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Chargebacks and Penalties for Poor Inventory Productivity?

Posted By RCVF Admin, Saturday, August 4, 2018
Updated: Saturday, August 4, 2018


Chargebacks and Penalties for Poor Inventory Productivity?

by Victor Engesser & Stephany Goodnight of RVCF

Inventory productivity is increasingly becoming a key area of focus for retailers.  As we highlighted in the June issue of the RVCF Link newsletter, inventory is typically the largest asset on the balance sheet for retailers and contributes significantly to the liquidity of the organization.  Many retailers are seeing their inventory turns slowing, which has a direct impact on cash flow.  At the same time, both retailers and suppliers are under pressure to operate with leaner inventory.  We recently read a trade article that got us wondering, "Will inventory productivity become the next element of supplier compliance management?"

In the olden days, inventory management was fairly simple. A retailer met with a supplier, negotiated a price, wrote a purchase order, and paid in full 30 days after the product arrived into the retailer’s distribution center (DC). At that point, the inventory was all theirs to sell (or not sell).

However, over time, compliance management came to be.  Retailers expect orders to be on time, in full and in accordance with a myriad of other requirements.  As retailers keep "fine tuning" this process, is it possible we have reached a point where suppliers will not only be responsible for delivering inventory, but also for ensuring inventory is sold within a reasonable amount of time?  How much responsibility do suppliers have with respect to inventory productivity?

According to a recent article by Daphne Howland in Retail Dive, Amazon is instituting a series of initiatives aimed at improving inventory management on its Marketplace.  In July, Amazon began assigning an “inventory performance index” to each seller.  We are not sure how this index is calculated, but sellers who fail to achieve a minimum index score will be prohibited from sending new shipments to Amazon until their inventory levels drop below specified limits. Sellers will also be charged a “store overage fee” on the excess inventory. 

In the past, Marketplace sellers had been able to pay for unlimited storage.  Not surprisingly, Amazon is also taking a harder look at unsold inventory, especially aged (365 days or older) inventory, by adding additional monthly charges to motivate space productivity improvements.  Amazon’s fulfillment costs have escalated over the past year as new DCs have been added and Prime members’ expectations for customer service continue to rise.

In light of this, we can envision other retailers questioning whether they should be looking at store space productivity or DC space productivity in a similar way. Until now, most traditional merchandise retailers have made store shelf assortment decisions and planagram location and space decisions while looking at sales and margin metrics.  We have heard very little to suggest poor inventory productivity performance has escalated to a compliance program violation or candidate for automated chargebacks.  But we also recognize that fulfillment costs are escalating and DCs do not have unlimited space.

Clearly, inventory productivity can be measured and key performance indicators (KPIs) such as inventory turns, DIOH (days inventory on hand), and GMROI (gross margin return on inventory investment) are valuable performance metrics to add to a supplier scorecard.  But setting a required performance standard and holding suppliers to this performance as part of a compliance program is not the norm today, and with so much variability throughout the supply chain, a single standard seems unrealistic.   However, having supplier performance expectations around inventory performance does seem likely.

We at RVCF would like to hear your thoughts and opinions on this topic. We are especially interested to know if you feel inventory productivity should remain a retailer (internally-managed) responsibility and, as such, a business area best handled as part of the merchant/supplier relationship management process.  Or do you feel that inventory productivity should be thought of as an element of the end-to-end supply chain and would benefit if incorporated into the supplier scorecard so performance could be more broadly managed?

Give this some consideration and, if you agree, we can make this topic a part of the Retailer Open Forum discussion at the 2018 RVCF Annual Fall Conference this October in San Diego.  We are already planning to delve more deeply into the area of Inventory Management and Productivity during the Fall Conference, with three breakout sessions included in the agenda:  Business Processes Driving “Buy Online Pickup in Store,” Selling More with Less – Smart/Lean Inventory, and Best Practices in Inventory Management.

See you in San Diego!

 

 

 

Tags:  Amazon  Chargeback  Chargebacks  Inventory Integrity  Inventory Management 

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From the Desk of Kim Zablocky: Amazon Goes Under the Microscope at the First E-Commerce Working Group Meeting

Posted By Administration, Thursday, June 8, 2017
Updated: Wednesday, June 7, 2017


We're off to a great start! May 10, 2017 marked the first meeting of the RVCF E-Commerce Working Group, which was formed to facilitate the sharing of e-commerce insights and best practices among suppliers and select third party service providers. The group met in conjunction with the RVCF Spring Conference in Arlington, VA to focus on a topic that suppliers have been eager for us to cover – working with Amazon.

Jessica Butler of Attain Consulting Group, LLC got us started with the results of a survey that focused on Amazon deductions. Jessica discussed the most common deductions, factors that often contribute to deductions, who is typically responsible for deductions, and how deductions are handled and resolved. Topics included purchase order management, labeling and shipping requirements, issue escalation and claim disputes.

Kathy Rotondo from IAB Solutions, LLC reported that deduction activity has increased dramatically in 2016 and is trending upward again in 2017. She also offered tips for identifying and addressing deduction issues. Ella Mui of OpenText brought attendees up to speed on Amazon's extended attributes initiative, while John Thomas of Ralph Lauren Corporation shared an inspiring success story about working with Amazon.

The meeting closed with a roundtable discussion in which members requested ongoing calls to discuss additional e-commerce issues, particularly drop ship challenges and best practices. RVCF is working on future educational opportunities in this area so stay tuned.

We plan to carry the momentum from our initial meeting into our first E-Commerce Working Group Call, which is being held Friday, June 23rd from 2:00 to 3:00 pm EDT for suppliers and select third party service providers. The E-Commerce Working Group Calls will have more of a topic-based agenda than our typical Supplier Open Forum Calls.

The first call will explore topics such as drop ship best practices, supply chain execution, relationship management, deduction and dispute resolution, and other issues. If you'd like to submit a question or topic for discussion, contact Evie Hooper by 12:00 pm EDT on Wednesday, June 14th for inclusion in the agenda. Space is limited, so please register today! Although the first meeting focused on Amazon, the group is open to any retailer that is heavily involved in e-commerce and drop ship.

Additionally, we've created a group within the RVCF website to allow the exchange of best practices, information, and ideas related to drop shipping, E-tailer specific requirements, general fulfillment procedures, and more. RVCF supplier and select third party service provider members are welcome to access this section of the site and use the forum boards, view the videos, etc.

We'll continue to gather information from members about the topics they'd like us to cover, the types of presenters they'd like to hear from, and specific e-commerce and drop ship issues they need help overcoming. The goal is to design conference sessions and presentations that address real world problems and concerns. We're already looking at putting together a panel on drop ship best practices for our Fall Conference. If you'd be interested in participating, let us know. We believe this is an important ongoing initiative that needs to be addressed collectively.

We hope more retail industry professionals will consider presenting to the RVCF E-Commerce Working Group to maximize the effectiveness and profitability of e-commerce efforts. The first meeting at the RVCF Spring Conference was a resounding success and we encourage you to join us on this exciting journey.

Kim
kzablocky@rvcf.com
(646) 442-3473

CLICK HERE to return to the JUNE 2017 RVCF LINK

Tags:  Amazon  Drop Ship  e-commerce 

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From the Desk of Kim Zablocky: We're Launching the RVCF E-commerce Working Group, and Our Top Priority Is Amazon

Posted By Administration, Thursday, April 6, 2017
Updated: Wednesday, April 5, 2017


Amazon is a behemoth that only continues to grow. Although Amazon has had an adverse effect on brick-and-mortar retail, there's no denying that it's a valuable platform for manufacturers and brands to sell their goods. In 2017, doing business with Amazon is a must.

The selling part is easy. Consultants can help with sales, planning and forecasting. But the sale isn't official until the check is in the bank. The headaches for the merchandise supplier community involve the management of actual shipments, tight shipping windows, confusion with invoices and purchase orders, EDI problems, packaging and routing errors, and high return volume. These problems on the backend lead to chargebacks that cut into already razor-thin profit margins.

Most headaches can be traced back to a lack of communication with Amazon. Unless your sales are measured in the tens of millions, it's darn near impossible to speak with someone. It's even difficult to reach someone by e-mail.

According to feedback we've received, suppliers are sent to Amazon Vendor Central and left to fend for themselves. If there's an issue with chargebacks or requirements, they open a case ID in Vendor Central. If they get a response at all, it's often a scripted answer that doesn't address the specific problem. In many cases, multiple case ID's are filed for the same problem that ultimately goes unresolved.

Of course, Vendor Central is always changing, which means suppliers have to keep up with those changes. I've compared it to the Borg aliens from Star Trek that would change forms in pursuit of perfection and try to force other species to assimilate.

"We are the Borg. Lower your shields and surrender your ships. We will add your biological and technological distinctiveness to our own. Your culture will adapt to service us. Resistance is futile."

To be fair, the Borg are bad guys. We don't view Amazon as a bad guy. We just want merchandise suppliers to be successful at selling their products through Amazon. Actually, RVCF has spent several years trying to get anyone from Amazon to support our efforts to help suppliers deal with them.

Unfortunately, Amazon, to date, has not expressed an interest in participating with our group. As we see it, Amazon considers itself a platform – perhaps a technology company, but not a conventional retailer. Now, it's up to us to work together and figure this thing out.

That's why we're launching the RVCF E-commerce Working Group, which will focus on Amazon right out of the gates. Our first meeting will be held on Wednesday, May 10 during the RVCF Spring Conference at the Crystal Gateway Marriott in Arlington, VA, just minutes from downtown Washington, DC.

Topics to be discussed include but are not limited to:

  • Order Fulfillment
  • Ship Windows
  • Prep Work
  • Carton Labeling
  • ASN Match
  • Shortages (and coordinating chargebacks)
  • Deduction and Dispute Resolution
  • Payment Process

The goal of the RVCF E-commerce Working Group will be to bring industry stakeholders together, identify best practices and a path of least resistance, determine what the perfect order looks like, and clarify the process from the time an order is generated until a check arrives.

That's the key. There are plenty of consultants, most of whom are former "Amazonians" who can help you on the sales side. But again, selling is the easy part. The challenges facing the supplier community involve shipping goods and getting paid. Nobody likes to talk about that part of the equation. Well, we're planning to get into the dirty details of every transaction so we can chart a clear path forward for suppliers who want to sell through Amazon.

But we can't do it alone. We need your support and participation so we can come up with real world solutions to real world problems. You can either operate in a bubble, hire a consultant, and hope you come up with the right answers, or we can collaborate and lift up the supplier community as a whole.

The real work gets underway when the RVCF E-commerce Working Group meets for the first time at the RVCF Spring Conference on May 10 in our nation's capitol. Moving forward, we'll be holding meetings on regular basis. To get participate in the kick-off of the working group, register for the conference. I also encourage you to contact Evie Hooper as she'll assist you with effectively involving yourself in the group's efforts.

Kim
kzablocky@rvcf.com
(646) 442-3473

CLICK HERE to return to the APRIL 2017 RVCF LINK

Tags:  Amazon  E-Commerce Working Group 

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Protecting Your Brand on Amazon

Posted By Administration, Thursday, October 13, 2016
Updated: Tuesday, October 11, 2016


by Rachel Greer, Cascadia Seller Solutions


Your listings are humming along happily on Amazon, you have your enhanced marketing content working for you, PO's are coming in nicely, and you have limited chargebacks. Then you start seeing negative reviews come in on the listing about a serious customer complaint regarding safety. Upon researching the matter, you see that there are multiple sellers on the listing, claiming to sell your product, yet you are not distributing.

One of the more frustrating aspects of being a vendor on Amazon is the seemingly endless proliferation of seller listings, some of them legitimate, some of them dealing in gray market, and some of them appear to be outright fakes.

For those sellers who are selling due to access to your legitimate product through unauthorized channels, there aren't many good ways to kick those sellers off the listing. They are selling legitimate product and Amazon doesn't get too persnickety about distribution channel as long as the product is legitimate because they don't have a clean nose on this themselves.

For those sellers who are actually selling fakes on your listing, those are called "hijackers." To report on this kind of illegitimate behavior:

1) Send a polite but firm e-mail asking sellers – with no threats, strong language, etc. – to stop listing against the product, explaining that you do not distribute the item. Example text:

"Hello Seller XYZ, I see you are listing on my ASIN XXXXX. As I do not distribute, and am the owner of the trademark (insert relevant trademark #, etc. here), I ask that you cease listing against my items since your offer does not match. I appreciate your help with this."

2) If they persist in listing, do the test buy and report it to Amazon. The link to report infringement violations is as follows:

https://www.amazon.com/gp/help/reports/infringement?ie=UTF8&*Version*=1&*entries*=0

Note: any other violations you find, such as inaccurate images, listing content, etc., should go here:

http://www.amazon.com/gp/help/reports/contact-us

If you are struggling with illegitimate private label versions of your product, illegitimate uses of your images and written copy, and other inappropriate uses of your intellectual property, Amazon has this test buy procedure in place to support brands in their efforts to provide good quality, legitimate product to customers.

What is a test buy? This is a purchase of the product sent to the location of your choice. The images must be taken, documented, and put into a report in the format required. Do not return the items, do not give feedback to the seller, and do not leave a negative product review as this is counterproductive to your cause.

At the end of the day, Amazon will always take care of their customers. If you can prove that a hijacking seller or competitor would do harm to Amazon customers, Amazon will always support you.


Rachel Greer has over seven years of Amazon experience, most recently in the Product Compliance team at Amazon, managing audits, product testing, and inspections for the global retail and private label compliance programs. Rachel is also experienced with product recalls, product safety/Andon Cords, and restricted/prohibited products at Amazon. She is focused on simplifying complex global regulations to help small and medium vendors expand their selection or go global with minimal recall/port seizure risks or product defects. Rachel holds an MA from the University of Oregon in Early Modern European History and an MBA from Seattle University with a focus in operations and international business.

CLICK HERE to return to the OCTOBER 2016 RVCF LINK

Tags:  Amazon 

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Listing on Amazon – the AmazonBasics Way

Posted By Administration, Thursday, August 11, 2016
Updated: Tuesday, August 9, 2016


by Rachel Greer, Cascadia Seller Solutions


There are two parts of any Amazon detail page – there's the top portion, sometimes called "above the fold" – and the bottom portion, which is the product description and A+ content. Only companies signed up as vendors or who are in the Amazon Exclusives program have access to A+ content, so we won't dive into that on this post.

To have a killer detail page that immediately hooks your customer and increases conversion, take a page or two from the AmazonBasics listing methodology. For the purpose of this article, we'll use the AmazonBasics Portable Bluetooth Speaker as an example here.

The perfect Detail Page:

What makes it perfect?

  • Breaking the 2D barrier – the product is photographed from an angle, breaking up the monotony of 2D scroll in the search results
  • The pictures are all free of text
  • The device is shown with a cordless phone connection and a corded phone connection, the two most important features about its function
  • It is pictured with a human hand, as a reference point. All products need a physical reference point that is easily understood visually because people rarely measure things out and are surprised when the product isn't what they expect
  • The close up is of the most important feature of the product – the plugs – to ensure that the customer has the right kind of plug for the device
  • The picture of the included cable is separate per the terms of service, only the product can be in the primary photo
  • The video is simple, relatively short, and produced at a low budget

Let's dig into some of these elements in detail.

2D Barrier:
It can be really monotonous for a customer – search and scroll, search and scroll some more – looking for the product they want to buy. By changing up the angle and shape of the image, you not only can show the customer a different view of the product, you're also not boring them with the same straight ahead view everything else seems to have. Here are ways other products could be photographed:

  • A toy could be photographed from the eye level of the toddler playing with it.
  • A tin can be photographed as though the lens is at the counter level, and the tin is rising above it.
  • A chair can be photographed from the position of the person walking up to it to sit down.

Note, the primary image must still show the entirety of the front of the item, so don't get too creative with the primary image!

Text free images:
Amazon Terms of Service strictly prohibits text in images. This is because they want you to sign up for and use A+ (enhanced) content, which can contain pictures, images and charts. While many sellers and vendors get away with listings that have text in the images, this can result in listing suspensions until the issue is fixed, or sometimes Amazon employees will revert the page to a previous version with a suboptimal photo, directly impacting conversion on your product.

Product in use images:
What are the most important parts of using the product that you're selling? Put those into the image directly. In this case, the most important feature of the speaker is that it's portable and Bluetooth enabled. So, the photos show how it can be used with a phone ("Look, ma, no plug into the wall!") and how it can be used without a corded connection to the phone. In this way, the customer can see in less than 5 seconds the primary selling point of the product. Remember that for conversion, you have less than 10 seconds on average to "hook" your customer or they'll hit back, or click on a related product.

Reference point image:
A very common issue faced by vendors and sellers who list products online is that customers don't read the listed dimensions carefully, or mix up product dimensions with package dimensions, or simply have a hard time visualizing what a particular size of an item might be. By including a human hand, which is a universally recognizable reference point, the customer can immediately grasp the size of the product without even reading your dimensions. This helps to reduce returns from customers buying the wrong size, or lower review ratings because customers believed they were getting something bigger.

Close ups:
If the product has specific features that are integral to the function of the device, or to which kind of accessories or associated the customer might buy (in this case, a charging cable), then there needs to be a close up image of that cable plug area so that the customer can ensure they buy the right plug for the product. Other examples of this are belt loops on pants, kitchen utensils meant to be used with other products, etc.

Bundled products:
Any bundled products with your primary listing need to be photographed alone, so that the customer clearly understands what they're receiving when they buy the product. Under no circumstances should you include photographs of products on their own that do not come with the purchase! This confuses customers and leads to returns and complaints.

Video:
You only get one video for your listing as a vendor, so make it a good one! Think about how to recreate an in-store in in-home use experience for the customer, and keep the video short and simple – 1-3 minutes at most.

Having a good detail page can significantly increase your products conversion on Amazon – selling online is all about helping the customer understand why your product meets their needs. These tips can help you list your products successfully, the way Amazon lists their own products!


Rachel Greer has over seven years of Amazon experience, most recently in the Product Compliance team at Amazon, managing audits, product testing, and inspections for the global retail and private label compliance programs. Rachel is also experienced with product recalls, product safety/Andon Cords, and restricted/prohibited products at Amazon. She is focused on simplifying complex global regulations to help small and medium vendors expand their selection or go global with minimal recall/port seizure risks or product defects. Rachel holds an MA from the University of Oregon in Early Modern European History and an MBA from Seattle University with a focus in operations and international business.

CLICK HERE to return to the AUGUST 2016 RVCF LINK

Tags:  Amazon 

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Amazon Seller or Amazon Vendor Platform

Posted By Administration, Thursday, April 14, 2016
Updated: Tuesday, April 12, 2016


by Rachel Greer, Cascadia Seller Solutions

Many brand owners are selling on Amazon as a vendor and assume this is the end of the story for their Amazon channel. However, these owners don't realize they may be leaving a lot of money on the table by not fully utilizing all of Amazon's platform. We'll outline here various ways to protect your brand on Amazon by using a seller account, how a seller account may be more profitable for some products or the entire brand, and when costs are broken down for each channel.

What is retail arbitrage?
Retail arbitrage refers to the practice of small internet middlemen who go on "sourcing trips" to local stores and use scanners or their smart phones to find products heavily discounted that can be resold online for significant profits. This is often done with discontinued items or slow moving items that the brand owner tried to get off their books. These sellers will create their own detail pages for the brand owner's products and, sometimes, these are not authentic products. They make money because Amazon takes care of the entire fulfillment and customer service process for them, through Fulfillment by Amazon (FBA), a program that allows sellers to ship in boxes and boxes of purchased retail goods to Amazon's fulfillment centers and Amazon takes care of the rest. While there are storage fees and pick-and-pack fees associated with this, the sellers can still make money by moving enough volume through the system.

What can a brand owner do?
By signing up for a seller account and getting brand registered, a brand owner gains full control of these pages and can request they be merged with the correct pages or deleted from the catalog. They can also report violations of their intellectual property and report counterfeit goods, if that is an issue. Brand protection is a major reason for opening a new seller account and setting up monitoring on Amazon. Additionally, by using FBA themselves, a brand owner gets the same benefit of direct to customer fulfillment that Amazon offers a vendor, but with a different pricing structure as the seller gets to set the price at which their product will sell.

What other reasons are there to expand a seller account?
Retail arbitrage sellers are making a living doing this work – there are thousands and thousands of sellers who make enough money reselling items they've found in stores to do only that for their income. This is a huge volume of sales that brand owners are leaving on the table! By transferring discontinued or slow moving products to your seller account instead of doing small PO's with Amazon Vendor Central or selling the remainder of the item off at a discount, the brand owner can continue to make full profit on that product. This is obviously only one part of your overall strategy and approaching it in a data driven manner comparing costs for doing business on Vendor Central and Seller Central is essential, but there is certainly room for improvement for many brand owners.

Why does Amazon allow violations of rules and counterfeit items?
Amazon is a very large platform and it would be impossible in the current business model to evaluate everything before it goes live. As such, Amazon relies on brand owners to police their own products through test buys and reports, and expects that customers will complain about bad detail pages or counterfeit products. Because the platform is explicitly set up expecting you to own your own brand, it's essential to set up a process for monitoring and managing this brand risk.

How does this work in other marketplaces?
Perhaps a vendor relationship makes the most sense for you in the U.S., but a seller account makes the most sense for you in Canada or in Europe, where you can manage the compliance and pricing for the product without interference from Amazon. Amazon has high expectations of documentation if they act as the importer of record. Obviously, you should ensure compliance, but it is one less hurdle to selling in Europe by simply setting up an FBA account and having Amazon directly fulfill the products. This is especially true in China and Japan, where Amazon has struggled to grow a solid import presence. In some cases, the only way to ensure your legitimate product – compliant with local regulations – is sold on the platform is to import it yourself and sell on FBA.

So, how do you get started?
Go to sellercentral.amazon.com and sign up for a seller account using an e-mail that is shared by multiple people at your company (something like support@ or info@) and ensure it's regularly monitored. Often, notifications are only sent to the primary e-mail address. Sign up for brand registry and then start cleaning up the listings listed under your brand. Have your inventory planning team map out different scenarios for products, factoring in chargebacks, fees, and marketing costs on the Vendor Central platform as well as factoring in pick-and-pack fees, referral fees, and storage fees on the FBA Seller side. Make smart, data-driven, informed choices about what makes the most sense for YOUR business.


Rachel Greer has over seven years of Amazon experience, most recently in the Product Compliance team at Amazon, managing audits, product testing, and inspections for the global retail and private label compliance programs. Rachel is also experienced with product recalls, product safety/Andon Cords, and restricted/prohibited products at Amazon. She is focused on simplifying complex global regulations to help small and medium vendors expand their selection or go global with minimal recall/port seizure risks or product defects. Rachel holds an MA from the University of Oregon in Early Modern European History and an MBA from Seattle University with a focus in operations and international business.

CLICK HERE to return to the APRIL 2016 RVCF LINK

Tags:  Amazon 

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Urgency to Innovate: Retailers Deploy New Strategies to Engage Consumers

Posted By Administration, Thursday, April 14, 2016
Updated: Wednesday, April 13, 2016


by Leela Rao-Kataria, GT Nexus

Omni-channel has long been the main topic of discussion in the retail hemisphere. In the past few years, this dialogue has extended much further into specific strategies retailers need to deploy to engage their target demographics. It's all about the customer, and retailers are going "off plan" and trying approaches that have never before been deployed. Some retailers are making huge investments into e-commerce and user-friendly front end technology, while others are focusing on fulfillment options and competing with the industry's biggest threat – Amazon. Outlined below are some of the most innovative ways retailers are going after market share and staking their claim to permanency within the retail landscape.

Personalization
It's no secret that most retailers are spending their marketing dollars appealing to millennial customers, a key demographic that seeks personalization. Footwear giant Adidas was one of the earliest companies to satisfy this need with their "mi Adidas" customizable offering, allowing consumers to choose style, color, and design options.1 Some retailers have based their business models around this type of customization, previously unavailable for the average consumer. Blank Label and Indochina both offer a variety of dress shirts and business clothes that allow personalization of fabric, size, fit and color.2 It's a brilliant consumer base to go after because men traditionally don't like to spend too much time shopping in-store and these retailers eliminate the hectic in-store element.

Expansion into e-commerce platforms allows greater personalization. Once the product is in the store, it is already made, but by partaking in the design process, consumers can be really specific and get exactly what they want, how they want it – which is a crucial component of the omni-channel process. But upfront investment into developing robust e-commerce platforms with user ease and multi-faceted capabilities requires buy-in from fashion and apparel executives, some of whom are nervous to take the plunge. Is there a payoff? Department store leader Nordstrom seems to think so. CFO Mike Koppel believes there will be a high payoff in the future. "In evolving with our customers, we've made significant investments to enable customers to shop in multiple ways," said Koppel. "This business model has a high variable cost structure, driven by fulfillment and marketing costs, in addition to ongoing technology investments."3

Other examples of new business models include curated subscriptions. Fashion company Stitch Fix focuses its brand DNA on understanding the personality, size, and preferred dressing style of its clients who are assigned their own personal "stylist."4 The stylist will evaluate the best fashion pieces per the client's requests around sizing, price, and color, and proceed to send the client a monthly box of five varied pieces that are especially curated to create a beautiful and put together look. Similar models are popping up, and will continue to trend as consumers are shying away from mass fashion and looking to express their individuality through their attire.

Fulfillment against Promise
In theory, the retailers that understand how critical innovation and the consumer experience is will be the same retailers that understand the importance of fulfillment. According to a recent global study conducted by GT Nexus, consumers are facing alarming levels of out-of-stock inventory, ranging from 63% online and 75% in-store, on an annual basis.5 Retailers are aware of this gap, where investment in front end technology doesn't necessarily translate into alignment with back end fulfillment models. Imagine taking the time to personalize a jacket, only to find out you won't receive that order for 3-4 months. That type of experience leaves a negative impression with the consumer, who will often disengage with the retailer and move on to a competitor.

There are retailers that are getting ahead of these fulfillment issues and putting strategies in place to guarantee an assurance of supply. Examples of this include denim and apparel giant, Levi Strauss & Co. Levi's has partnered with the IFC to put in place a system that enables assurance of supply with manufacturers abroad.6 Similarly, Deckers (parent company to UGG and other brands), has moved to a cloud supply chain platform to automate shipments and have better collaboration with its partners. Mark Fegley, SVP of Decker's Supply Chain comments, "One of the key things we were looking for was adding value through reducing complexity and being able to streamline some of our core processes."7

Other companies like Columbia Sportswear are gaining insight into their supply chain via technology investments, allowing better collaboration amongst n-tier trading partners. This not only gives Columbia the ability to track inventory from a consumer standpoint, it also allows them to operate with agility, adjusting the supply of colors and sizes to respond to the demand of product they are seeing in-store and online – especially crucial with the seasonality of most of their clothes. Suppliers have greater – and earlier – visibility into orders. This means better planning for materials and capacity throughout the supply chain. But that same data and collaboration allows for innovative shipping programs, such as direct shipments to the store or individual consumer. The ability to execute order fulfillment from multiple nodes in the network is a strategic differentiator in meeting omni-channel demand.

Fulfillment is one of the greatest factors determining a retailer's success. Recently Amazon revealed that it has seven new private label brands. This is in addition to the news that, since 2013, the company has forcefully expanded its investment in supply chain, creating a fully comprehensive platform that allows it to own the process from manufacturing to final mile delivery.8 If we consider what truly made Amazon a leader, it was their ability to push the envelope with delivery and fulfillment. Partnering in both their own fashion and apparel segment, along with the capability to get product into the hands of the consumer, will make Amazon an even more powerful threat to watch for in the upcoming year. The best way for retailers to compete and stay ahead of the competition is to ensure that their front end investments are matching their back end capabilities, giving consumers what they want, how they want it, and, most importantly, when they want it.

[1] http://www.adidas.com/us/customize  
[2] http://lifehacker.com/5909754/five-best-online-custom-clothing-stores  
[3] http://www.wsj.com/articles/nordstroms-high-cost-for-online-sales-1456174730?mod=djemlogistics  
[4] http://www.businessinsider.com/stitch-fix-review-2015-3  
[5] http://mktforms.gtnexus.com/rs/979-MCL-531/images/GTNexus-The-Global-Out-of-Stock-Crisis.pdf  
[6] http://www.gtnexus.com/resources/blog-posts/win-win-win-levi-strauss-co-and-ifc-team-support-sustainable-suppliers  
[7] http://mktforms.gtnexus.com/rs/979-MCL-531/images/GTNexus_Deckers_EI.pdf  
[8] http://www.therobinreport.com/planes-trains-trucks-and-ships/?utm_source=The+Robin+Report&utm_campaign=5187446811-Planes_Trains_Trucks_and_Ships_3_28_2016&utm_medium=email&utm_term=0_e90268c709-5187446811-201801229


Leela Rao-Kataria is Retail Marketing Manager for GT Nexus. She has more than 10 years of experience working with fashion brands/labels including Levi Strauss & Co., Sephora, Estee Lauder, and L'Oreal Companies focusing on global product development, international channel execution and luxury products. Leela helped integrate Sephora's loyalty program, Beauty Insider, into Sephora in JCPenney stores. She later joined Levi Strauss and Co. where she partnered with wholesale and retail partners such as Dillard's, Macy's, and Kohl's to deliver heritage programs to Levi's enthusiasts. She has also developed marketing strategies for new market entrants Yellow Brick Coffee and Amyris. Leela received an MBA in Marketing and Finance from New York University's Stern School of Business.

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Tags:  Amazon  Omni-Channel 

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RVCF to Present Webinar Series on Working with Amazon

Posted By Administration, Thursday, March 10, 2016
Updated: Wednesday, March 9, 2016

by RVCF


Last summer, Amazon passed Wal-Mart as the world's biggest retailer by market value. Amazon continues to be an innovator and industry leader in supply chain management and order fulfillment, offering everything from one-hour package delivery to 1-Click purchasing for countless product categories. In fact, a study from Cowen and Company predicts that Amazon will be the largest clothing retailer in the U.S. by 2017.1

There is no denying that Amazon is a powerhouse. But selling goods on Amazon presents a number of challenges compared to traditional brick-and-mortar stores and many RVCF members are struggling with the Amazon model. Although this is uncharted territory for RVCF, we believe it is extremely important to understand the front end of the sales opportunity when planning to do business with Amazon.

RVCF is excited to announce a trilogy of webinars to help suppliers learn how to manage Amazon. The webinars will be presented by Rachel Greer, founder of Cascadia Seller Solutions, a Seattle-based consulting firm created to support Amazon sellers. Areas of focus for this team of former Amazon employees include product development, sourcing, testing and packaging design, detail page development, customer service management, import transportation, and compliance with Amazon policies. A seven-year veteran of Amazon, Rachel Greer most recently worked in product compliance for Amazon, where she managed audits, product testing and packaging, and inspections for the global retail and private label compliance programs.

Many large companies that sell to Amazon ship and sell the item, like a traditional retail account. However, when you sign up for the Amazon Seller program, you can control the selling portion of the Amazon relationship while Amazon handles the difficult work of fulfilling products directly to customers. You can sell through the lesser volume products at your own pace. You control how much or how little you send to Amazon and when, and reserve the Amazon relationship for high-volume, easily forecasted products.

As an Amazon Seller, you can be paid within two weeks, not two months or more. You can connect directly with customers and get feedback on your products. You control the price set for your products on Amazon. You can use Amazon to try out new prototypes and predict potential volume for new products. And Amazon sellers obviously benefit from Amazon's traffic, customer trust and brand equity.

Of course, you have to know how work with Amazon if you expect to profit from the relationship. Here are the three webinars that can help you manage Amazon:

Amazon Vendor or Seller? How to Manage Amazon Effectively for your Business
Wednesday, March 16, 2016
11 am – 12 pm EST

Register Here

This webinar will explain the difference between an Amazon Vendor and an Amazon seller, and the benefits of each kind of relationship. Brand owners will learn how to manage their Amazon reputation through product reviews, brand registry, IP infringement reporting, and other means. Find out the right time to use Amazon's 3P platform or 1P. Brand owners who choose to manage a portion of their Amazon channel as a seller will learn how to manage a direct-to-customer experience.

Amazon Seller 101: Setting up a Seller Account and Using Available Tools
June 2016 (exact date and time TBD)

This webinar will show you how to set up a seller account and introduce you to the tools you can use to manage the account, reduce overhead and increase automation. You will also learn what financial approaches can be used to determine what will sell well at Amazon Retail and what should be sold as a direct seller.

Amazon Seller Performance and Protecting Your Brand
September 2016 (exact date and time TBD)

This webinar will show you how to manage customer service as an Amazon Seller, how to manage returns, and how to effectively interact with various seller enforcement teams at Amazon. You will also learn whether to use FBA or a different 3PL to get Seller Prime, a must for Amazon Sellers.

Whether you do business with Amazon now, plan to do so in the near future, or are exploring the possibility, this trilogy of webinars will be well worth your time. By learning the ins and outs of working with Amazon from a person who has been in the trenches at Amazon, you will be better prepared to succeed and avoid the pitfalls that have plagued a number of RVCF members. We encourage you to register for the March webinar, share your feedback, and let us know what other issues you would like us to cover during future webinars, conference calls and events.

[1] http://www.bloomberg.com/news/articles/2015-07-20/cowen-amazon-will-be-the-number-one-u-s-clothing-retailer-very-soon


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Tags:  Amazon 

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5 Tips for Navigating the Amazon

Posted By Administration, Thursday, September 10, 2015
Updated: Wednesday, September 9, 2015

by Rachel Greer, Cascadia Product Testing Solutions


Many vendors find communicating with Amazon when there's a problem an exercise in frustration, at best, and not worth enduring, at worst. And trying to navigate Vendor Central's "Contact Us" system can be the most frustrating experience for vendors, especially when there's already a problem with a shipment going out late or if a chargeback has been. However, there are ways to make this easier for you and the associate with Amazon trying to help you succeed.

Keep It Simple
The typical associate who answers any cases you submit has between 3 and 20 minutes to fully investigate your issue, provide you feedback, and do whatever internal tracking is required. This number trends downward each year. The associate reading your submission will be more likely to follow what you have to say if you use straightforward Latin based words (phrasal verbs like "put up with" are more difficult for non-native speakers than "endure") and keep your sentences short, with a focus on proper nouns rather than pronouns, where it can be hard to follow the train of thought. If what you're asking isn't direct, to the point, and relatively short, it may be too confusing for the initial associate to handle and they will then escalate it. Escalations always take longer because there are fewer qualified associates to handle them and you can be stuck in the no response purgatory for upwards of a month with some understaffed teams. You want the associate handling your case to be able to read it, understand your concern, have all of the relevant information to solve the problem in front of them (so don't just reference an order or shipment ID, provide a screenshot as an attachment in your case). And always be very polite! The associate tasked with reading your query is not the one setting the policy and making people feel bad usually doesn't make them want to help you.

Use the Right Dropdown Options
There are many possible options when using the Vendor Central dropdown menu, but which should you use to get to the right team? Some I/SIs go directly to operations teams who will answer your case quickly, sometimes within a day, but may not have the right expertise to handle your inquiry. Or, you may submit something to a queue that goes directly to a corporate based team who can definitely answer your query, but they have much slower response times due to their staffing. In addition to this, there are sometimes confusing overlaps with the I/SIs. For example, if you have a problem with your import shipment, you may be tempted to select "Shipments" then choose "#3 My shipment hasn't been picked up yet and I need help," and assume that will solve the problem; however, that may not work depending on the issue. If it's due to a product compliance delay, perhaps you were asked for documents on electrical safety listings or children's products, and for this kind of shipment delay, you must use "Issue Product Compliance >> Direct Import Submission."

Don't Spam the Queues
Each case is assigned in incoming order to the next available associate. If multiple associates are working on the same case, you will sometimes get less than optimal responses. Different responses may come from the same issue submitted, but were worked by different associates, or sometimes both associates may resolve the case as a duplicate, citing that the other case is being worked on or was already resolved. If you've already submitted a case, you can go into "Settings >> Case Log" and open your existing open cases to submit additional information. For example, the interface only lets you attach one file at a time of no more than 4MB; if you're submitting import documentation, it's important to attach all relevant documents and test reports to the same case rather than forcing an associate to go searching for your other new cases you submitted. Again, these associates are limited in the time they have to help you, so you want to make it as easy as possible for them.

Do Your Homework
The Vendor Central Resource Center is full of information to help you succeed with Amazon – it's just not text searchable or easy to navigate. Sometimes, items which seem "Legal" are found in "Operations" or vice versa. If you can provide the exact reference to the guide that you used to the associate reviewing your account, that will help them better troubleshoot your problem. Sometimes, internal policies have changed, but the external facing policy hasn't yet been updated and it helps them to know why you're facing the issue you're facing. Additionally, nearly all guidance you need to submit documents or ship successfully with Amazon can be found here; they are just usually owned by each individual team, so you may have to read through four or more manuals to make sure your shipment is properly labeled and compliant with Amazon policy.

Make Use of Experts
Sometimes, it's very difficult to reach anyone who is willing to provide you a phone number to call at Amazon. Everyone has goals to meet and phone calls are not a part of these goals. An experienced manufacturer's representative to Amazon or consultant team can help you with breaking down your concerns and issues into the most relevant parts and go to bat for you with whichever team you need them to at Amazon. Amazon is a very fragmented company and what works with one VM, or even with retail in general, may not work with the product compliance or vendor chargebacks teams (which are essentially operations teams with limited corporate support). Many consultants and rep groups supporting Amazon are based in Seattle and can advocate for you not just in e-mail or on the phone with Amazon, but also in person.

Every day you're not getting an answer or getting to the root cause of a stuck import shipment or labeling issue is a day you're not shipping to customers and making money. Following these steps will help you get closer to your goal of a successful partnership with Amazon and access to Amazon's many customers!


Rachel Greer has over seven years of Amazon experience, most recently in the Product Compliance team at Amazon, managing audits, product testing, and inspections for the global retail and private label compliance programs. Rachel is also experienced with product recalls, product safety/Andon Cords, and restricted/prohibited products at Amazon. She is focused on simplifying complex global regulations to help small and medium vendors expand their selection or go global with minimal recall/port seizure risks or product defects. Rachel holds an MA from the University of Oregon in Early Modern European History and an MBA from Seattle University with a focus in operations and international business.

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The Future of Retail in a Globalization 2.0 World: The Four New Roads to Growth and Profit

Posted By Administration, Thursday, June 11, 2015
Updated: Wednesday, June 10, 2015

by Dr. James A. Tompkins, Tompkins International


Globalization 1.0 was born in the 80's, matured in the 90's and peaked in the early 2000's. The era was marked by "made in Asia," the growth of the BRIC economies, wealth residing in the West, the birth of the Internet and the maturation of local, regional and global supply chains.

More importantly the era gave birth to three MEGATRENDS, the rise of China first as a manufacturing hub and then as a market, the exponential growth of e-commerce and the development of the advanced globally integrated supply chains.

Retail has experienced major disruptions over the last five years. These megatrends have melded together to form a single new MEGATREND -- Globalization 2.0 – and this has completely changed how retailers and brands must operate and how they must approach making, moving and selling consumer products.

Globalization 2.0 has largely shattered close to 100 years of retail and consumer product manufacturing, operations, sales, marketing and supply chain structures, closing down the old routes to growth and profit while opening new ones.

If you are a retailer or consumer product brand Globalization 2.0 means you not only CAN but MUST be able to "make/buy it" anywhere, "move it" anywhere, and "sell it" anywhere.

Globalization 2.0 has found its purest expression in the birth of global disruption twins, Amazon and Alibaba. Amazon and Alibaba are changing the face of global retail.

They are the poster children for a 2.0 world. Jeff Bezos and Jack Ma both run companies that are supply chain focused, that have cool tech interfaces and who rely on China as a factory and market.

Both companies have used the 2.0 foundation to influence every aspect of global retail, branding and merchandising. Changing how all brands need to operate.

In this 2.0 environment U.S. and European retailers and brands must deploy four new strategies in order to grow and be profitable.

STRATEGY I – Reframe Your Business for a 2.0 World
This means asking three questions:

  1. Where should I make it?
  2. Where and how should I sell it?
  3. How should I deliver it?


Retailers and brands must ask themselves, how do we reset our "make it, sell it, move it" strategies in a 2.0 world?

While the answer will be different for every retailer and brand it will usually involve shifting to a model that accounts for:

  1. A mix of Asia, Latin America and the U.S. for production and sourcing
  2. A mix of Asia, Latin America and the U.S. as growth markets
  3. A new mix of hyper-localized supply chains integrated with an omni-channel and e-commerce focus on regional and global networks


STRATEGY II – International Expansion
The middle class is shrinking and less affluent, the retailers and brands serving that middle class are disappearing. The toll taken by a "race to the bottom" on pricing, influenced by e-commerce, means that, with the exception of luxury and mass market products, the old economic rules no longer apply and profit margins are narrow or non-existent. The first road to take for retail and brand growth is expansion into developing markets, in particular China. China is now home to the fastest growing and largest consumer class in the world.

STRATEGY III – Omni-channel + Borderless E-Commerce + Alibaba
Retailers and brands must expand domestically and internationally in order to grow. Growth domestically and internationally lies in transitioning into omni-channel sales. Omni-channel is the ability to present a brand, a product, an experience and to facilitate frictionless sales and returns across all channels.

Growth will also come from embracing the future that is borderless e-commerce. The recent news that Amazon has opened a store on Alibaba's B2C e-commerce platform T-Mall marks the moment that borderless e-commerce went from a "want" to a "must" for retailers and brands. The two companies are creating a world where any consumer from any country can buy from any brand or retailer from any country.

China is the largest e-commerce market in the world. Roughly 500 million Chinese shop online and that number is growing by the quarter. Alibaba is the largest and most profitable e-commerce company in the world having a touch on close to 75% of all e-commerce transactions in China. Alibaba generated $250 billion, Amazon generated $100 billion and eBay generated $76 billion in revenue, making Alibaba, Amazon and eBay the top three revenue generators in 2014.

Alibaba will soon become a major e-commerce platform, technology provider, retail facilitator and brand showcase on a global basis. Selling on Alibaba now will give companies entry and advantages in the US, Europe, India, Brazil, Russia and Africa eventually.

To fully understand Alibaba, what it has accomplished and where it is going, you need to watch "The Alibaba Effect," our extremely popular video that covers all things Alibaba.2

STRATEGY IV – Profits Through Supply Chain
During Globalization 1.0 the supply chain was simply understood as making, moving and storing products: a necessary, if little understood, business function. Globalization 2.0 now mastering the six mega-processes of the supply chain (PLAN-BUY-MAKE- MOVE-STORE-SELL) is essential. Understanding the supply chain often makes the difference for retailers and brands between profits or losses and between thriving or dying.

In a world where your customers are global, where your product sourcing is global and where omni-channel sales and e-commerce excellence are a must have, your supply chain network is a central business strategy and profit driver.

Retailers and brands need to be able to sell anywhere and at anytime, deliver anywhere at any time and be able to see and move product anywhere at any time.

SUMMARY
Retailers and brands are no longer operating in a world where the old rules, old structures, old relationships and old production and channel models work.

The companies that will survive in Globalization 2.0 will embrace a new framework for operations and strategy, expand internationally and shift to an omni-channel/borderless e-commerce channel strategy.

[1] http://www.tompkinsinc.com/alibaba-effect/


Dr. James A. Tompkins is an international authority on supply chain strategy, focusing on implementation of end-to-end supply chains that are demand driven. Jim is the founder and CEO of Tompkins International. His 35-plus years as CEO of a consulting/integration firm and his focus on helping companies achieve profitable growth give him an insider’s view into what makes great companies even better.

He has written or contributed to more than 30 books, including Caught Between the Tiger and the Dragon, Bold Leadership, Logistics and Manufacturing Outsourcing, The Supply Chain Handbook, No Boundaries and Facilities Planning. He has also fulfilled over 1,500 speaking engagement requests.

Jim has served as President of the Institute of Industrial Engineers, the Materials Management Society, and the College-Industry Council on Material Handling Education, and Purdue has named him a Distinguished Engineering Alum. Jim received his Bachelor of Science in Industrial Engineering, his Master of Science in Industrial Engineering and his Ph.D., all from Purdue University.

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Tags:  Alibaba  Amazon  Globalization 

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