April 30, 2003, 12:00 AM

Using the web to make new product rollouts less risky

Best Buy is rolling out a web-based store inventory management system that provides updates of store inventory every 30 minutes, enabling merchandise managers to get quick views into how well new items are selling.

Proven sellers are easy for stores to stock at the right levels, since they have a history. But new products are something else. Despite market testing of new products, retailers usually guess at how much to initially stock, running the risk of running short on a star-or being stuck with a dud.

That’s why Best Buy Co. Inc. is rolling out a web-based store inventory management system that provides updates of store inventory every 30 minutes. Best Buy says the new system will enable merchandise managers to get quick and frequent views into how well new items are selling-and react more quickly to sales activity. “The system allows us to look at the first few hours of a sale and see if we have enough in stock at each store location,” says Joel Lauterbach, Best Buy’s director of retail process development.

The ability to quickly monitor inventory levels is particularly important for many of the products that Best Buy sells, such as movies and DVDs from new artists that have never been tested in the market. “It’s become critical in the entertainment business due to short lead times for getting products into stores,” Lauterbach says.

Take the new rapper 50 Cent. Because of unexpectedly wild demand by his fans, the official market release date of his first CD, “Get Rich or Die Tryin’,” was moved up several days in February, forcing Best Buy to quickly decide whether it should order more of his CDs. With the new web-based store inventory management system, which forwards POS sales data in near real time to headquarters, Best Buy merchandise managers in Minneapolis monitored what turned out to be robust sales in their East Coast stores throughout the first morning of the 50 Cent release, then quickly decided to order more. “That Thursday afternoon we placed an order for more 50 Cent CDs, but we if had waited until Friday, we could have missed out,” Lauterbach says. If Best Buy hadn’t been able to act so quickly, he says, its supplier may have run out of enough CDs, leaving Best Buy with lost sales.

Retek Inc.’s web-based Store Inventory Management system, following a test last year in Minneapolis stores, is on course to be in all of Best Buy’s more than 540 stores by this summer. Lauterbach says the test proved the system can produce accurate store inventory data in near-real time, replacing a former system that updated inventory records at the end of each day.

The store inventory management system, which Retek developed in conjunction with Best Buy, integrates with Retek’s Merchandising System and Sales Audit System, which Best Buy had already implemented.

In addition to helping maintain in-store stock levels, the store inventory management system will be used as a customer service tool to help shoppers in case the product they want is not available in a particular store. Employees will be able to use the browser-based system to check availability in other nearby Best Buy stores, Lauterbach says. For example, he adds, Best Buy clerks were able to use the new system to find other Best Buy stores that were still carrying the $89.99 Band of Brothers 6-disc DVD set, a hot-selling movie. “We can give the customer the option of driving to another Best Buy store or trying BestBuy.com,” he says.

Store personnel will be able to access the system from several points, including kiosks on the sales floor, POS terminals and back-office desktops. Best Buy may even let employees access the system over demo computers on display.

A particular advantage of the web-based system, the spokeswoman adds, is that it’s easy for all employees to use. “The training time for employees was less than a day, more than 50% less than other systems,” she says. “We didn’t want a mainframe-based system that our 16-year-old clerks couldn’t navigate.”

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