How to win the convenience war
The pace of change in Australian retail will significantly accelerate this year. For retailers who have struggled to get their boards to agree to digital transformation and logistics optimisation projects over the past few years, now is the time. Amazon is only the start. There is a multitude of international retailers ready to expand into new markets such as ours. But local retailers have some great advantages and the time to maximise them is now.
Turning local presence into an advantage
Any multichannel retailer with physical store locations should be able to beat anyone with less (or zero) stores and only one or two distribution centres in terms of convenience. Stores can become a combination of a shop front, a warehouse and a distribution centre. When a customer orders a product, it could be shipped or collected from a local store faster than Amazon can.
Retailers that can optimise store operations, delivery networks and order orchestration processes can offer consumers a range of fulfilment options and convenience that international players will struggle to compete with – they would need warehouses in each state but also stores everywhere for easy customer returns and to provide click-and-collect services.
However, it isn’t that simple, and technology is required to bring service and speed to market. Up until recently, Australian retailers have had to either buy a large, inflexible system from one of the software giants, or customise other systems to get them to help – typically writing custom code in the ERP system or at the back of the ecommerce platform.
Today, there are far more flexible and agile native cloud solutions available that can drop in alongside those legacy systems and take care of difficult omnichannel operations. This is what we call “distributed order management” systems, and every retailer wanting to improve speed to market and the level of convenience to shoppers, needs to adopt one.
Investing in technologies to improve efficiency
It starts with having enterprise-wide inventory availability that not only can be relied on to show consumers what is available and where, but also makes it easy for staff to know what products are available, in what quantity and in what locations. The rubber hits the road in “unified commerce” in the physical stores, where customers come to pick up goods, make exchanges and bring returns. Unless store staff have simple tools to be able to handle this, staff will be engaged in menial tasks such as printing labels and locating stock, instead of interacting with customers, resulting in poor customer experiences.
Next there needs to be a robust and reliable distribution network that can be utilised at low cost. With all the major carriers having significantly stepped up recently – including the recent launch of Australia Post’s Shipster service, as well as the efficiency and reduced cost of the last mile logistics companies – this is an area that can be quickly addressed. It is critical to the ability to drive convenience to understand exactly how long and at what cost any item can be shipped from one location to any other be it warehouse, store, pick-up point or house. That way, distributed order management systems can understand what options are both cost-effective and optimally efficient for the retailer to take in delivering any item(s).
At the very least, the retailer should be able to offer an enhanced or reduced cost service to loyalty program members and this data should feed into the system. Being able to split inventory within the order means that the most effective shipping options can be applied. And with the right tools, customer service staff can have real-time visibility of stock and can make decisions on how to get it to the customer at speed.
Giving the customer the choice
All these elements have traditionally been handled by systems after an order has been placed to ensure order processing and delivery efficiency. But cloud native software architecture makes it possible to make these calculations live, on the checkout page before a customer hits the “buy” button, thereby offering the most convenient, cost-effective options for the customer to choose from, and in this way, out-convenience the competition.
It is very clear that in the battle to win the hearts, minds, and indeed wallets of consumers, the fight is over convenience. To win in 2018, you’ll need to be faster and easier to shop with. The old defence that Aussie consumers just love a bargain, isn’t true anymore. All consumers make value decisions, and faced with no other compelling reason to stick with a brand they will defer to price. However, if you can become more convenient to shop with than your competition, you’re back in business.
Graham Jackson is the CEO of Fluent Commerce
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