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Holiday 2015 Highlights Weak Points in Omni-channel Strategy

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

by Carol Weidner, eZCom Software


Every holiday shopping season has its upsides as well as its lessons to learn. Holiday 2015 signaled an uptick in overall spending and consumer demand.1 However, digital shelves did not always meet that demand: this year, online out-of-stocks saw a ten to fifteen percent increase over 2014.2

Unforeseen demand can explain part of this shortfall – especially for hot items in the toy category. But industry experts point to a more overarching issue – the majority of retailers have not yet fully aligned inventory management with omni-channel imperatives.3 Backend dramatically affects brand engagement – perfectly executed social and e-mail campaigns have little impact if consumers can't get what they want when they want it.

New Habits, Big Expectations
Technology has brought a myriad of new choices and possibilities to retail while raising consumer expectations concerning convenience and shopping options. More and more, consumers utilize multiple channels to complete each purchase, such as click and collect (buy online and pick up in store) and endless aisle (purchase in store and ship to home from another store, drop ship location or DC). This trend of combined channel shopping heavily characterized holiday 2015 and raises the bar significantly for retailers (as well as their distribution and supplier partners).4 It requires extremely agile fulfillment capabilities, highly visible inventory, and significant integration of all fulfillment points as well as the applications that support them.

Although most retailers now recognize such seamless and integrated fulfillment capabilities as the ideal, not all have completed implementation.5 Many established retailers have significant investment in legacy systems and still have portions of inventory and fulfillment managed through siloed applications. Many are in pilot stages of the item-level RFID tagging that provides heightened inventory visibility and helps stores more efficiently function as fulfillment centers. And the industry as a whole currently struggles to configure the balance between push and pull fulfillment models that the new buying patterns require – a gold ring that will likely remain in constant motion as technology evolves. (Ironically, startup retailers that may have had problems competing with more established rivals often have an edge in this new environment – they can start fresh with flexible cloud-based backend systems, respond more quickly to consumer trends and technological innovations, and disrupt with new channels and business models.)

Seamless facilitation of omni-channel fulfillment delivers a win-win for both consumers and retailers. For example, in recent surveys holiday shoppers have expressed a preference to purchase items online and to pick up in store, as this option relieves anxiety concerning holiday shipping issues and saves searching and standing in lines at store locations. Once consumers are in store, however, most click and collect shoppers tend to purchase additional unplanned items – to the tune of 40% this past holiday. Likewise, well executed "save the sale" and endless aisle options protect shoppers from the hassle of calling and/or driving to multiple store locations to track down out-of-stock items. Such transactions afford retailers the obvious upside of, quite literally, saved sales.6

Chasing the Omni-channel Ideal: Making the Dream a Reality
Specific tactics can facilitate retailers' exchange of linear distribution models for a "buy anything, anywhere, anytime" distribution web. These include:

Enable stores to borrow best practices from the DC's playbook and vice versa. If omni-channel fulfillment ideally allows customers to order anything with quick turnaround from any channel, each channel must borrow from the others' strengths.3 Stores with capriciously organized back rooms and semi-accurate inventory will benefit from warehouse-tested tools that heighten visibility and enable streamlined and accurate in-store picking and shipping, such as item level RFID tagging, use of RF guns, voice-directed fulfillment, and even integrated "lite" versions of the DC's WMS system. Similarly, retailer and supplier partner distribution centers, with large order legacies, need tactics to efficiently process smaller and more complex orders shipping direct to customers as well as to stores. An example includes picking single line e-commerce or click and collect orders bound for stores to tote containers with clear labeling, thereby scaling up small orders to the size of typical store replenishment orders.

Keep inventory close, but not that close. Industry experts have suggested "hub stores" as at least a partial solution for relieving omni-channel pressures, such as store replenishment and direct (from store) to consumer fulfillment – from stores, DC's and even supplier partners.3 A hub store would hold defined quantities of the great majority of SKU's in the inventory, and be close enough to a supported group of stores to send out daily replenishment and/or click and collect orders, acting essentially as their "enhanced back room" to pivot in response to sales developments without overwhelming actual back rooms with unmanageable and impractical amounts of inventory.

Simultaneously serve the experience of the in-store, online and mobile customer (as well as every iteration in between). Omni-channel fulfillment requires close coordination between stores, retailers' DC's/warehouses, and supplier partners' warehouses on many levels--including seamless real time visibility of all channel inventory. What's happening online and in-store, both on the floor and in the back room, must be up to the minute, centrally recorded, and accessible to all. Success depends on accurate, scalable and agile integration of software solutions that facilitate this close coordination (such as the aforementioned "WMS lite") – and transition from siloed applications. Solutions exist to track the pace of business on each platform, continuously update stock numbers, send reordering notifications, submit requests to vendors and foster price changes in real time.7

Coordinate more closely with suppliers. Closer connection, or even integration, with suppliers' inventory and order management systems offers considerable omni-channel advantage. Tighter coordination supports seamless and successful direct to consumer fulfillment (drop shipping) – key to omni-channel success. Drop shipping gives retailers the ability to offer a larger array of merchandise to consumers (without the costs and risks of warehousing), giving traditional retailers a toe-hold against e-tailers in terms of selection. It can facilitate cheaper and often faster shipping to the consumer as the fulfillment channel eliminates financial and time costs associated with receiving and distribution. This logistical savings additionally allows retailers to compete on price and still preserve margins – further giving them ability to fulfill the "anything, anywhere" expectations of today's consumers.

Additionally, increased transparency with suppliers can bolster successful just-in-time inventory management. These automated and efficient inventory replenishment systems strike balance between glut and stock outs, saving costs on inventory overages while ensuring in-demand products stay available for purchase, where and when needed. Through integration with suppliers' order management systems, retailers can initiate rapid, strategic response to low stock levels.8 Although such syncing of systems requires an initial buildup of technology infrastructure, the investment can pay high returns in terms of omni-channel efficiency, cost savings, and customer satisfaction.

Continually up the IT ante. In omni-channel retail, IT forms the backbone of the customer experience. Accordingly, it warrants significant investment. Tech departments can no longer focus solely on automating daily back end tasks of the enterprise, they must find ways to innovate and disrupt. As a recent Retailing Today article put it, "Every retailer must actively leverage technology to innovate new ways of engaging and delighting the customer, and then converting and executing sales as efficiently as possible."9

Omni-channel also necessitates IT departments to create and maintain flexible, scalable, and robust infrastructure. Customer and sales data volume has risen dramatically with the rise and ubiquitous use of multiple shopping channels and the support of in-store and online digital shopping "experiences." Inventory across all channels must ideally be managed centrally and visibly. IT departments must align the back end across shopping channels, execute integrations and break down silos.

Prioritize. In shooting for the omni-channel ideal, each organization should define its own contemporary real. Although omni-channel fulfillment dictates a global and dramatic change in inventory management and fulfillment, individual paths to success will vary in accordance with priorities, strengths, budgets, and challenges. Set long and short term goals and tactics in accordance with your organization's unique environment to pace for eventual success.

[1] https://nrf.com/media/press-releases/retailers-very-digital-holiday-season-according-nrf-survey
[2] https://www.washingtonpost.com/news/business/wp/2015/12/22/youre-not-imagining-it-a-lot-of-coveted-gifts-are-out-of-stock-online/
[3] http://www.mmh.com/article/retail_whats_in_store_for_e_commerce_operations
[4] http://www.retaildive.com/news/why-digital-dominates-the-retail-sales-story-this-holiday-season/407936/
[5] http://www.retailingtoday.com/article/what-fashion-retailers-need-know-stay-competitive
[6] http://www.retailingtoday.com/article/four-best-practices-make-holiday-season-bright--convenience
[7] http://www.retailingtoday.com/article/five-mistakes-retailers-will-make-holiday-shopping-season
[8] http://smallbusiness.chron.com/advantages-disadvantages-justintime-inventory-21407.html
[9] http://www.retailingtoday.com/article/three-new-years-resolutions-retail-it


Carol Weidner, CEO of eZCom Software, is living proof of the adage "If you want something done right, ask a busy person." Soon after graduating from Rutgers University with a degree in Mathematics, she opened her own successful business – wholesaling home wares and accessories in the New York/New Jersey area. Carol continued in her entrepreneurial endeavors while she returned to Rutgers full time and completed a second degree in Biology. Following her (second) graduation, Carol learned computer programming and focused on EDI – working for companies serving the retail industry and consulting for major retailers like Toys "R" Us. When an opportunity arose to take over a small many-to-many retail portal in 2000, Carol grabbed the reins. She directed the finance and sales side of the burgeoning company, while working together with a team of colleagues who redesigned one of its key products to serve as a web-based EDI application. The result was the B2B supply chain software provider eZCom Software – and the cloud-based EDI solution, Lingo. Carol can be reached at cweidner@ezcomsoftware.com or 201-731-1800. Learn more about eZCom Software at www.eZComsoftware.com.

CLICK HERE to return to the JANUARY 2016 RVCF LINK

Tags:  Holiday 2015  Omni-Channel 

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Did You Get the Black Friday and Cyber Monday Message from Consumers?

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

by RVCF


Another Black Friday and Cyber Monday have come and gone, and both the sales figures and consumer behavior data should serve as a wake-up call for the retail industry. Let's dive into some of the numbers.

Online spending on Cyber Monday 2015 couldn't maintain the torrid pace established over the weekend when sales increased 26 percent on Saturday and Sunday compared to 2014. But Cyber Monday sales were still up 18 percent, according to IBM. Data from Adobe Systems Inc. shows that total Cyber Monday sales exceeded $3 billion, with nearly $800 million coming from mobile devices.

A National Retail Federation survey found that more than 103 million people shopped online over the course of the weekend. Fewer than 102 million shopped in brick-and-mortar stores. A report from ShopperTrak shows that in-store sales dropped 10.4 percent.

Of course, not all retailers were prepared for such an enormous spike in online traffic, which doubled previous traffic records in some cases. The websites of a number of major retailers went down briefly and many customers were forced to deal with an abnormally slow checkout process. According to Adobe, out-of-stocks doubled their normal rate, with 13 of 100 product views showing an "out-of-stock" notification.

15 percent of online purchases were made using smartphones, and 12.4 percent were made on tablets, according to the NRF. IBM found that purchases made on smartphones increased 75 percent and surpassed online spending on tablets for the first time.

Nearly eight in 10 shoppers use their mobile devices when shopping brick-and-mortar retail stores, according to survey from Deloitte and Statista. 55 percent compare prices and 45 percent research products and find coupons.

A survey from the International Council of Shopping Centers tells us that shoppers are doing their research before they go to the mall so they can get in and out as quickly as possible. On Black Friday, shoppers visited an average of 3.3 stores and made a purchase at an average of 2.8 stores. Consumers know what they want before they get to the store.

However, a very small percentage of sales is coming from social media. Facebook, Instagram, Pinterest, Twitter and other social platforms drove only 1.7 percent of Black Friday sales. On the other hand, traditional e-mail promotions continue to deliver ROI and drove 25 percent of online orders on Black Friday.

There are few important takeaways from this data. We've reached a tipping point with online vs. in-store shopping. Most experts predicted a rise in online and mobile sales, but nobody predicted such a dramatic increase. Retail industry stakeholders need to pay attention to the messages sent by consumers over the holiday weekend.

First, the majority of consumers now prefer to shop online. Second, when they do go to the store, they want to spend less time there. Third, consumers are no longer just comparing prices with their mobile devices. They're buying with their mobile devices.

These trends shouldn't shock anyone. The folks who have been taking their time in developing and improving their omni-channel strategy and beefing up their online and mobile offerings are at serious risk of being left behind. The folks who continue to cling to an unsustainable model for the physical retail store risk becoming obsolete.

Retailers, suppliers and service providers need to collaborate and figure out how to capitalize on online and mobile shopping and adapt the brick-and-mortar shopping model. That's where RVCF comes into the picture. We want to bring industry stakeholders together to answer some key questions.

How do we solve the out-of-stock problem on the busiest shopping days of the year?

How do we solve the issues that contribute to a negative online shopping experience during this time?

What strategies for improving online and mobile sales need to be cultivated? Why isn't social media driving more sales?

How can the in-store shopping model be changed? Should retailers that don't compete with each other join forces? Should the mall become a giant open space with different kiosks for different brands and stores? What is the best way to reduce store footprints and make better use of in-store real estate?

We need to hear from you. What did you do well during the holiday weekend and what weaknesses were exposed? What are your ideas for building on strengths and correcting weaknesses? What more do you need from trading partners and service providers? Visit the RVCF forum boards and share your thoughts, ideas and concerns about taking advantage of online and mobile shopping and improving the in-store model.


CLICK HERE to return to the DECEMBER 2015 RVCF LINK

Tags:  Black Friday  Cyber Monday  e-commerce  Holiday 2015  Omni-Channel 

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"Bleak" Friday 2015: A Perilous Season Ahead for Retailers?

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

by Dwight D. Hill, McMillan Doolittle LLP


On a rainy, cold Black Friday two weeks ago I went to one of the local malls to check out the crowds. I was shocked – I drove right up to one of the department stores, walked in and saw neat displays with very few crowds. I had to check my watch to make sure I had the date correct! The crowds came later, but brick-and-mortar traffic was definitely down for Black Friday 2015. According to Shoppertrak, in store sales were down 10.4% versus 2014.1 So what is happening? Will it be a "blue" Christmas for retailers? Here's some perspective on the retail trends we're witnessing:

1. Promotion creep. Black Friday promotions have crept over the years earlier and earlier in the month of November, with many beginning this year on November 1st. The result is an incredible dilution of the Thanksgiving shopping weekend. Combined with Thanksgiving Day openings, the pie is simply divided over a greater amount of time. The result: The sales over the holiday weekend appear softer.

2. The shift online continues. Why wait in line or get out the door at 4:00 am when you can shop online? This year, the trend hit a record – Thanksgiving Day through Cyber Monday netted a record $11 billion in sales, a 15% increase over 2014 according to Adobe.2 Cyber Monday also turned out to be one for the record books – it was the largest online sales day in history, hitting $3 billion in sales.3 These online sales certainly influence brick-and-mortar sales, but when it comes to Black Friday crowds, it looks like a lot of folks chose to avoid the madness and shop online instead. The result: Retailers' e-commerce businesses will set sales records, with margins pressured by all of that free shipping.

3. Third quarter sales were soft. We saw a who's who list of retailers including Macy's, Best Buy, and Nordstrom report disappointing quarterly results recently. What this means is inventories are likely higher than planned, which means a raucous promotional holiday season ahead, particularly later in the month if sales don't materialize as planned. The result: Yet more margin pressure to clear through holiday inventories.

So will we hit all of those holiday sales predictions? We will see, but one perilous fact is certain – retailers' margins this year will certainly be in a race to the bottom.

[1] http://www.shoppertrak.com/media/press-release/in-store-retail-sales-decline-on-black-friday-weekend/
[2] http://www.adobe.com/news-room/pressreleases/201511/113015AdobeDataCyberMondaySales.html
[3] http://www.usnews.com/news/business/articles/2015/12/02/record-cyber-monday-spending-tops-3-billion


Dwight D. Hill, whose background includes leadership roles with Neiman Marcus and Deloitte LLP, is Partner, McMillan Doolittle LLP. Dwight can be reached at dhill@mdretail.com. Learn more about our services and perspectives on retail by visiting us at www.McMillanDoolittle.com.

CLICK HERE to return to the DECEMBER 2015 RVCF LINK

Tags:  Black Friday  Brick-and-Mortar  Cyber Monday  Holiday 2015  Omni-Channel 

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The Holidays Are Coming: Are You Ready?

Posted By Administration, Thursday, October 8, 2015
Updated: Tuesday, October 6, 2015

by Dwight D. Hill, McMillan Doolittle LLP


The air is crisp, the holiday trim boutiques have been up for weeks, and the cottage industry of sales predictions by all the pundits is well in gear. Holiday sales predictions this year are coming in around +4% depending on your source, slightly less than last year's 5.2% gain. Will this holiday season be frightful or delightful for retailers? It's anyone's guess, but we offer a list of facts retailers need to be aware of going into Holiday 2015.

1. Get the turkey on the table early. Better start planning Thanksgiving "lunch" versus "dinner" going forward – if you aren't already planning to open your stores on Thanksgiving Day, you soon will be. While many naysayers will trumpet the sanctity of the holiday has been lost, the shopper has proven over the past two years they have no problem spending Thanksgiving evening on a mad dash for deals. We all know the retail institutions of "Black Friday" and "Cyber Monday" are rapidly vanishing into an endless caldron of promotions that blur the entire holiday season. Yet shoppers enjoy the thrill of this kick-start to the holiday season. Thus, the Thanksgiving afternoon/evening openings are here to stay and the number of retailers participating will continue to grow. Retailers: Eventually you will be forced to seriously consider this dreaded Thanksgiving opening if you haven't already.

2. Every day counts: we have a few extra days this holiday season. Just two years ago we witnessed some of the highest levels of promotional activity on record. Holiday 2013 presented the fewest shopping days since 2002 with 26 shopping days between Thanksgiving and Christmas. To make matters worse, Mother Nature provided her own gift in the form of two major winter storms that socked in much of the Midwest and Northeast during two key shopping weekends. As a result, retailers panicked and it turned out to be one of the most promotional in history – shoppers were treated to 30%, 40%, or even 50% off their entire purchases during the last 12 or so shopping days before Christmas – not to mention clearance events that were moved up into the holiday period. It was the shopper's paradise that year!

Now, another holiday season is upon us, and in case you've not checked your calendar, there are 28 days between Thanksgiving and Christmas, giving retailers a few more days to woo shoppers. Even with these extra days, we are likely in for another wild ride as retailers attempt to grab as much of the shopper's wallet as possible through an almost never-ending sea of promotions. Retailers: What is your contingency plan during this 28 day period if sales start to decline?

3. The evolution of the store will continue and likely be more pronounced over the holidays. Store traffic has continued to decline as e-commerce continues to take on a larger portion of retailers' businesses, yet shoppers still like stores, using click and pick up tools as a convenient way to shop between both channels. We will continue to see more pop-up stores as e-commerce brands take advantage of high traffic locations and install temporary physical locations. In addition, the mobile device continues to be the shopping tool of choice as shoppers seek out product and pricing information, store locations, and comparison shop. The takeaway? Is your omni-channel customer journey well thought out and tested from your customer's point of view? Have you thought through ways to extend your brand through new pop-up locations or brand alliances? Fail in these areas and you will lose out to the competition.

Will we see the positive sales increases the retail sages are predicting? It's anyone's guess, but as long as the consumer feels confident, this season certainly promises to be an interesting ride. Retailers: It's now up to you to deliver!


Dwight D. Hill, whose background includes leadership roles with Neiman Marcus and Deloitte LLP, is Partner, McMillan Doolittle LLP. Dwight can be reached at dhill@mdretail.com. Learn more about our services and perspectives on retail by visiting us at www.McMillanDoolittle.com.

CLICK HERE to return to the OCTOBER 2015 RVCF LINK

Tags:  Holiday 2015 

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Five Shipping Strategies for a Successful Holiday Season

Posted By Administration, Thursday, October 8, 2015
Updated: Tuesday, October 6, 2015

by Alan Hopper, ProShip Inc.


Today's consumers want instant satisfaction, particularly during the hectic holiday season. Although some busy seasons peak earlier than others, retailers all have the same goal in mind – customer satisfaction. That means on-time delivery at a competitive cost.

With these five effective shipping tips, retailers can prepare for increased volumes, ensure timely deliveries and implement cost efficient processes for the holiday season and beyond.

1. Provide Origin-to-Final Destination Package Tracking
Notify customers when packages are expected, but keep it simple. If full details are provided from the carrier including hub stops, it may generate calls to customer service from nervous customers who see their package on unexpected carrier routes. Retailers who have a tracking interface for customers can show them what they expect; the origin, the destination and an expected delivery date.

Keep in mind that a spike in outbound volume will likely mean a spike in returns. Prepare for the increased return volume by ensuring that customers know the return policy and that the return process is easy for customers to find and execute.

Be aware of carrier service and weather restriction delays which may affect designated shipment dates. Ideally, this information should be taken into account prior to making delivery commitments.

2. Ensure Software Reliability
Maximize up-time by making sure the latest version of carrier software is installed to prevent any known glitches that may cause the system to be down. If processes have changed since last year's peak, stress-test new processes by simulating peak volumes. This will help find and fix any potential failure points as well as identify stress points that should be monitored when peak volumes hit.

3. Utilize Advanced Date Shopping
Maximize shipping costs by planning ahead and utilizing advanced date shopping to avoid using highly priced next-day or overnight shipping services to ensure on-time deliveries. For example, if a package needs to be delivered from New York to California by December 20, have the package pulled and shipped the prior week, allowing ground service to be used for the five-day shipping.

4. Stock Up Before Peak
Be sure all equipment has been serviced and shipping supplies are fully stocked: labels, ink, boxes, tape and packing material. Then add a bit extra. If projections are spot on, then the extra supplies will be consumed during regular business. If sales surpass expectations, supplies will be on hand to get products out the door without struggling to get additional materials that may be scarce during a busy holiday season.

Heavy FedEx SmartPost shippers should be sure to have enough tracking numbers so they don't run out in the middle of the day. Likewise, Endicia or Stamps.com shippers should see that they have enough prepaid funds so they don't run out of postage.

Make sure the shipping team is aware of sales and marketing discounts and special offers that are planned to run during peak seasons. The shipping team should know when to expect major pushes and if there are any special packaging requests, such as gift wrapping or special labeling requirements.

5. Line Up Support
Know how to get support when needed. An organization may not require 24/7/365 support, but be sure a process is in place to get help if a problem occurs. Remember, customer support adds value to the relationship. Support should come from a team of certified engineers who are familiar with the environment and have access to carrier support.

Consumers want to know that the items they purchase will arrive in time for the gift-giving season. A shipping process that enables automation, visibility and reduced costs can provide speed and accuracy – while achieving all-important customer satisfaction. If shippers adhere to these shipping strategies, holiday volumes that may have caused chaos in the past can be handled smoothly and efficiently this year.


Alan Hopper is the Director of Business Development at ProShip Inc., a leading provider of enterprise-wide, multi-carrier shipping software, and is a part of the company's direct global sales team. Alan is responsible for demonstrating the superiority of the ProShip software suite and growing the international user base. Alan has more than 15 years of experience in business and technology, in diverse industries. He has led software development teams, run global IT operations for a multi-national organization and delivered logistics software to companies large and small. He studied international relations and computer science at the University of California at Davis, and holds an MBA from Vanderbilt University, where he concentrated in strategy and innovation.

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Tags:  Holiday 2015 

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