Omni-Channel is Not Just About Customer Service

We are implementing omni-channel strategies as this is the modern customer expectation – though probably an expectation we have created. There are however sensible benefits for the retailer.

A retailer managing seasonal product is fundamentally focused on selling the most product at the highest price before entering a cycle of margin threatening markdown activity. A retailer’s main concern is to maximise their Sell Through position, to optimise the margin they achieve from an investment in stock.

Historically, physical stores represented segmented stock pools. Many retailers initially treated on-line in the same way, ring fencing stock to guarantee and manage availability, many still do. The fundamental problem with a distributed or ring-fenced stock model is that of stock availability never neatly matching stock demand. Three givens that we need to acknowledge are that Demand Forecasting can never be truly accurate, stock will never always be in the right place at the right time and that stock will never be truly accurate.

Segmented stock also leads to range and size fragmentation and inevitably customer demand going unfulfilled. This ultimately leads to unnecessary markdown activity or costly stock re-allocation and, as a consequence, reduced margin.

Visibility of cross channel customer activity and real time sales and stock starts to provide intelligent input into initial allocation. More importantly it gives us the opportunity to drive store based fulfillment from stores where stock is selling slower than desired. This starts to avoid fragmentation and reduces the burden of store transfers and DC recalls.

Any Order Management strategy needs to combine real time stock visibility with the intelligence to route order fulfillment to the most commercially sensible location. A stock strategy acknowledging the presence of stock inaccuracy and combining lighter initial allocation with distributed fulfillment will lead to increased sell through, reduced markdown and increased margin.

Have a single stock pool, sell the stock from where it is.

There are obviously factors of delivery costs and stock handling space that need to be considered but I think the principle is sound ?