Co-Author: Parikshit Chauhan
Changes in the global economy, and an increasingly demanding customer push the frontiers across all industry segments; Retail and Consumer Packaged Goods are no exception. Not long ago, retailers such as Amazon, Alibaba, and eBay captured a substantial consumer mindshare and now command a sizeable portion of the world’s marketplace. Their success story taught the industry several lessons, primarily, ‘the customer was, is, and will always remain the king.’ Traditional retailers were not far behind and responded with surprising agility and focus unexpected from big-box firms. A 2017 e-commerce trends report highlights that 55% of all e-commerce sales are effected through branded stores versus 45% via the marketplace. A closer inspection of these varied but equally successful e-commerce stories reveal factors that differentiate success from failure in an omnichannel setup — streamlined supply chain operations, diversified yet meticulously cataloged product portfolio, and extreme customer-centric focus. Supply chain and customer centricity relate to execution, but a well catalogued product portfolio forms the establishing factor in delivering a successful omnichannel experience
The establishing factor
A well-cataloged product portfolio
A clear instance of poorly cataloged products hits one of the leading home improvement stores. A user initiates a search using the keyword ‘king mattress.’ The results comprise bed frames all over the first page, with one exception of a spring mattress, and not in the size queried. Filters could narrow down the search, but a shopper cannot see ‘mattresses’ in the filtering criteria.
A leading hardware retailer headquartered in United States faces lost sales due to poorly catalogued product information. A search for a ‘gas-powered lawn mower’ will yield tens of pages of search results with any product that has the keywords gas, power, lawn, mower, and possible combinations of the phrase. The actual product will, in all probability, not be anywhere on the first page, or the second, of the search results. The product is in stock, but searching for it is a nightmare. If it cannot be found, it cannot be sold. Their solution — implement a leading vendor’s product information management suite.
The vendor, rated consistently by Gartner as a leader in the product catalog and information management products, insists that a sound omnichannel experience cannot be delivered without establishing a well-cataloged product portfolio. While supply chain agility and customer centricity play a key role in ‘delivering’ an omnichannel experience, a sound product catalog forms the foundation for ‘establishing’ effectiveness of omnichannel strategy. It does come as a surprise that most knowledge and research papers on omnichannel strategy skip, or do not completely cover, the importance of a sound product portfolio, with all possible product attributes accounted for, in defining an omnichannel strategy. Multiple channels have multiple dimensions of product data requirements, which the product master cannot completely cater to. For instance, a printed catalog only has enough space to provide basic product information, while an e-Commerce site should provide complete product details along with how-to’s, product reviews, and comparable products. A product information management suite, coupled closely with product lifecycle management, has actually established the reason why some companies have been extremely successful in delivering a compelling omnichannel experience over others. Some of key benefits of the sound master data management strategy are listed below –
- Omnichannel enablement
- Streamlined new product introduction
- Search result optimization
- Improved top and bottom line
The execution factor
Supply chain has always been a focus area for retailers. The likes of Walmart and Amazon actually deploy their supply chains capabilities to assert their competitive edge. However, continuous innovation and improvements of these back-end operations is but far from over. Be it a concept as simplistic as a demand-driven supply chain or as bizarre as a flying warehouse, each of these improvement areas strives to enable just one purpose: ‘serve the king.’ A case in point is a patent filed by Amazon to enable drone deliveries. We are witnessing an enhanced collusion between retail and its associated upstream (manufacturers) and downstream (transportation) partners to deliver enhanced service levels and reduce time to doorstep (contrast this with the metric we consistently encounter — time to market or time to shelf). Top retailers continue to make major investments in automating warehouse operations, piloting forward thinking programs like Uber e-Commerce delivery programs and internet of things (IOT). How successful would these individual initiatives be, we still do not know; but each step dynamically changes the way retailers interact with their customers, suppliers, and partners.
We can go on and on about the supply chain improvements alone, but equally important are customer-centric front-end interactions which delivers the ‘wow’ factor. Price-sensitive shoppers expect quality products, superior service levels, and a variety to choose from, irrespective of the shopping destination, and the medium they choose for shopping. Retailers regularly engage in price wars with each other in order to woo customers using programs such as everyday low price (EDLP), price match, and accepting competitor coupons. These leading customer centricity strategies have all but became mainstream offerings. To enhance their value proposal and improve brand perceptions among customers, retailers analyze a mountain of data frequently. Using the most advanced analytical tools available to date and inputs from famed data scientists hired to write sophisticated algorithms, retailers define a consumer’s need with precision. They interact with customer centricity across multiple forums to manage and promote brand perceptions, develop promotional and marketing strategies that span across mediums, and solicit consumer feedback to drive product improvements.