About the impact of stock accuracy on marketplace strategies for retailers

The basic idea of online marketplaces such as Amazon, Alibaba, eBay or Zalando is to provide a platform that connects merchants and customers in order to trade goods. As such platforms can reach an extensive, ready-to-buy customer base, they increasingly become an integral part of the omnichannel strategy of fashion retailers.

“Whether it’s through our own channels, or exploring new commerce partners, NIKE’s defining what’s possible at Retail to better serve consumers and unlock growth.” Mark Parker, Nike CEO (source: Seeking Alpha)

Marketplaces provide retailers with huge opportunities to expand their businesses by being able to offer their products on multiple platforms – even internationally. While the marketplace can concentrate on building brand awareness in order to create relevant customer access, the retailers typically take responsibility for the products and thus take the risk of carrying the full inventory.

The result is a rather “schizophrenic” situation: the retailer is responsible for (accurate) stock data, while the marketplace provider manages the relationship with the shoppers and thus does anything to avoid distractions. As a consequence, the demand of marketplace providers on stock accuracy is growing steadily.

The potential: Shoppers easily find and trust marketplaces
Most shoppers frequently browse and order on marketplaces. In fact, 53% of consumers who shop online are making purchases on marketplaces three or more times per month. A recent study by Forrester gives a good overview of the benefits that marketplaces offer to them, such as:

  • Shop more conveniently.
  • Compare a wide assortment of products.
  • Discover new brands.
  • Competitive prices.
  • Flexible and cheaper shipping.
  • Smooth checkout experience.

This leads to a high satisfaction rate of 90% among consumers who purchased something from a marketplace, which results in a high loyalty. What I find really interesting is that shoppers especially like to use online marketplaces for repeat purchases. Of course, this means that the retailer’s products also need to be available on the online marketplaces to make sure that the customer’s experience is frictionless.

Source: The second edition of the “Shopper-First Retailing” report from Salesforce and Publicis.Sapient.

 “Consider the scenario of finding the perfect-fitting pair of jeans. A shopper may discover the brand, which offers the perfect size and fit, in a retail store. They’ll then feel confident to order their next pair online […]. But what if their size and preferred wash isn’t available on Amazon? The brand has just created friction for that customer.” Kiri Masters, Forbes

The risk: Poor order fulfillment can lead to disappointed shoppers and exclusion
Accurate stock information is the basis to avoid customer disappointment. If an order cannot be fulfilled due to inaccurate stock information, customers will just walk away from the marketplace and the brand. Although the risk of inventory is passed to the merchant, most of the marketplace providers perform intensive assessments of the stock accuracy and fulfillment capabilities of a retailer or brand. Some providers are even known to send own people to the retailer’s store in order to perform a (random) stock check. In the worst case, a retailer might be excluded from the marketplace, if a certain number of orders is cancelled.

The opportunity: Connect stores with online channels
Promoting the store’s stock on an online marketplace can create a lot of additional sales opportunities. For example, Google’s “Local Inventory Ads” showcase products and their availability to nearby shoppers searching on their smartphones. According to Google, mobile searches for “near me” have grown over 3x in the past two years, and almost 80% of shoppers will go into a local store when it holds an item they want immediately.

“Retailers have a huge opportunity to use physical stores to deliver on the heightened expectations of today’s impatient shoppers. To do this, it’s important to provide always-on assistance and ensure high-intent shoppers find what they need at the time they’re nearby and ready to shop.” Google

The action plan: Use RFID to raise the stock accuracy
Retailers need to feed accurate and real-time stock data to online marketplaces, because only accurate stock information can convert prospects into shoppers. The basis for promoting the store’s stock information can be a regular check of the actual stock information – e.g. supported by RFID counts. Using RFID, retailers can get much more insights into their stock levels and make sure that the online product information matches what’s actually available in the stores.

The conclusion: from store to omnichannel hub
Ultimately, a “ship-from-store” or a “guide-to-store” model can transform stores into a strong asset within the platform economy world. With full stock visibility, retailers can easily fulfill online orders and even boost sales of full-priced items. RFID technology is the foundation for accurate stock information as it makes it possible to automate the in-store stock management – resulting in a near 100% in-store stock accuracy.

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About the author: Tom Vieweger

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