May 29, 2009, 12:00 AM

Sponsored Supplement: Technology investment for now and the future

(Page 7 of 8)

Just as live chat can help retailers save sales, so too can fulfillment. No shopper wants to log onto a retailer’s site only to discover the item is out of stock or on back order. Worse is seeing an item in a store and attempting to buy it online only to find out the retailer’s web store does not carry the item.

Shoppers, however, encounter these problems more often than retailers realize. “A lot of multichannel retailers do not carry all their available SKUs online and it is not uncommon for an e-retailer to understock their online warehouse,” says VendorNet’s Gardner. “There is no reason why multichannel retailers can’t seamlessly aggregate their store inventory online.”

The business case for doing so is predicated on the fact the inventory is a retailer’s biggest expense. “Why let seasonal items languish in the store and be sold at a discount at season’s end if the same inventory is moving briskly through the web store and can be sold at full price?” Gardner says. “Aggregating inventory across sales channels increases sales through greater availability of inventory.”

VendorNet’s supply chain technology is a web-based, middleware application that communicates with and receives inventory feeds from the retailer’s order management system in its warehouse and stores. Inventory levels in the stores and warehouse are reset either in real-time-provided the retailer’s order management system supports this capability-or as often as the order management system permits.

When an online order cannot be fulfilled through the warehouse, the application scans available inventory in the stores and selects the appropriate store to fulfill the order. Store staff is notified of the order through VendorNet’s web-based application portal, which also generates the packing slip and shipping label for store personnel. The item is packed in the store and shipped the same day.

Retailers can set rules for which store fulfills the order, such as the one closest to the customer, which offers the lowest shipping cost, or the store with the highest level of inventory for that product. Retailers can increase sales through their online channel by as much as 40% using the application, according to Gardner.

“It’s a way to make the stores an additional warehouse that supports the web store and expands the online catalog,” Gardner says.

The match game

Having matching inventory between the store and the web is a must, according to consultant Wu. “Consumers expect to find the same products on a retailer’s web site that they do in their stores,” she says. “Retailers don’t want the store to serve as a major fulfillment center, but fulfillment through the store on a spot basis can effectively fill the holes when an item is out of stock or on back order.”

Making store inventory available online can also help retailers clear out seasonal merchandise that is selling well online but is aging in the store, without necessarily having to put the item on sale in-store.

“Shoppers pretty much know when stores start their end of season clearance sales, but in many cases, the same item is still selling well online and doesn’t have to be discounted just yet,” Gardner says. “Exposing store inventory to the web store is a way to squeeze out a higher margin.”

In addition to fulfilling orders through stores, VendorNet can link e-retailers directly to the manufacturer to place a drop-ship order, which can help web-only e-retailers fulfill orders for items out of stock in the warehouse. “Our technology acts as an intelligent order broker,” Gardner says.

While bringing transparency to inventory across all sales channels can improve availability of inventory online, getting the order to the customer in a timely fashion and holding the line on shipping costs is becoming a focal point for retailers as they expand their customer base into more rural areas.

To reduce their shipping costs, many e-retailers either shop their business among carriers to find the best rate per shipping batch or will commit all their business to a single carrier in the hope of negotiating a discounted rate.

What retailers overlook, however, is that any private carrier levies surcharges for such services as delivering to a residential or rural address and for Saturday delivery and pick-up. Surcharges are also levied for sending a package to what turns out to be an undeliverable address, which requires the carrier to look up the correct address to complete delivery.

Low prices, high quality

“In this economic climate retailers are looking to hold down shipping costs without sacrificing quality,” says Endicia’s Whitehouse. “There are a lot of factors that affect shipping costs that many retailers aren’t aware of until they get their invoice at the end of the month.”

One alternative carrier that can help retailers reduce shipping costs, but which retailers tend to overlook, is the U.S Postal Service. Endicia provides software that enables retailers to print out USPS shipping labels and USPS approved postage, verify an address prior to shipping, pre-fill customs forms for orders to be shipped internationally, and prepare packages to be shipped using any of the USPS’s premium delivery services, such as Priority Mail.

Endicia’s U.S Postal Service mailing application can be integrated with mailing and shipping applications that support other carriers using XML. Retailers can also use Endicia software to compare shipping costs between the USPS and other package carriers on a per-package basis.

Retailers can download Endicia’s basic mailing software, which is compatible with PCs and Macs, free of charge. Shipping labels and postage stamps can be printed on any laser printer or with a DYMO printer, which can be rented through Endicia. Monthly service packages, which include such features as address verification and customized label printing, start at $9.95 per month.

“The USPS will discount Priority and Express Mail packages 5% to 11% from retail postal rates as part its Commercial Base and Commercial Plus rate plans for retailers using PC postage services,” Whitehouse says. “When surcharges are factored into the base rate charged by private carriers, the cost to ship through them can be as much as three times higher than the USPS. For retailers that ship a lot of packages under five pounds, such as jewelers, the USPS is a more cost-effective alternative.”

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