omni-channel challenges and best practices
Post on 21-Oct-2014
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Ted McCaffrey of eBay Enterprise presented his talk on Omni-Channel Challenges and Best Practices at our eCommerce Town Hall in June 2014. Learn why Omni-Channel is a must, how to leverage physical stores as well as prioritizing initiatives for future success.TRANSCRIPT
PROPRIETARY & CONFIDENTIAL
AGENDA
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Why Omnichannel
is a Must
Leveraging Physical Stores
Prioritizing Initiatives
Omnichannel Challenges and Best Practices
PROPRIETARY & CONFIDENTIAL
OMNICHANNEL DEFINED
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Coined by IDC’s Leslie Hand in early 2009, her definition
Omnichannel refers to two things - omnichannel shopping patterns and behaviors and the retail people, process and technology change that occurs to support the new customer.
Omnichannel customer shopping patterns and behaviors are start/stop, traversing a myriad of online and offline touchpoints.
Omnichannel requires that retailers put the people, processes and technologies in place to support customer centric omnichannel retail.
PROPRIETARY & CONFIDENTIAL
Shift: Consumers Have Redefined Commerce…
Retailers and Brands Need to Respond
PROPRIETARY & CONFIDENTIAL
Customers Expect More In-Store
81% of consumers expect retailers to be utilizing the technology available to them in order to improve their in-store shopping experience1
50-80% of consumers leave the store without all of the items they came to purchase.
1 eBay Enterprise research, May 2013 2 eBay Enterprise and CFI Research, March 2014
PROPRIETARY & CONFIDENTIAL
Customers Expect “Seemless”
77% of consumers expect retailers to provide a consistent, integrated experience between their in-store and online channels.1
40% of consumers say a retailer is likely to lose their business to the competition when one item is back-ordered or out of stock.2
1 eBay Enterprise research, May 2013 2 eBay Enterprise and CFI Research, March 2014
PROPRIETARY & CONFIDENTIAL
Customers Want Convenience
42% of online shoppers have abandoned shopping carts due to delivery times.1
59% of consumers would purchase other items if the retailer secured out of stock items.2
50% of consumers choose in-store pick up to avoid high shipping fees.1
1 UPS Research, 2013 2 Cross-Channel Brand Interaction: 2012 Consumer Preferences
PROPRIETARY & CONFIDENTIAL
LEVERAGE YOUR STORES
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Increase revenue, margin and inventory turns by exposing store inventory to the web and captures lost sales
Ship from Store
Increase sales, store traffic and enable consumer convenience with same day pickup
In-Store Pickup
Save sales of out-of-stock items and drive consumer satisfaction
In-Store Associate Ordering
PROPRIETARY & CONFIDENTIAL
KEYS TO EXECUTING SHIP FROM STORE
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• Proximity to delivery address
• Minimize split orders
• Inventory optimization / daily store limits
Intelligent Order Routing
• Store set-up
• Protocols and procedures
• Goals and incentive plans
Store operations & training
• Accurate store level inventory
• Safety stock levels
• Automatic adjustments of ATP inventory
“Available to Promise” inventory calculations
PROPRIETARY & CONFIDENTIAL
• Create a program support mechanism • Easy access/location to place orders
• Mobile / Tablet ordering
• Educate associates to look for inventory online and not just the back room
Associate Training & Support
• Provide free shipping on in-store orders • Promote / market the capability (Ask Us)
Create Win-Win for Consumers
KEYS TO EXECUTING IN-STORE ASSOCIATE ORDERING
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PROPRIETARY & CONFIDENTIAL
• Customer ease
• 37% of shoppers purchase additional items when picking up in-store
Thoughtful pick up location
• Established protocols and training
• Goals and incentive plans
Training and store operations
Inventory accuracy is critical
KEYS TO EXECUTING IN-STORE PICK UP
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PROPRIETARY & CONFIDENTIAL
INCREASE REVENUE AND IMPROVE MARGIN
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*Average across all eBay Enterprise Omnichannel Clients
20-40% Average increase
in incremental ecommerce revenue
33% Average percent of items shipped
are inactive
30%+ Margin increase on items nearing
markdown
80% 1-Day Transit
Time, 96% 2-Day Transit
PROPRIETARY & CONFIDENTIAL
20-40% Average increase
in incremental ecommerce revenue
SALES INCREASE - WHY IS THIS BELIEVABLE?
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Inventory Distortion: An $800B Issue for Retailers Worldwide Definition – The cost of out of stocks, plus the cost of overstocks that then have to be marked down.
PROPRIETARY & CONFIDENTIAL
Time
Inve
ntor
y A
ccur
acy
100%
90%
80%
70%
50%
1 year 0
60%
HOW DOES THIS HAPPEN?
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At the beginning of the year, a physical inventory is done, and inventory accuracy is near 100%
Average Accuracy Inventory Accuracy drops due to both Overstated and Understated PI
During the year, inventory distortion occurs from: • Theft • Shipping/receiving errors • Cashier Error • Improper Returns
PROPRIETARY & CONFIDENTIAL
SFS FILLS THE GAP – 20/30%
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Footwear Retailer – “SFS provides a 20-25% lift in ecommerce Sales”
Specialty Apparel Retailer – “20% of my ecommerce complaints have to do with OOS in our FC”
Hardware Retailer – 20% of the ISPU orders are cancelled
Sporting Goods Retailer – 25%-30% pick declines
PROPRIETARY & CONFIDENTIAL
UNLOCKING OLDER/INACTIVE ITEMS IN STORES
Toy Retailer 33% of orders were for inactive/older products not moving at the stores
Office Supply Retailer With 60 FC/DC’s in NA, they still have “trapped” inventory in their stores up to 6 years old.
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33% Average percent of items shipped
are inactive
PROPRIETARY & CONFIDENTIAL
SERVICE LEVEL AGREEMENTS (SLA’S)
We are at least two (shipping) zones closer by utilizing the stores, Joel Anderson, president of walmart.com said. “The closer we can inject the order into our network, the more this saves the customer time and reduces what it will cost us to get it to the customer.
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80% 1-Day Transit Time, 96% 2-Day Transit
“ “
PROPRIETARY & CONFIDENTIAL
Low
High
Hard Easy
Ease of Implementation
Bus
ines
s Im
pact
PRIORITIZING OMNICHANNEL INITIATIVES
• Business goals
• Inventory characteristics
• Average price point
• Retailer type
• Store footprint / configuration
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In-Store Pick-up
Associate Ordering
Ship From Store
PROPRIETARY & CONFIDENTIAL
OMNICHANNEL BREAKDOWN
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• Total ecommerce $1B+
• All Omnichannel Initiatives (AOS, SFS, ISPU) $250-$300M
– SFS $175M
– BOPIS $80-$100M
Toy Retailer
• Total ecommerce $240M
– SFS $55M-$60M
– BOPIS $11M-$14M
Footwear Retailer
• Total ecommerce $2.B+
– SFS $250M
– BOPIS/ROPIS $12M-$20M • Half was cancelled
Tier 1 Apparel Retailer
PROPRIETARY & CONFIDENTIAL
LEGAL NOTICE
eBay Enterprise™ and the ebay enterprise™ logo are trademarks, service marks, registered trademarks, or registered service marks of eBay Enterprise Inc., or its subsidiaries or affiliates. Other trademarks or service marks contained in this presentation are the property of the respective companies with which they are associated. This presentation is for informational and discussion purposes only and should not be construed as a commitment of eBay Enterprise. While we attempt to ensure the accuracy, completeness and adequacy of this presentation, eBay Enterprise is not responsible for any errors or will be liable for the use of, or reliance upon, this presentation or any of the information contained in it. The information contained in this presentation is subject to change without notice. This presentation contains proprietary and/or confidential information of eBay Enterprise and is released only under the terms of the non-disclosure agreement between our respective organizations. Unauthorized use, disclosure or dissemination of this information is expressly prohibited.
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