Omni-Channel Challenges and Best Practices


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Ted McCaffrey of eBay Enterprise presented his talk on Omni-Channel Challenges and Best Practices at our eCommerce Town Hall in June 2014. Learn why Omni-Channel is a must, how to leverage physical stores as well as prioritizing initiatives for future success.

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Omni-Channel Challenges and Best Practices

  1. 1. ECOMMERCE TOWN HALL 6.24.14 | Ted McCaffrey
  2. 2. PROPRIETARY & CONFIDENTIAL AGENDA 2 Why Omnichannel is a Must Leveraging Physical Stores Prioritizing Initiatives Omnichannel Challenges and Best Practices
  3. 3. PROPRIETARY & CONFIDENTIAL OMNICHANNEL DEFINED 3 Coined by IDC’s Leslie Hand in early 2009, her definition Omnichannel refers to two things - omnichannel shopping patterns and behaviors and the retail people, process and technology change that occurs to support the new customer. Omnichannel customer shopping patterns and behaviors are start/stop, traversing a myriad of online and offline touchpoints. Omnichannel requires that retailers put the people, processes and technologies in place to support customer centric omnichannel retail.
  4. 4. PROPRIETARY & CONFIDENTIAL Shift: Consumers Have Redefined Commerce… Retailers and Brands Need to Respond
  5. 5. PROPRIETARY & CONFIDENTIAL Customers Expect More In-Store 81% of consumers expect retailers to be utilizing the technology available to them in order to improve their in-store shopping experience1 50-80% of consumers leave the store without all of the items they came to purchase. 1 eBay Enterprise research, May 2013 2 eBay Enterprise and CFI Research, March 2014
  6. 6. PROPRIETARY & CONFIDENTIAL Customers Expect “Seemless” 77% of consumers expect retailers to provide a consistent, integrated experience between their in-store and online channels.1 40% of consumers say a retailer is likely to lose their business to the competition when one item is back-ordered or out of stock.2 1 eBay Enterprise research, May 2013 2 eBay Enterprise and CFI Research, March 2014
  7. 7. PROPRIETARY & CONFIDENTIAL Customers Want Convenience 42% of online shoppers have abandoned shopping carts due to delivery times.1 59% of consumers would purchase other items if the retailer secured out of stock items.2 50% of consumers choose in-store pick up to avoid high shipping fees.1 1 UPS Research, 2013 2 Cross-Channel Brand Interaction: 2012 Consumer Preferences
  8. 8. PROPRIETARY & CONFIDENTIAL Omnichannel Operations is a Must.
  9. 9. PROPRIETARY & CONFIDENTIAL LEVERAGE YOUR STORES 9 Increase revenue, margin and inventory turns by exposing store inventory to the web and captures lost sales Ship from Store Increase sales, store traffic and enable consumer convenience with same day pickup In-Store Pickup Save sales of out-of-stock items and drive consumer satisfaction In-Store Associate Ordering
  10. 10. PROPRIETARY & CONFIDENTIAL KEYS TO EXECUTING SHIP FROM STORE 10 •  Proximity to delivery address •  Minimize split orders •  Inventory optimization / daily store limits Intelligent Order Routing •  Store set-up •  Protocols and procedures •  Goals and incentive plans Store operations & training •  Accurate store level inventory •  Safety stock levels •  Automatic adjustments of ATP inventory “Available to Promise” inventory calculations
  11. 11. PROPRIETARY & CONFIDENTIAL •  Create a program support mechanism •  Easy access/location to place orders •  Mobile / Tablet ordering •  Educate associates to look for inventory online and not just the back room Associate Training & Support •  Provide free shipping on in-store orders •  Promote / market the capability (Ask Us) Create Win-Win for Consumers KEYS TO EXECUTING IN-STORE ASSOCIATE ORDERING 11
  12. 12. PROPRIETARY & CONFIDENTIAL •  Customer ease •  37% of shoppers purchase additional items when picking up in-store Thoughtful pick up location •  Established protocols and training •  Goals and incentive plans Training and store operations Inventory accuracy is critical KEYS TO EXECUTING IN-STORE PICK UP 12
  13. 13. PROPRIETARY & CONFIDENTIAL INCREASE REVENUE AND IMPROVE MARGIN 13 *Average across all eBay Enterprise Omnichannel Clients 20-40% Average increase in incremental ecommerce revenue 33% Average percent of items shipped are inactive 30%+ Margin increase on items nearing markdown 80% 1-Day Transit Time, 96% 2-Day Transit
  14. 14. PROPRIETARY & CONFIDENTIAL 20-40% Average increase in incremental ecommerce revenue SALES INCREASE - WHY IS THIS BELIEVABLE? 14 Inventory Distortion: An $800B Issue for Retailers Worldwide Definition – The cost of out of stocks, plus the cost of overstocks that then have to be marked down.
  15. 15. PROPRIETARY & CONFIDENTIAL Time InventoryAccuracy 100% 90% 80% 70% 50% 1 year0 60% HOW DOES THIS HAPPEN? 15 At the beginning of the year, a physical inventory is done, and inventory accuracy is near 100% Average Accuracy Inventory Accuracy drops due to both Overstated and Understated PI During the year, inventory distortion occurs from: •  Theft •  Shipping/receiving errors •  Cashier Error •  Improper Returns
  16. 16. PROPRIETARY & CONFIDENTIAL SFS FILLS THE GAP – 20/30% 16 Footwear Retailer – “SFS provides a 20-25% lift in ecommerce Sales” Specialty Apparel Retailer – “20% of my ecommerce complaints have to do with OOS in our FC” Hardware Retailer – 20% of the ISPU orders are cancelled Sporting Goods Retailer – 25%-30% pick declines
  17. 17. PROPRIETARY & CONFIDENTIAL UNLOCKING OLDER/INACTIVE ITEMS IN STORES Toy Retailer 33% of orders were for inactive/older products not moving at the stores Office Supply Retailer With 60 FC/DC’s in NA, they still have “trapped” inventory in their stores up to 6 years old. 17 33% Average percent of items shipped are inactive
  18. 18. PROPRIETARY & CONFIDENTIAL SERVICE LEVEL AGREEMENTS (SLA’S) We are at least two (shipping) zones closer by utilizing the stores, Joel Anderson, president of said. “The closer we can inject the order into our network, the more this saves the customer time and reduces what it will cost us to get it to the customer. 18 80% 1-Day Transit Time, 96% 2-Day Transit “ “
  19. 19. PROPRIETARY & CONFIDENTIAL Low High Hard Easy Ease of Implementation BusinessImpact PRIORITIZING OMNICHANNEL INITIATIVES • Business goals • Inventory characteristics • Average price point • Retailer type • Store footprint / configuration 19 In-Store Pick-up Associate Ordering Ship From Store
  20. 20. PROPRIETARY & CONFIDENTIAL OMNICHANNEL BREAKDOWN 20 •  Total ecommerce $1B+ •  All Omnichannel Initiatives (AOS, SFS, ISPU) $250-$300M –  SFS $175M –  BOPIS $80-$100M Toy Retailer •  Total ecommerce $240M –  SFS $55M-$60M –  BOPIS $11M-$14M Footwear Retailer •  Total ecommerce $2.B+ –  SFS $250M –  BOPIS/ROPIS $12M-$20M •  Half was cancelled Tier 1 Apparel Retailer
  21. 21. Q & A
  22. 22. PROPRIETARY & CONFIDENTIAL LEGAL NOTICE eBay Enterprise™ and the ebay enterprise™ logo are trademarks, service marks, registered trademarks, or registered service marks of eBay Enterprise Inc., or its subsidiaries or affiliates. Other trademarks or service marks contained in this presentation are the property of the respective companies with which they are associated. This presentation is for informational and discussion purposes only and should not be construed as a commitment of eBay Enterprise. While we attempt to ensure the accuracy, completeness and adequacy of this presentation, eBay Enterprise is not responsible for any errors or will be liable for the use of, or reliance upon, this presentation or any of the information contained in it. The information contained in this presentation is subject to change without notice. This presentation contains proprietary and/ or confidential information of eBay Enterprise and is released only under the terms of the non-disclosure agreement between our respective organizations. Unauthorized use, disclosure or dissemination of this information is expressly prohibited. 23