The Trillion-Dollar Problem for Retailers: Not Having Clean Data

The Trillion-Dollar Problem for Retailers: Not Having Clean Data

By Nicola Kinsella, Supply Chain Brain Contributor and Senior Vice President of Global Marketing at Fluent Commerce

Imagine that you’re scrolling through the social media platform of your choice, see something you love, and click on it — only to learn that it’s out of stock. Or worse, you place an order that’s later canceled because the item is no longer available.

We’ve all been there, and it’s a disappointment for all involved, from consumers to retailers. A study by the IHL Group found that retailers miss out on nearly $1 trillion in sales per year because of out-of-stock items. 

According to a recent survey of 1,003 retailers and direct-to-consumer brands, 58% reported having less than 80% inventory accuracy. That means every time a consumer orders a product, there’s a 20% chance the product they want isn’t even available.

There’s also the case where the stock is available somewhere (maybe in a store) but it doesn't show up online. Then it's a double whammy: The customer doesn't get what they want and the retailer can't make the sale even though they have the item. So what can be done to fix the problem? 

Retailers have a massive amount of stock and data to track from warehouses to stores. With all that inventory moving around, it needs to be updated as close as possible to real-time, to know what’s actually in stock and where it is. Retailers with modern inventory control and order-management systems can use a data-driven approach to update their inventory at unprecedented levels of speed and accuracy. They are significantly reducing the chances of accidental over- or underselling of products.

A data-driven approach can mean synchronizing sales channels with the latest inventory levels. These systems enable retailers to quickly spot trends and manage their stock accordingly. During high-demand periods such as back-to-school or holiday periods, this method becomes even more beneficial. Retailers are better able to align their aggressive marketing campaigns with fluctuating inventory. 

Assume that you’ve done all this, have the proper systems and processes in place, and are ready to move forward. The first step is ensuring that your data is clean. Integrating modern inventory systems with legacy systems and workflows can be complex. It requires a thoughtful plan that includes comprehensive staff training and a reliable partner to assist. But when executed well, it leads to a consistent and accurate data flow throughout all platforms, guaranteeing that customer engagements are always guided by the most current information.

Following are some capabilities that you need to get started.

Demand forecasting. Gather and examine data based on sales or fulfilled orders. This will help identify the sources of demand patterns. Where do products sell quickly, and where don’t they? Do you need to send more stock to one location? Fulfill more orders from a location that sells less on the floor?   Retailers can also analyze website search queries to understand what consumers are looking for. These will enable the creation of effective fulfillment strategies.

Capacity or network planning. The strategic placing of products is critical for distribution. The data helps confirm that stores or suppliers are maximizing their performance. Additionally, it ensures that there are necessary resources to efficiently carry out duties.

Distributed order management system. A modern-day OMS is a great way to begin. Look for one that has a quick rollout and flexible platform, and scales easily. With it, you can meet the promises you set with your customers.

There are countless ways to analyze data to create a better customer experience while simultaneously fueling a retailer’s bottom line. In a world where customer loyalty can turn on a dime with a bad experience, ensuring that you’re advertising what you have in stock is an important piece of the puzzle.