5 Effective Tips to Improve Omnichannel Inventory Management
Inventory management is a challenging task. With the retail landscape becoming more and more complex, it has become even more demanding. As inventory starts piling up across multiple channels, it becomes hard to track, manage, and sync the product details centrally, increasing the likelihood of retail businesses making costly mistakes such as overstocking or over-purchasing.
Retailers must ensure that inventory is available across all of the channels through which they sell. Otherwise, they will miss out on sales. An omnichannel inventory management solution can help retailers monitor and manage their inventory across multiple sales channels from one centralized location. It allows retailers to optimize their supply chain to work with numerous stores, big or small.
What is Omnichannel Inventory Management?
Omnichannel inventory management is a system that involves optimizing inventory across all sales channels like brick & mortar shops, eCommerce stores, marketplaces, and social media platforms.
How does it help the retail business?
- Create a single view of the entire system
- Acts as a smooth interface between suppliers & customers
- Allows retailers to monitor the current inventory levels
- Assists in correct forecasting of product demand
- Ensures the retail store is always well-stocked
- Assists in selling unused inventory
Challenges in Omnichannel Inventory Management
1. Siloed systems & processes
As per a research report, siloed systems & processes have received the highest percentage of top votes as barriers to supply chain innovation & management. Having siloed supply chain can cause several issues like:
- Lack of transparency on the stock levels of various channels
- Customers can confuse about the availability of orders
- It can increase the order cancellation rate on eCommerce site
- Retailers may find themselves with duplicate purchase orders
2. Accurate forecasting of omnichannel demand
Identifying and forecasting omnichannel demand is a difficult task. Abrupt instances may lead to unpredicted changes in the inventory demand for each store or warehouse. Some of them are:
- Fear of a COVID-19 lockdown triggered panic bulk buying of staple food
- Celebrity wearing particular apparel and demand skyrocketing in a few hours
3. Order accuracy, tracking & visibility
It is easier to maintain business visibility when retail businesses have a single store and warehouse. It is really simple to keep track of orders and stock levels.
But when retailers expand into multiple channels and warehouses across various locations, it becomes a severe barrier to inventory management. Brands with no automated inventory management software struggle to track orders, maintain order accuracy and stock visibility across channels.
4. Access to right technology
The real backbone to an omnichannel approach is an inventory management system.
The omnichannel approach cannot be executed manually and needs robust supportive software for efficiently managing business operations. Order fulfillment is synced across channels simultaneously using an automated technology solution like inventory management software.
Retail businesses get marketplace channel information, channel-wise inventory data, and shipping data in one place with complete visibility using inventory management software.
Fynd has its own PoS that is integrated with the central ERP and keeps track of live inventory across all stores and warehouses.
5 effective tips to improve Omnichannel Inventory Management
1. Ensure inventory visibility
39% of consumers are unlikely or very unlikely to visit a retailer’s store if the online store does not provide physical store inventory information.
Another 71% of shoppers agree that it is important to view inventory information for in-store products.
More than 30% of businesses have experienced situations where they sell items they showed as in-stock but could not be located within the inventory.
The crucial research shows the critical nature of inventory visibility for both customers and retailers.
In fact, without inventory visibility, how can the retailers
- Assure the customers of product availability
- Notify customers when inventory is replenished
- Determine the shipment & delivery dates of ordered products
- Locate products that may be in stock in other channels
- Monitor inventory accurately to meet consumer demand
- Reduce out of stock items and overstocks
Ensuring inventory visibility with a centralized inventory management system can help grow the ROI of retail business, make customers happy, and their lives much easier as the business scales.
2. Make order fulfilment easy
Running out of stock across all channels can be detrimental to the bottom line of retail businesses, as customers dislike seeing an "Out of Stock" message next to an item they adore and need right now.
An order management system’s fulfillment process ensures that customers receive their orders on time regardless of their purchase channel. It is possible by automating the pick-pack-ship process to enhance operational efficiency, expediting the delivery of orders to clients, freeing up customer support resources, and boosting the likelihood of repeat business.
However, this will not work unless there are real-time inventory updates and complete stock visibility across all sales channels.
Fynd order management system (OMS) and central ERP allow a retail business to set rules and consolidate channels for a more cohesive order fulfillment strategy.
3. Improve return policies
A good refund policy can encourage repeat business as 72% of shoppers said they would spend more and shop more frequently at stores that make returns simple.
Research from Statista says that estimated return deliveries will cost the retail industry about $550 in 2020 and is still growing at a much sharper rate. The figure does not include the inventory restocking expenses.
Free delivery policies only worsen the problem by eating the profits and increasing the cost due to moving inventory.
Here are the five most important things that customers expect in a return policy:
- Who pays the return shipping?
- How long do I have to return?
- What makes a product ineligible to return?
- Whether they allow exchanges?
- How do I start a return?
A clear return policy would help efficiently manage omnichannel inventory, ensuring fewer returns and more sales.
Here is an excellent example of a return policy from Fynd.
4. Encourage in-store returns
Returns can be tough on retailers. They eat up cash flow and warehouse space while simultaneously damaging customer satisfaction. Implementing an in-store return program allows customers to return merchandise for free. Merchants can cut back on the return time and ensure that the returned goods are swiftly available in the inventory for sale to different customers.
Here is how in-store returns are beneficial for improving omnichannel inventory management:
Free cross-channel inventory movement: Returned products are available for sale – from one channel (online) to a different channel (in-store)
Get more in-store customers: It helps enhance customer footfall in actual stores where in-store returns happen.
Get more in-store sales: Customers get exposure to in-store products, helping them purchase more products from the retail brand.
Fulfill more orders: Delivery personnel get more time to deliver ordered products to other customers.
5. Using barcode technology for inventory distribution
Retailers start with a supplier who distributes products to a single distribution facility. At this stage, there is minimal complexity and monitoring inventory activities is relatively easy. However, if the distribution centre network expands, the supplier may ship to a central distribution centre to distribute stocks to another warehouse.
The best way to support this growth is by using barcode technology. Here are its benefits:
Inventory management: Retail businesses can track a product's progress and location during its shipment by scanning its barcode at various points.
Adapt to changes: Retailers can sense changes at a particular warehouse and quickly adapt their stock strategy as needed.
Accuracy: Scanning a barcode is more accurate than human data entry, when handling an item from shipment to sale
Efficiency: Barcode scanning is more efficient than entering a number because it only requires a simple scan to read the complete details of the product.
Such capabilities make the idea of growing stock in multiple locations more manageable.
Conclusion
Customers' primary concern is getting their orders filled swiftly and accurately. To deliver this level of service, retailers will need an omnichannel inventory management system capable of providing fast, accurate inventory management expected by customers.
Fynd offers a robust centralized inventory to view, manage and synchronize the entire inventory from all sales channels. It enables retailers to track the performance of each channel separately for granular analysis on a central management system.