For retailers, 2020 was The Year of E-commerce. Now that the critical need for an e-commerce strategy has been established, the new theme for 2021 will be finding ways to compete in the online market. This includes making inventory management more of a priority and less of an afterthought.
Online sales set new records last year, reaching 22 billion monthly visits by June and total sales growing 44% in the U.S. alone. As more people turned to online channels to maintain social distance and procure essentials not available locally, the future of e-commerce has truly never been brighter.
Perhaps not surprisingly, though, Amazon accounted for more than 13% of all global e-commerce sales (and nearly 50% in the United States). This means that less than 87% of the e-commerce sales market is thinly spread between all other retailers in the world, including established titans like Walmart, Target, and eBay.
It’s time to rethink retail, and inventory management is shaping up to be an under-the-radar competitive advantage that translates into sales, profits, and customer loyalty. Let’s look at some ways you can improve your inventory management to increase your market share:
1. Expand your product range and scale with an endless aisle.
One of the early benefits of shopping online was the ability to choose from a wider selection of products. Retailers that offered e-commerce weren’t limited to the square footage of their retail stores and instead could showcase inventory from all of their warehouses at once.
Today, the endless aisle is taking this benefit a step further, both online and in stores. Endless aisle gives retailers the ability to expand their product lineup without taking on inventory risks.
Consider it “virtual” inventory: endless aisle technology gives you the ability to offer products from multiple brands. Once the customer purchases an item, the product is shipped directly to them on your behalf. You get a portion of the sale without the overhead, which can translate into higher profit margins. Your customer loyalty may also get a boost when you can cater to your customers’ needs beyond what you could typically offer on your website or in your store.
2. Avoid overstocking or understocking.
It’s an age-old retail dilemma: how do I know how much of a product to stock? There’s a lot of guesswork that goes into finding the perfect stock level for each item you sell.
When distributors offer you good deals on bulk orders, it’s tempting to stock up on a product to potentially increase your profit margin. But stocking products costs money, and if those products aren’t moving off your shelves, those cost savings turn into warehouse real estate fees.
On the other end of the spectrum, understocking products means missed revenue opportunities. The pandemic’s disruption to global supply chains shows just how vulnerable companies are when market demands shift and common products are suddenly unavailable for weeks or months.
The best practice is to develop contingency plans for when local inventory runs out. For example, Our Tradehub’s Never Out of Stock feature allows other brands or retailers to fulfill an order when a retailer’s own inventory runs dry. Both parties receive revenue from the sale, thus eliminating the fear of missed revenue opportunities due to inventory shortages.
3. Offer same-day delivery.
One of the hottest trends we saw in 2020 is the ability to place an order online to pick up in the store. This ability to bridge the digital-physical retail gap is likely to continue playing a key role in how consumers shop.
To accommodate this trend, Our Tradehub recently launched its Click and Collect 2.0 feature. Customers can receive short or same-day delivery by placing an order with a retailer and picking it up in any store near them that carries the items they need. The entire transaction is completed online and doesn’t require you to hold or ship inventory.
While many stores are implementing their own curbside pickup service, Click and Collect 2.0 expands this level of service to multiple local retailers who wouldn’t otherwise have their own infrastructure to do so. Your online store serves as the “broker” in the deal, earning part of the sale while supporting the local economy and providing a higher level of service to your customers.
4. Automate replenishment of low or out of stock items.
Smart inventory management technology will become a valuable tool for retailers moving forward. Automation can keep a finger on the pulse of your sales and easily identify your best sellers without guesswork and manual review processes.
Tools like automated replenishment can monitor inventory levels of products that are selling well and reorder those items when stock runs low. This allows you to continue serving your customers without missing revenue opportunities or without having to tap into other retailers’ stock and sharing the sale.
5. Take control of your customer data.
Outsourcing some or all of your inventory management strategy doesn’t mean giving up control over your customer data. Even when not all of your inventory lives under one roof, retailers can (and need to) dive deeper into customer data to understand what people are buying from them and why. This data can serve as a blueprint to help you build on your successes and tap into lookalike audiences that will spur business growth.
All-in-one inventory management tools like Our Tradehub give you insight into customer purchases so you can follow the sale without third-party limitations. Use your customer data to continue marketing to your buyers, such as sending personalised offers or product recommendations. Predict demand according to seasonal trends or historical patterns to strike an ideal balance of in-stock inventory.
In this sense, data becomes a shared resource between you and your inventory management partners. It offers insight into your business and customers so that your inventory partners are best prepared to serve you.
Making the Most of Inventory Best Practices with Our Tradehub
Throughout this collaboration emerge many winners: the customers, your inventory management partners, and you. Customers will appreciate the high level of service that comes with understanding their needs. This translates into more sales and long-term customer loyalty, both of which promotes a healthy bottom line for you and your inventory partners.
Put these and other inventory management best practices into motion – request an Our Tradehub product demo to take the next step.