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Risk: Don’t let this four-letter word be a curse in your business


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NRF 2019: Retail's Big Show
KC Fox, SVP, Technology Services, Radial

Published in: Retail
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Risk: Don’t let this four-letter word be a curse in your business

  1. 1. Risk: Don’t let this four-letter word be a curse in your business KC Fox, SVP Technology Services
  2. 2. Retail Has Morphed Creating New Challenges & Risk 2
  3. 3. © 2018 Radial, Inc. 60% of online shoppers prefer to return items to a store3 expect to see store inventory online71% do so to avoid shipping charges73% heightened consumer expectations73% online shoppers make extra purchases when returning to store 73% online shoppers use in-store pickup61%
  4. 4. Attempts to Meet Expectations Create Additional Risk 7-15% the amount of safety stock consumes of inventory on the balance sheet $24.2B the amount of capital NA retailers tie up to compensate for OOS $144.9B total loss due to OOS annually 54% will shop a competitor if their preferred delivery method isn’t available 59% of shoppers won’t return after a bad experience
  5. 5. © 2018 Radial, Inc. Because Executing is Complex
  6. 6. © 2018 Radial, Inc. Product Availability Order Authorization Fulfillment Order Orchestration Customer Service Real-time visibility of inventory Available to promise (pre- orders, back orders) In-Store Pickup and Ship- to-Store availability rules Delivery estimates Single view of all enterprise inventory Order splitting rules Tax calculation Fraud screening Payment authorization Order status workflow Order routing optimization (stores, drop shippers, DCs) Exception management Order splitting optimization Inventory allocation Store pick/pack/ship Dropship integration Store pick up Carrier integration (for store-fulfilled orders) Single view of order across the enterprise Order modifications Distribution centers Same day delivery BusinessIntelligence Explore Buy Use There Is A Lot To Do 6
  7. 7. Complexity is Hampering Maturity 7
  8. 8. Order Management is Critical to Managing Risk 8
  9. 9. Integrating Store Resources Drives Profit, Minimizes Risk Ship-from-Store In-Store Pickup Ship-to-Store Buy Online Return In-Store Associate Delivery Tablestakes Competitive Advantage On the Fly Order Brokering Rules Integration with Promotions Ship Method Optimization Predictive Analytics
  10. 10. © 2018 Radial, Inc. Drop Shipping Extends Your Brand with Almost No Risk • Automation/Integration • Supplier Compliance • Management and Oversight Reduce risk to your brand with advanced drop shipping technology Eliminates inventory overhead and risk Expands your product assortment with $0 inventory investment Facilitates testing of new products Increases fulfillment locations 10
  11. 11. © 2018 Radial, Inc. Multi-Node Fulfillment
  12. 12. Multi-Node Drives Speed & Efficiency Single Node vs. Multi-Node • Better utilize distribution network • Outbound transportation cost • Speed of delivery Optimization Allocation • Inventory placement and distribution strategy • Get closer to the customer 12
  13. 13. Multi-Node Has Pros & Cons Pros Cons ↓ Outbound transportation cost ↓ Transit time ↑ Service level ↑ Total inventory level ↑ Fixed cost ↑ Inbound transportation cost 13
  14. 14. © 2018 Radial, Inc. Fraud Management May Be the Biggest Risk Today & In the Future 14
  15. 15. Source: Javelin Strategy Research 15 Identity Theft Account Takeover Synthetic Identity 16.7M Victims in the U.S. in 2017 31% Amount ATO increased in 2017 275% Increase in 2017 $16.8B Stolen $5.1B In losses 1.5M People who had a new account opened before realizing there’d been a breach eCommerce Fraud Grew More Than 30% in 2017
  16. 16. © 2018 Radial, Inc. Fraud Management Requires Man + Machine 16
  17. 17. Machine Learning Only Assets Best at identifying patterns Fastest decision maker Scales well in volume and cost Minimizes human interaction Liabilities Decreases order approvals Increases false positives Only as good as the data it has Boundaries understood by fraudsters 17
  18. 18. Man Only Assets Able to weigh “gray area” decisions Decreases false positives Seeks new data sources Best at exception handling Liabilities Adds friction to the buying process Increases processing time Increases cost Limits # of variables used at same time 18
  19. 19. • Human intuition that relies on machine input • AI/Machine learning + sophisticated fraud screening tools • Big data – the more, the better A Balanced Approach eCommerce companies that invest in a multi-layered approach experience 65% fewer successful fraud attempts.
  20. 20. Some Retailers Are Getting It Right 20
  21. 21. © 2018 Radial, Inc. Headquartered in Carlsbad, California, TaylorMade Golf is a leading manufacturer of high performance golf equipment with industry-leading innovative products. Solution: Fraud Management Results: • 99.5% order approval rate • 13% increase in order conversions • Nearly 40% decrease in chargebacks • 1.5 headcount resources freed up to focus on service and finance • Zero fraud liability “With more orders getting approved and no fraud liability, we are increasing our revenue while freeing up headcount to focus on other initiatives. Choosing Radial to protect us from fraud only had an upside for us, and Radial delivered on everything it said it would.” Matt Kneller, Director, eCommerce, TaylorMade Golf Company 21
  22. 22. Solutions: Optimized OMS, Ship-from Store, In-Store Pickup Results: • 250 stores live in 6 weeks • 5,614% increase online inventory (70K units to 4M units) • 99.7% of orders ship in 2 days • 90% of online orders fulfilled by stores • 99.5% fill rate • 567% increase in boot sales in first 5 days of peak vs. entire prior year peak season “We went from about 70,000 units on average to about 4 million units available to our customers. We did more business in our first holiday season than we did in the entire year.” Kent Zimmerman, VP, Digital, Shoe Carnival 22
  23. 23. A premier cosmetics company wanted the ability to reach their customer within 2 days Solution: Multi-Node Fulfillment Model with 4 Facilities across NA Results: • Lower time in transit • Increased peak capacity • Improved business continuity option 23
  24. 24. © 2018 Radial, Inc. It’s Time to Change Your Thinking Modern Order Management: If your OMS isn’t smarter than shoppers, replace it Store Fulfillment: It’s tablestakes; start thinking beyond the fundamentals Drop Shipping: If you’re not doing it, start Multi-Node Fulfillment: Your customers expect faster delivery; you need to deliver Fraud Management: Hands-off is an open invitation to fraudsters; it’s time to take care of your good customers instead 24