Managing Inventory Visibility tells you where the item is, how many there are, and what it costs you as the reseller. Orders are where everything comes together, when a consumer has purchased a product that a retailer was selling virtually. The retailer must send that order and fulfillment information to the supplier, who will ship to the consumer.
In short, the world is continuing to align to the consumer, and that is driving new integrated partnerships, omnichannel experiences such as BOPIS and SFS, and better technologies for seeing and selling all the inventory in a retailer’s ecosystem, whenever and wherever the consumer needs it.
In Enterprise Drop Shipping Part 1, I discussed how important drop shipping is for brick and mortar stores to be able to compete with online retailers. In Part 2: The Basics, I provided a definition of drop shipping, explored some of the hype surrounding it, and defined its major challenges. In Part 3: Suppliers vs Retailers, I addressed how drop shipping alters the traditional relationships between suppliers and retailers.
In this post, I’ll outline several important strategies for enterprise-level drop shipping operations to achieve success. I’ll start by highlighting one of my favorite drop shipping all-star retailers: Wayfair.
Inventory has always been one of the biggest risk factors for retail. Even the best case scenario for unsold items involves significant markdowns and/or selling to off-price retailers to recoup initial investment. Just a few quarters of sales disruptions (like some retailers are experiencing with COVID-19) can lead to bankruptcy as capital remains frozen within unsold inventory and revenue dries up. Ascena and Brooks Brothers are facing that grim reality right now.
Without robust omnichannel programs, retailers have less assortment, sell less of their inventory, and offer much less customer choice. All of which translates into lower growth and revenue. And yet building a scalable omnichannel program is a labyrinth of financial, technical, and multi-team challenges that can quickly turn into a money-pit with little or no growth to show for it.
From all of the presentations and panels that I attended, it’s clear that retailers are going all in with using their store fleets to fulfill online orders.
This is a really interesting strategic move considering that, as noted above, stores have the lowest accuracy of any inventory asset in retail. It therefore highlights the difficult choice that retailers face.
If order volume grows at 20% per year, a retailer will have to invest in doubling its fulfillment capacity every five years. This is what we’re seeing with Amazon but it’s not something anyone in the supply chain would look forward to doing. Building new FCs is expensive, time consuming, and risky.
Traditionally retail has placed priority on inventory ownership when processing orders. If you own a lot of inventory it makes sense to try to sell that first.
Around the world, companies hold onto stock they know nothing about, or worse, promise products to customers they don’t have. Typically, retailers and brands operate on data that is only 65% accurate, wasting $1.5 trillion of revenue opportunities.
Even before Covid-19, in-store fulfillment was a big deal for retailers. In 2018, Target fulfilled 70% of online orders through its stores, while 30% of all of Neiman Marcus’ online orders are shipped from stores as well. With all the disruptions to the supply chain and customer behaviors that the Coronavirus has caused, it’s not […]
Agile retailers are moving fast as they accelerate ecommerce to make up for low in-store sales. But speed comes with its own growing pains. New processes and fulfillment teams are causing late shipments, cancelled orders, fulfillment mistakes, and difficulties handling customer service requests. In other words, a perfect storm for losing customers to Amazon.