If you missed our webinar on Omnichannel Retail Inventory Management, here’s a quick summary for you. This article discusses common definitions and what they mean. We then move on to common pitfalls in omnichannel retail inventory management.
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Let us start by decluttering some definitions.
Omnichannel retail: You may hear this term a lot, often used incorrectly. What it really means is that you’re selling the exact same product across various channels. The same product, with the same description, at the same price. Only the sale channel varies, the product does not.
Omnichannel marketing: It is the same parallel applied to marketing. You may have several digital channels for marketing a product: your website, Facebook, Google Ads, email newsletter.
Multichannel retail: It refers to the use of several channels to sell your product.
Unified Commerce: This means unifying all your channels of sale into a single platform.
Direct to Consumer Or D2C: You sell directly to your consumer, whether through an online channel or brick-and-mortar stores.
How to navigate omnichannel retail inventory management pitfalls
Pitfall #1: Setting up your catalog for failure
Inconsistencies in SKUs across channels can cause trouble in finding and shipping the right product. A standardized system for naming SKUs makes order fulfillment across channels that much smoother. Use barcodes: machine-readable, scannable codes are the best way to keep track of inventory levels.
Pitfall # 2: Bad storage
How you store and distribute your inventory across locations is crucial. It should be suitable for online as well as offline distribution. In addition, your warehouses must be well-organized on the inside.
Brick and mortar stores should have suitable areas for walk-ins as well as a designated storage area. If you choose to fulfill orders from the store, have a separate area for order picking.
Follow the FIFO process in organizing bins/ shelves and positioning merchandise. Older merchandise in the front ensures its movement first and helps keep stock fresh.
Pitfall # 3: Channel-specific Inventory
It is not a good idea to segregate inventory by channel. If you try to maintain separate inventory for every sales channel, it leads to unnecessary duplication of stock, and a lock on your working capital because all sales channels will not turn over at the same rate.
Consolidate inventory into one entity and use it to distribute across channels based on how they perform.
Pitfall # 4: In-store stock allocation to online sales
When fulfilling orders through your brick-and-mortar store stock, be mindful where limited quantities are involved. You end up cannibalizing your own sales. A walk-in customer will have first dibs on a particular item, and an online customer who ordered the same thing will see his order canceled.
To offset this, there are a few things you can do such as under-committing fast-moving items to online suppliers while maintaining a steady-reordering pace
Do take a look at the full webinar below for more ideas on how you can fulfill orders better.
Pitfall # 5: Uninformed store employees
Store employees should have a handle on item availability at all times.
If the inventory is very large, equip them with a tablet to locate the item in your other stores or warehouses. They could also use it to place an online order on behalf of the customer.
Pitfall # 6: Channel-specific returns
There could be scenarios where a customer can place an online order in your store for an item not available in the store, receive it through your shipping partner, and return it at a different store.
To be prepared, it is important to have the same customer database and records across all your stores and online channels. This helps track such returns and exchanges across the board and maintain correct inventory records.
Pitfall # 7: Ignoring stock takes
Despite your best efforts and processes, sometimes, system figures may not reflect accurate figures. Events like breakage, pilferage, or some complicated returns or exchanges may not be entered into the system.
Always supplement automated systems with regularly scheduled manual checks. Stock audits help ensure that your physical stock matches your system numbers. This helps you locate stock for keeping in circulation so that it sells on time. Do not make stock reconciliation an annual event!
For the complete discussion of omnichannel retail inventory management pitfalls to avoid, here’s the full webinar.
Other useful tips for omnichannel retail inventory management
- Schedule inventory maintenance at regular times- check for damages and such, and keep replacements handy
- Ensure supplier support across multiple locations; it is worth the extra charge.
- Dropship only from reliable partners, else you may have to deal with irate customers due to missed orders, shortages and other issues that may stem from you not having your own stock.
- Set a higher reorder point to keep replenishing your inventory for fast-moving items or high-frequency sales.