees as well, as their perception or experience of the brand matters as it impacts how they show up each day as frontline ambassadors of the company.
Digital platforms have multiple functions for a brand or retailer. These platforms can be used as:
- A source of information
- A communication tool
- A selling tool
These platforms or touchpoints serve different functions dependent on regional context or target audience. They ultimately ensure a high level of engagement with the customer with a focus on personalized consumer experience and products.
To conclude, brands and retailers have invested in customer experience and journey where the consumer is in the middle of attention, ensuring high levels of authentic engagement through different touchpoints. Blurring of lines among these platforms and what functions they serve is part of this process alongside legacy practices being challenged and reformed in these new circumstances.
Sales conversion and inventory management
Although engagement and experience are important in digital commerce, the main objective is to convert it into a sale or sold item. To ensure sales, the ability to move inventory to the right place and time is essential. This can be done by implementing a centralized inventory management system. Such systems are important to have the right amount of stock at every location, as the final goal is to meet the demand of the consumer and ensure product flow where consumers come to buy.
Another solution to overcome supply issues is the sharing of the data among retailers and brands. Therefore, inventory visibility across the network (internal and external) is a key success factor. By utilizing data, the ordering calendar can be made more efficient, allowing brands to order later and reduce overstocking. Sales conversion is also being able to respond to what the consumer wants, which puts into question the traditional ways of decision making, ordering, and buying products on a seasonal plan.
Given the omnichannel approach which involves consumer centricity, we must rethink some of the traditional inventory management techniques; the rhythm of the buying cycle needs to be reformed both from the supply and product development point of view.
5 trends leading the omnichannel retail environment
- Covid has accelerated the consumer adoption of digital commerce across the globe, brands must anticipate increased adoption and try new customer engagement strategies.
- Successful omnichannel is a seamless interaction of trading across multiple channels both digitally and physically, so the customer sees one brand, and for that data and IT infrastructure are critical enablers.
- The lines between marketing and sales are getting blurry. The customer journey is not sequential, it is omnipresent. You need to be able to engage with your consumer/target audience at every stage of their journey offline and online, at any time.
- Customers’ preferences need to be considered in this highly competitive landscape to build and maintain brand loyalty.
- Data is a critical enabler. Having a hold of your data is key to ensuring you can manage it across all channels, trading partners, and interactions as well, also note the growing privacy laws and concerns