Derek O’Carroll, CEO at Brightpearl
Online retailers are facing a major crisis. Since COVID-19 hit, reduced headcount and social distancing practices within the walls of warehouses and distribution centers mean retail businesses struggle to manage the stresses and strains of increased ecommerce demand—which we think will continue soaring.
Brightpearl’s research shows that two-thirds (65%) of shoppers plan to increase their online shopping spend in 2021 over 2020. As a result, online retailers have seen year-on-year sales increases upwards of 600% in the first half of the year.
Grow carefully
While any increase in sales is good news, there’s evidence that retailers are not adjusting quickly enough to the new normal of ‘heightened demand’ outside of traditional peaks. They are often winding up overwhelmed because of an inability to process increased demand from shoppers moving online. As a result, retailers are missing orders. Or, they are wrongly placing orders or overselling merchandise—resulting in disappointed customers
You’d be forgiven for thinking that these are problems only for small and mid-sized retailers. However, some of the largest businesses in the world struggle to process sudden demand, as we saw when Microsoft encountered a myriad of problems last year after opening the pre-order window for the new generation of Xbox consoles.
These operational problems have been a significant theme since COVID-19, which—as consumers—many of us will have experienced when shopping online. Widespread stockouts and delivery delays due to sudden increases in demand have significantly damaged shoppers’ relationships with online brands, with 34% of consumers saying that unreliable delivery has lessened their trust in online shopping altogether.
Nailing delivery expectations using automation
To operate viable and successful online businesses long-term, vendors must process online orders more quickly, more accurately, and in a manner that safeguards their employees and end-users. If they don’t, they risk errors and delays that will likely further damage an already tenuous relationship between a seller and consumer—and result in lost return sales.
There’s a reason people remain so loyal to Amazon. From order to delivery, they have it nailed. They’ve invested billions in a highly efficient ecosystem that supports speed and hyper convenience. Of course, smaller brands struggle to compete.
When you’re operating in different markets and seeing demand grow across channels, you’ve got to have the correct retail operations in place to respond effectively. Lost in the desire for growth, too many brands lack the agile digital retail processes to thrive in today’s multichannel ecommerce environment and successfully manage all the critical operational touchpoints, including inventory, customer communications, and, of course, delivery.
This situation ultimately leads to weak infrastructure that can’t support demand, service failure and poor consumer experience. It should be a simple fix—make sure your foundations are stable and able to cope with sudden spikes in demand—but 25% of shoppers still experienced items being listed out of stock after purchase last year.
Automation is the answer
In this current climate, retailers and their warehouses need to maintain flexibility and scalability and decrease their reliance on temporary or unreliable labor pools to meet operational requirements.
Automating retail workflows, from order processing to inventory and shipping, negates the need for a human presence in large parts of the warehouse. Automation safeguards employees by supporting greater social distancing, but it removes the risk of human error from these repetitive manual tasks. It also ensures orders can be picked and packed efficiently and quickly, boosting employee productivity.
Because automation optimizes ecommerce workflows, retailers’ labor pools can be better allocated to other areas of the business—for example, to support growth and innovation within the company.
While Amazon remains faster than every significant competitor, smaller players are speeding up. Research suggests retailers that automate shipping can increase “orders out the door’” by up to 92%. This means smaller brands have an opportunity to present themselves as genuinely viable alternatives to the online giants.
COVID-19 has spotlighted existing retail models and technologies that brands might not have considered before the pandemic but are now aiding recovery and providing a competitive edge.
Automate first, grow later
Many exciting technologies support new sales avenues—voice commerce, augmented reality, new social media outlets (e.g., Reels, TikTok) and even in-app purchases via WhatsApp and similar platforms.
But retailers need to be wary of prioritizing growth at all costs. Before exploring new sales avenues, firms first must ask themselves if their current setup is sophisticated enough to support a further increase in demand.
And if it isn’t, they must embrace technologies that sync sales channels and orders with inventory and shipping, so consumers get the right product on time, every time, alongside tools that can automate order management and fulfillment. This will enable them to exceed expectations and maximize customer lifetime value.
The truth is, companies that are only concerned with acquisition post-COVID-19 will always be at risk of being overwhelmed by demand and delivering a substandard experience
The brands that instead focus on creating an outstanding experience at every stage of the buying journey, alongside strategically implementing automation to stay true to customer expectations, can look forward to greater retention, profitability and success over the long term.
Brightpearl provides omnichannel retail management software for orders, inventory, financials, point of sale and customer relationship management
Favorite