Omni-Channel Challenges and Best Practices

ECOMMERCE TOWN HALL 6.24.14 | Ted McCaffrey

PROPRIETARY & CONFIDENTIAL

AGENDA

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Why Omnichannel

is a Must

Leveraging Physical Stores

Prioritizing Initiatives

Omnichannel Challenges and Best Practices


OMNICHANNEL DEFINED

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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.


Shift: Consumers Have Redefined Commerce…

Retailers and Brands Need to Respond


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


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


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


Omnichannel Operations is a Must.


LEVERAGE YOUR STORES

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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


KEYS TO EXECUTING SHIP FROM STORE

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• 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


• 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

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• 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

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INCREASE REVENUE AND IMPROVE MARGIN

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*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


20-40% Average increase

in incremental ecommerce revenue

SALES INCREASE - WHY IS THIS BELIEVABLE?

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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.


Time

Inve

ntor

y A

ccur

acy

100%

90%

80%

70%

50%

1 year 0

60%

HOW DOES THIS HAPPEN?

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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


SFS FILLS THE GAP – 20/30%

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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


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.

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33% Average percent of items shipped

are inactive


SERVICE LEVEL AGREEMENTS (SLA’S)

We are at least two (shipping) zones closer by utilizing the stores, Joel Anderson, president of walmart.com 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.

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80% 1-Day Transit Time, 96% 2-Day Transit

“ “


Low

High

Hard Easy

Ease of Implementation

Bus

ines

s Im

pact

PRIORITIZING OMNICHANNEL INITIATIVES

• Business goals

• Inventory characteristics

• Average price point

• Retailer type

• Store footprint / configuration

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In-Store Pick-up

Associate Ordering

Ship From Store


OMNICHANNEL BREAKDOWN

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• 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


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.

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Omni-Channel Challenges and Best Practices

Technology

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