22 January, 2019 | Written by: David Hogg
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For retailers, heads of e-commerce, and any executive focused on transformation in the B2C and B2B worlds, Black Friday delivers illuminating insights. Here’s the stat that caught my eye: seven retailers outperformed Amazon in year-on-year growth during the Black Friday week. Given what we know about Amazon, this seems incredible. In Europe we saw some equally impressive online performance: Arcadia saw a 39% increase in peak day trading; El Corte Ingles a 38% increase on orders processed over Black Friday period. Yoox Net-a-Porter got more clients online and saw a 94% increase in orders. Media Saturn reported a 2.5-fold increase in order volumes compared to regular trading days. And John Lewis Partnership’s carrier Centiro reported a 26% increase in JLP deliveries over the Black Friday period. How did they do it? By taking the fight to the only field where Amazon doesn’t do battle (for now): brick-and-mortar stores. By making the store a fully integrated component of the customer experience, whether through click and collect, reserve online and pay in store, or return anywhere. These omnichannel capabilities are becoming game-changing competitive advantages.
It’s easy to see why. Offering consumers more choices lets them dictate the terms of their experience, personalising it to their needs – the customer is in charge. What’s less easy is bringing these capabilities to life. Typically, retailers struggle in four areas.
- Capacity management. IMRG says UK Black Friday sales are around 7% higher than last year and eMarketer says US sales are 6% higher, and of course this represents a big spike versus normal trading. To fulfil those orders, you need to have made plans to ramp up staffing in warehouses and distribution centres, ensure the stock is in the right place and set up contracts with additional third-party carriers.
- Inventory visibility. Without a unified, up-to-the-minute picture, it is difficult to use the store as a fulfilment centre, retailers need to have a view of stock from suppliers or predict when out-of-stock items can be fulfilled.
- Communication. Effortless communication with external supply chain partners, internal teams and – especially – customers is vital to maintaining control over order flow and maintaining customer satisfaction.
- Returns. It’s becoming clear that consumers are looking beyond free shipping and reading the small print about returns. A clear and comprehensive returns policy is needed. If it seems complicated or laden with conditions, consumers will abandon their carts.
Again: if you can get these four elements right, you can compete with online specialists and even outpace them in terms of growth. To get there by Black Friday 2019, you need to start now. IBM is hard at work collaborating with all kinds of brands to turn these four challenges into omnichannel realities. The pillars of this transformation are:
- Make all inventory visible. Our solution works with current systems for e-commerce, point-of-sale, warehouse management, supply chain planning and collaboration, so there is no need to “rip and replace”. Instead you gain the ability to see all inventory and surface the information wherever it is needed, providing a comprehensive “available to promise” view. Marks & Spencer, G-Star RAW and Yoox Net-a-Porter all use IBM solutions to do this.
- Improve communication. IBM Order Management has a built-in event management and alerting capability. This allows the retailer to provide prompts to protect target service levels and inform the customer in key steps of the fulfilment journey. IBM also integrates the call centre to accommodate instances where consumers change their mind about the delivery destination or order details. For adidas, IBM Order Management is central to its omni-channel strategy, which includes global inventory visibility, enablement of the store as a fulfilment centre and real-time communication to all interested parties, including, of course, the customer.
- Manage complexity. As a retailer provides more options for the consumer, the behind-the-scenes processes and communication requirements get more complex. As an example, think about a large, expensive item that involves financing, a warranty, delivery and installation. IBM makes it possible to manage all of this as a single order, then split it into lines that can be managed independently or as a group. Another area of complexity is the management of B2C and B2B channels. Carter’s, the largest branded retailer of children’s apparel in the US, relies on IBM to treat its wholesale and retail consumers differently, leading to an 11 percent uptick in international sales and a 14 percent jump in revenue.
- Enable the store. Consumers have questions. You need answers. IBM equips store associates to recognise individuals as they arrive for in-store pickup, recommend companion products, coordinate changes in delivery and execute other “save the sale” strategies. This is key to making your stores essential to a variety of omnichannel experiences. In the US, Best Buy uses our approach to make “ship to store” a reality, enabling in-store pick-up, a service which half of all online shoppers use. In addition, these click and collect shoppers spend on average an extra $30 on their visit to the physical store.
- Adjust dynamically. Most order management platforms use business rules to figure out the best path for fulfilment. But when Black Friday hits, you need to adjust these rules to account for seasonal promotions and heightened demand, which can be time-consuming. Using artificial intelligence, IBM Watson Order Optimiser lets you do this dynamically, optimising by cost, speed or other supply chain factors.
If you’re wondering how long all of this takes to get up and running, Fossil went live in three months and the fashion retailer Charlotte Russe went live in just over five. Again, starting now gives you time to build a solution in Q1, go live in Q2, harden it in Q3 and get it ramped up for Black Friday in Q4.
Much of this depends on where your brand is on the journey to omnichannel. To find out, take our quick self-assessment. Then get in touch to start the conversation.