E-stock set-upBY Aadeetya Sriram | comments ( 0 ) |
With an impressive annual growth rate of e-commerce at 35%, retail portals are gradually making their own space in retail sector. But this growth can actually be smooth once it stops fumbling with inventory management. A look into this area of operation.
The need for proper inventory set-up has been apparent with the conventional brick & mortar store for years. With the induction of e-commerce players, the importance of a robust set-up still exists. There are certain factors which are not entirely being taken care of, which results in inefficient conclusion.
When a customer reaches out to you and asks for a product that he needs immediately and you come to know that your warehouse doesn’t stock it at that moment and if this happens after the item has been logged in as a confirmed order; it’s a serious blunder. Make sure records are updated which enables you to respond within a timespan that’s suits your customer’s interest. “With international players such as Amazon entering the Indian market, best practices in supply chain and analytics will get introduced to the industry, only to contribute to the growth of e-retailing,” says Mukesh Bansal, CEO, Myntra.com.
The primary requirement for any e-commerce business is that it employs systems that manage orders and inventory levels efficiently, which reduces the possibility of any mishappenings. Combining orders into a single interface for submission, tracking, routing, fulfillment, and order status queries, can help the workforce access vital information from a common interface thus ensuring visibility in the entire process. One of the largest costs to any business is that of inventory or stock at hand, the amount of inventory held directly impacts your bottom line in many ways. This impacts the entire supply chain, thereby affecting the warehouse level. Incessant refilling in a warehouse can become a huge task if consumer response is not studied accurately. To facilitate efficient consumer response based on consumer demands, warehouse data, sales forecasts, and inventory planning, it becomes imperative that such companies consider inventory management seriously. Making accurate demand and supply predictions is an ideal situation that anyone in the supply chain management business can utilise.
The main aims of inventory management are – improving customer service, low inventory investment and high level productivity. Many small and smart e-retailers do ‘drop ship’. This means that they tie up with brands or their distributors, and on receiving orders from customers, send their courier partners to pick up the goods and deliver. “Excellence in e-inventory management requires on-time updates between front end and back end, demand planning end to end, and high e-integration of suppliers. E-inventory management decides on the availability of product to execute customer satisfaction in the next level of supply chain management. The future of e-retailing is depending on intelligent e-inventory management,” says Dietmar Jobst, Director - Supply Chain, Fashion&You. The internet is the driving force for an inter-connected supply chain. E-commerce is a complex process that involves extreme coordination between entities. Electronic retailers tend to carry lower inventories than brick & mortar retailers. To achieve real-time efficiency, e-commerce applications have to be multi-layered and full of rapid decision-making capabilities.
Internet customers are impatient; they expect prompt delivery of services and products. Reverse logistics is one of the greatest challenges that the internet retailers have to perfect. Online retailers experience more product returns than brick & mortar retailers. Because of this challenge of high product returns, the management of reverse logistics is crucial for survival. “The growth and acceptance of e-tailing in India has been a concern for some time now which over the last couple of years has taken a sudden surge. This will sustain. More than internet adoption or consumer mindset change, this surge is triggered by real bargains on hot items like electronics, apparel and accessories,” says Arindam Bose, Managing Director, Timtara.com. “Educating the consumer about benefits of online shopping is currently the biggest challenge. Consumers are slowly but steadily opening up to online shopping, but a large percentage of consumers still prefer shopping offline” Bansal informs. Transportation management systems should be sophisticated enough to manage the shipping process in a cost effective and route efficient manner. Internet retailers can organise their inventory through the following options: drop-shipping, inventory ownership (click and mortar). “Key challenges are the management of growth, people and the ongoing tech development. Strong implementation focus, leadership programmes and innovation will foster the e-commerce speed” comments Jobst. It’s also advisable for e-commerce players that instead of building up in-house logistics infrastructure, there should be seamless inventory management system that leverages the reach and scale of professionally managed logistics company. What is required is an effective application.
The benefits of inventory management are complete control of inventory, complete information about the value of the inventory, complete visibility on quantities on hand, quantities committed and quantities sold, response time to demand changes reduced, increased sales, preventing misuse of warehouse space with excess merchandise stock and avoiding taxes and insurance premiums paid on excess merchandise. The effective inventory management facilitates drop-ship for e-retail players. E-retailers can showcase a large catalogue and reach out to tier II and III markets without too much investment. The cost structure is always in control for e commerce as there are no store rentals, or employing lots of people on the shop floor, etc.
Now that virtual stores are coming up thick and fast, how exactly are they servicing their customers which make them retain their base is something to look into. As Bose says, “One innovative way is what Timtara does. We call it ‘Happy Call’. When the order is delivered, a member from the Delight Team of Timtara calls up the customer to check how ‘delighted’ he or she is.” Such innovative steps heighten the chances of customer coming to your brand. Online portals need to have robust distribution to ensure that customers receive their orders within promised delivery timelines. After every order is delivered, one must send out a feedback form to their customers to capture their shopping experience, this way the customer is engaged actively.