Thursday, July 27, 2017

Spring cleaning – how to avoid excessive discounting when seasons change

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We live in an era of fast fashion and disposability; products have short lifecycles and are often thrown out at the end of a season to make way for the next wave of trends. With the sun finally coming out and spring collections appearing on the high street, most shoppers will be feeling optimistic about forthcoming fashion collections.

But a glance at recent company results paints a different picture for retailers that are only now recovering from losses sustained last autumn, when they were forced to resort to drastic discounting. The BRC reported a massive 4.1% drop in clothing and footwear sales as a result of an unseasonably warm September, which harmed the bottom line for many brands. Thankfully, inventory management is no longer a guessing game, and retailers can now invest in technology to minimise the financial impact of the weather and quickly-changing trends through efficient omnichannel stock optimisation.

Embrace in-store fulfilment

The best way for retailers to prevent stock pile-up is to make all inventory available to fulfil all orders, whether made online or in-store. The combination of omnichannel fulfilment and order management systems enables this by using high street stock to fulfil orders across multiple channels. This has the dual advantage of on the one hand helping balance stock by centralising inventory visibility, and on the other preventing stores holding on to items that are selling out online. Ship-from-store, which turns high street stores into local mini distribution centres, allows retailers to optimise stock by prioritising fulfilment from outlets where stock is starting to build up, reducing the need to discount heavily come the end of season.

But there is more to be gained from Ship-from-Store than just mitigating the risk of stock build-up by balancing inventories – retailers can also use it to strategically prioritise order picking. For example, if a retailer initially prioritises order fulfilment through its store network, the majority of the remaining stock come end of season will reside in a central distribution centre. This makes it easier to assess end-of-season stock levels and the level of discounting required.

Active stock management has a direct impact on the bottom line. eBay Enterprise customers using Ship-from-Store have reported an average margin increase of 30% on items nearing markdown. In fact, since launching in 2012 our customer Tiger of Sweden has progressed to processing almost 30% of its e-commerce sales using Ship-from-Store. Tiger’s Head of E-commerce, Anders Rahr, identifies Ship-from-store as “the one omnichannel solution that most helped our business to improve product availability and therefore our online sales”. Ship-from-Store has also had a knock-on effect on in-store footfall: “For most of our customers, if they don’t see we have the product they want available online, then they assume it’s also not available in the local store. Therefore, improving our online availability also directly benefits our stores through increased customer visits.”

Invest in technology to better track stock movement

Trends change faster than ever in the world of just-in-time manufacturing, so it is becoming increasingly difficult for retailers to shift stock that has been developed to address a specific fad once the next one has come along and that demand has faded. As consumers increasingly make purchases across multiple channels interchangeably, it is clear that stock management is not something that can be left to individual stores.

Omnichannel retailers looking to increase efficiency should be investing in order management systems (OMS). These provide oversight of all orders and a single view of stock levels across different markets, payment methods, and currencies. The OMS is very much “the brains of commerce”, enabling retailers to accurately track sto

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