As we look ahead to the re-opening of retail stores, we expect to see a change in consumer shopping behavior and how the purchased product will be collected. In-store distancing restrictions, paired with a general leeriness to browse in a physical store, means that many shoppers may continue to opt for at-home delivery and curbside pickup.
We are in constant communication with our customer community through the Oracle Retail User Group and Advisory Boards. What we have discovered is that retailers are responding and leaning into these delivery options. For starters, a good chunk of their inventory is residing in the distribution centers since restocking stores have been difficult, if not impossible, during the past couple of months.
The challenge for retailers becomes how to balance these changing expectations while achieving profitability. Ask a retail CEO what their most significant cost issues are, and chances are fulfillment will be somewhere near the top of the list. Some of this is due to retailers’ attempts to provide customers more paths to purchase and faster delivery. But by better defining fulfillment zones and prioritizing how inventory is assigned (such as moving clearance merchandise first), retailers can profitably fulfill orders and create better experiences.
One challenge retailers will face is how to handle potentially a season’s worth of merchandise that has been sitting in stores while they are shutdown. Enabling rules for shipping priority—shipping it from the stores first where there is inventory, versus shipping from the distribution center—protects margins by preventing further markdowns.
Further, setting a location priority to look at the proximity of inventory to fulfill the order that is residing closest to the customer can save on shipping expenses. Let’s say the order is for a dress. There are two stores to pick from, both overstocked, one’s in Dallas, and one’s in Chicago. The customer lives in Houston, so ship out from the Dallas store location, right? You shorten the shipping distance by almost 800 miles. The retailers significantly save on costs, and the customer gets their order faster—win, win.
Retailers should also consider moving inventory where it’s more likely to sell. For example, a Steeler’s jersey certainly won’t do well in Patriots Nation in an offseason, so send it closer to Pittsburg. Or warm sweaters still residing as inventory in California may do better back East where the weather is still colder.
For all of this to work smoothly, swift and seamless communication among all parts of the enterprise are essential. Today, doing that most effectively means harnessing the economic and computational capabilities of the cloud. Embedded within Oracle Retail Order Management and Oracle Retail Order Broker, is the Oracle Science Engine, which uses mathematical modeling to do margin analysis and identify the most profitable location from which to fulfill an order—turning data into profit. That all adds up to a better bottom line – and a win when you do the math.
The Oracle Retail Order Management Suite provides retailers with a flexible, effective solution that delivers a rapid return on investment and creates opportunities to build better customer engagement and earn increased customer loyalty.
Customers see the results: