Retailers are caught in a dilemma: on one hand, there are endless channel possibilities in the digital environment, each of which will enable business growth. On the other, expanding into new channels brings logistical complications that could lose customers if handled incorrectly.
Embracing new channels is clearly at the forefront of retailers’ minds. According to a Jupiter Research study, 75% of businesses see multichannel expansion as a core growth strategy objective, in terms of both where to sell and where to market.
For those who already operate across at least 2 online channels, the results are lucrative; on average, online retailers report a 75% uplift in sales, while 85% increase customer acquisitions.
However, this success can only be achieved if the practical implications of expansion are thoroughly addressed – and this means combining multiple systems, such as online and amazon order management systems, into a central solution platform.
Building a multichannel order management strategy
The equation is simple: the greater number of channels you sell in, the higher risk that something can go wrong. However, despite this, many retailers still treat their activities in siloes.
One of the biggest risks in treating channels separately is inventory allocation. For example, you can see through your amazon order management system that 20 orders have been placed for a particular item. You have 35 in stock, so that’s not a problem. However, you then analyse activity from your website order management system and find a further 12 orders have been placed. That means only 3 items remain in stock – way below anticipated demand, if your current orders are anything to go by.
Reputation is formed on retailers’ ability to deliver to a customer’s satisfaction, and all too often poor order management can result in a profile being damaged. You may have enough orders to cover both channels for one day, but what will you do tomorrow when you face declaring an item out of stock?
More to the point, in the event of a stock shortage, which of the channels do you prioritize over the other – the one with the heritage and guaranteed performance? Or the emerging channel that you’re nurturing and investing in, where fledgling customers are more likely to defect than loyal advocates?
This is where the complex algorithm of managing multichannel inventory becomes evident. Without any set operational formula, retailers run the risk of making a decision that harms the business in the long term, even if it best addresses a situation in the short term.
In order to better allocate inventory across multiple channels, increasingly businesses are turning to automated software to handle web and amazon order management requirements.
Rather than undertaking the time consuming task of manually counting what stock needs to go where, an automated solution will processes orders from end to end, to enable straightforward calculation of stock movement and replenishment.
One of the most important elements of automatic order management is that it takes most of the responsibility out of the retailer’s hands.
This empowers you to concentrate instead on marketing the new channels through which your company is now selling – safe in the knowledge that when a purchase is finalized, you’ll have the capacity and availability to fulfill it in a timely manner.