Buy anywhere, Fulfill anywhere….Illustrative examples for click and collect % of online orders...
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1 David Hogg, Commerce Solutions Leader Europe October 15 th , 2014 Buy anywhere, Fulfill anywhere Considerations for Omni-Channel Retail Supply Chain
Transcript of Buy anywhere, Fulfill anywhere….Illustrative examples for click and collect % of online orders...
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David Hogg, Commerce Solutions Leader Europe
October 15th, 2014
Buy anywhere, Fulfill anywhereConsiderations for Omni-Channel Retail Supply Chain
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3 areas which retailers need to take note of and
respond to
Customer demands are driving supply chain
developments
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Considerations and how IBM can help3
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3 areas which retailers need to take note of and
respond to
Customer demands are driving supply chain
developments
2
Considerations and how IBM can help3
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However, Customers are looking for more …
IBM survey of 30,554 consumers in 16 countries, highlighted 5 top omni-
channel needs, 4 of which focused on integrated supply chain capabilities
1. Price consistency across channels
2. In-store, locate out-of-stock item and get it
shipped home
3. Track order status
4. Consistent assortment across channels
5. Return in store of online purchases
Top 5 omnichannel capabilities
Source: IBM IBV 2013 survey, n= 30,554 Q21 HYP2 New capabilities
We surveyed 30,554 consumers in 16 countries to discover their opinions of omni-channel capabilities and the
impact on choice
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Retail supply chain executives, see the challenges for their operations ; Most Important Perceived Operational Challenges in Supply Chain Execution
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Traditional supply chains have been linear with moderate challenges in
demand volatility, delivery channels, order fulfilment windows and inventory
HubDC
Customers
Customers
Spokes
ManufacturerLocal
In Transit Supplier International
Transit
…
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Complex supply chains servicing stores and customers directly….
HubDC
Customers
Customers
Spokes
Manufacturer
Local In Transit
Supplier
International Transit
…increasing challenges in demand volatility, multiple order
channels, faster fulfilment expectations and inventory utilisation
Web andMobile
CallCenter
Catalogue & Field Sales
SpecialOrder
Kiosk
Customers
E-commerceDC
Manufacturer
MarketPlace
Returns
3PLs
3rd Party suppliers and services
Customers
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3 areas which retailers need to take note of and
respond to
How Customer demands are driving supply chain
developments and our understanding of Blokker
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Considerations and how IBM can help3
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#1 – Optimise and Model for success
Be sure that your supply chain strategy
locks in competitive advantage not cost
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With the rapid growth of omni-channel retailing, it is critical for long term
success that retailer supply chains have good design and inventory
optimisation
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Supply Chain strategy influencing store layouts, formats and organisational
design
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#2 – Delivery Impact on Profit?
Multiple options of fulfillment expected,
much of it being free – profitability is critical
as volumes increase
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What is the right balance on basket size and charging ?
….Illustrative examples for next day delivery
Delivery Charge
£5.95
£4.95
£5
£10
£6.95
£3.99
£3.95
Free
£8.95
Ba
ske
t Siz
e ?
Scenario
- Product value £20, with Gross Margin of 30% or £6
- Argos/Toys R us Delivery charge difference is £5
- What is happening ? Is one operating at a loss,
breakeven or enhancing gross margins ?
- How does this effect price and value perceptions ?
Brand 2
Brand 3
Brand 4
Brand 5
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What is the right mix of collection and delivery ?
….Illustrative examples for click and collect % of online orders
% o
f O
nlin
e O
rde
rs c
olle
cte
d f
rom
sto
re
45%
31%
86%
65% *
Ave
rag
e
2014
35%
13%
Fo
rec
ast
2017
71%
5%
(1) Argos figure includes Check and Reserve *
(2) Country information sourced from Planet Retail Click and Collect report, store information from company reports
Click and collect forecast to double in 3
years, key capability to manage working
capital and operating costs for Omni-
Channel retailers
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#3 – Beware of DisruptorsNew entrants and others see supply chain
differently, focus on agility and innovation
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New subscription models being offered to drive loyalty and predictability,
however adoption will impact on existing operating and financial models
$99
$79
€9.95
£9.95
$39
£60
£70
$119
$99
£60
(1) Prices checked October 2014
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Amazon extends Prime to non-perishable Grocery items, in 48 US states –
supply chain economics very visible in its approach
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3 areas which retailers need to take note of and
respond to
Customer demands are driving supply chain
developments
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Considerations and how IBM can help3
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drive omni-channel revenue, improve customer satisfaction and profitability
Cross Channel
Dropship
Guided selling
Order management
Cross channel sales
Endless aisle
Save the sale
Markdown reduction
Additional revenue streams resulting from system and process integration of online and Brick & Mortar
Ability to sell merchandize that cannot be stocked profitably at each store
Stock out reductions realized through expanded inventory access on existing assortment
Expanded enterprise view of available inventory and sourcing flexibility improves conversion, improves turn and avoids markdown
Expanded assortment
Incremental revenue from expanded assortment from drop-ship agreements with 3rd party partners
Order modification
Self service
Order fulfillment
Revenue from order modification / retention versus order cancelation and / or returns
Consumer self-service capabilities reduce agent assisted service contacts
Improved order fulfillment rate
Dynamic Bundling
Ability to create dynamic bundles of products and services, and personalize these products and services through configuration
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#1 – Optimise and Model for successBe sure that your supply chain strategy locks in competitive
advantage not cost
#2 – How does delivery impact profitability ?
Multiple options of fulfillment expected, much of it being free –
profitability is critical as volumes increase
#3 – Beware of DisruptorsNew entrants and others see supply chain differently, focus on agility
and innovation
In summary, Customers are demanding more from retailer supply chains,
considerations for success
All of which requires a connection between supply chain strategy
and operational capabilities for long term profitable success
