Building a Superior Customer Experience: The Initial Order
by Taryn Collins
In our previous post in this Building a Superior Customer Experience series, we discussed the logistical complexities retail businesses today need to tackle in order to simplify the complicated customer journey. Let’s take a look at the process right from the beginning, when a customer places a new order.
An incoming customer order sets off this chain of complex logistics, and the operational wheels start turning. Business needs to know where stock exists, where an item is shipping from, and where an item is shipping to. If it’s shipping from a store, could that item already be safely nestled into another shopper’s cart, headed for checkout? If it’s shipping from a different store location, is there enough in stock not to require replenishment? If it’s shipping from a warehouse, how long will it take to fulfill? Just because your system says a certain product is in inventory doesn’t mean it’s actually in inventory. It’s not enough to know that a product is in-stock in a store in the morning, because what if a sales associate checks stock levels at 2pm and things have changed? To combat this, stock levels need to be updated across all channels in real time.
According to a study done by RSR, 93 percent of retailers rated system-wide inventory visibility as the most significant capability in executing their omni-channel fulfillment strategy, but only 45 percent can enable this, and only 39 percent are enabling this via system synchronization across all channels.
This becomes an especially challenging problem for luxury brands like Louis Vuitton, who have a very limited quantity of merchandise. How do they decide, for example, whether to use a physical location to fulfill an online order for a specific bag, when doing so might take the only in-stock bag of that type out of a showroom? Additionally, if they decide to fulfill the online order with that in-store bag, who gets credit for that sale -- a store associate or the ecommerce team? The answer isn’t clear, and may vary greatly between organizations.
Order processing -- picking and shipping products
When a sale comes through, and stock levels have been assessed, the item(s) on that order must then be picked, packed, and shipped. This is where the Amazon model has historically thrived -- what they lack in a beautiful retail model, they more than make up for with their efficient and exacting distribution warehouse model. Other business models, however, have struggled to find the same fulfillment efficiencies.
Using a grocery store example makes a strong case for the complexities of cross-channel purchasing. According to Business Insider, online grocery sales will grow at a compound annual growth rate (CAGR) of 21.1% between 2013 and 2018, reaching nearly $18 billion by the end of that period. Roche Brothers is one grocery chain that’s doing it right -- they have strong ship-from-store and parking-lot-pick-up programs, but even with those types of programs in place, sourcing from store inventory has it’s own set of challenges.
Imagine you’ve just put through a grocery order online. You’ve selected your items, scheduled a pick-up or delivery date, and your shopping list has gone through to an in-store associate for picking and packing. A typical supermarket doesn’t have much back-room storage space, given the perishable nature of many grocery products, so the employee with the picking ticket (your comprehensive order and associated instructions) has to shop the front of the store, just like you might if you were to enter the store as a shopper yourself. Invariably when they head out to fulfill your order, they’ll encounter another store associate who is restocking the shelves from boxes or pallets (generally the only available product in stores), pinning employee against employee, each with a competing goal, and each getting in the way of the other, as well as actual shoppers. This can then lead to the demise of the customer experience -- both in-store when they have to compete for space with store employees picking shipments -- and on the receiving end of online orders, where the end consumer could easily fall victim to underripe bananas, bruised apples, or spoiled dairy.
To make matters even more complicated, a grocery order is incredibly complex, and without very specific instructions from the shopper, can be next to impossible to fulfill. Instead of buying a shirt in a certain size and color, which has a simple assigned SKU, picking produce and other perishable items can involve a lot of guesswork. A green banana doesn’t have a different PLU number than a yellow banana, and yet an underripe or overripe banana could mean different things to different customers. As the associate picking this order, how do you really know for sure? To add even another element of complexity, what happens with orders that include half shelf-stable items, and half frozen items? Pickers and shippers in those instances need to take into consideration how to store those items, and then package and ship them so they arrive at the proper destination intact and edible.
The grocery store example is by far the most complex, but even in other retail sectors, like convenience or clothing, the issues persist. SKU numbers aren’t always consistent across channels, which means that an online SKU associated with a certain item might be entirely different than the in-store SKU for that same item. Businesses must find a way to normalize this information, so that it doesn’t get jumbled across channels, and so that an expeditious and streamlined delivery is possible.
In the final post in this series, we'll discuss transactional vs. operational systems, and how to make them work together.