After years of relying on outdated models of manual work, retailers are now being thrusted into the digital age as they confront the new age of challenges presented in today’s retail landscape.
To succeed in 2021, every retailer should be asking these questions around inventory, returns, marketing, warehousing, pricing and customers.
With EDITED Retail Intelligence, your team will be able to answer questions like these, as well as understand the connect of each data point and decision. Reach out for a demo today.
Inventory – views alignment
Aligning inventory to web product views is comparable to an online planogram. In stores, items in the shop windows will typically sell well versus placing sold out or low inventory products there would clearly be a poor strategy. Whereas through the web, we have the luxury of measuring what customers view and abandon. These questions represent a new way of working that successful web merchandisers must adopt.
1. Which products should be exposed or marketed together to capitalize on lift and maximize profit?
2. How much inventory is not getting viewed on the website? How can I quickly identify those products and any potential problems?
3. Which products are receiving too many or too few views, given their inventory levels, conversion, profitability, review ratings, time on site and fragmentation?
4. For which product categories are we under or over-optioned, given viewing demand?
5. What percentage of our product views land on in-stock, non-fragmented items?
6. What technology am I using to make automatic changes to inventory processes?
Returns
Returns have a sobering impact on retail profitability. They can be fueled by misbehaving customers who take advantage of a customer-first return policy and factors under the company’s control such as poor product descriptions, unorganized marketing programs and disconnected order fulfillment. However, those losses ($428 billion last year according to NRF) can be reduced and recouped by pinpointing the problems at various levels of the enterprise.
7. What are the most efficient actions we can take to reduce returns?
8. What percentage of customers return 100% of what they purchase (e.g. “free rentals”)?
9. What percentage of customers frequently return the majority of any order containing substitutable items (e.g. “home dressing room”)?
10. What percentage of loyal customers return products with a return rationale under our control (e.g. damaged, differs from web description, wrong items, etc.)?
Marketing spend
Organizations have the ability to know precisely how every digital marketing dollar translates into revenue and profit – or doesn’t. It’s time for retailers to go beyond return on ad spend and begin to understand marketing results in terms of stock alignment and profitability.
11. How much money are we spending on marketing campaigns that send customers to products that are sold out or highly fragmented?
12. Which products should we cut marketing spend on because we will sell through the item without the paid exposure?
13. Once you consider all costs including returns, which marketing initiatives, promotions and customer segments are the most profitable?
14. How is my technology working to optimize marketing campaigns efficiently?
Warehouse operations
When retailers make better decisions about how to promise and fulfill customer orders, the result is improved customer satisfaction. Retailers have an opportunity to focus on their most profitable customers and ensure they receive a VIP experience. They can also place emphasis on exceptional service for new customers and execution that turns one-time buyers into loyal repeat purchasers.
15. What percentage of orders from high valued customers get shipped within 24 hours? What percentage are delivered after their delivery promise date?
16. Are we decreasing our average days to ship for new customer orders?
17. Which stores and/or warehouses have we over or under-allocated for our most profitable products?
Pricing
When an item isn’t selling well, oftentimes retailers are quick to execute a profit-eating price markdown. Fortunately, timely data such as the EDITED Retail Intelligence is now available to point to potentially less expensive corrective measures that will still allow retailers to make a profit.
18. Given inventory levels, conversion, profitability, review ratings, time on site, fragmentation and competition, for which items do we need to consider a price reduction?
19. For an overstocked product, will increased exposure or a price reduction lead to a more profitable action?
20. Which products require a pricing reduction due to lower competitive prices?
21. How is my technology working to make pricing changes more efficient?
Customers
What if you could create a merchandising strategy specifically geared towards cultivating a customer base that collectively was more profitable than last year’s customer base? Year after year, certain products and collections are responsible for attracting, keeping and re-acquiring customers that are profitable. Even in omnichannel organizations, executives need to be able to identify these goldmines and point the merchandising teams in that direction.
22. Which first-purchase brands lead to lifetime customers?
23. Which campaigns and promotions perform the best at luring back previously churned customers?
24. How is my technology enabling my organization to create optimized customer experiences that precisely match customers with products that generate maximum revenue and profit?
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Daphne Duong
