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Five Smart Steps To e-Tail Inventory Management

Furniture World Magazine


It’s a path to success!

Operations Management by David McMahon

About a year ago, my wife decided that she wanted to redo our kitchen. The first stage was dreaming and visualization. To get help, she googled “kitchen planning”. She chose to use Ikea’s Home Planner as it seemed the best for her needs. As her design progressed, she started to source specific items. These included appliances, cabinets, flooring, lighting, wall tile, furniture, countertops, and trades people. She googled many hours into the night.

Her product search worked basically like this, she started general and then got specific. At first she browsed broad categories of merchandise (online and then in-store). Then she narrowed it down to specific vendors and exact models or styles. Once she found her favorite items, she googled vendor model numbers. Local lists of retailers that carried these items appeared on Google. She visited these sites and signed up to receive their e-newsletters. She then checked each piece to determine the best price and availability of merchandise. When she needed more information, she either used live chat or called the retailer’s customer service number.

Now she was ready to buy. She bought from several different retailers. In some cases, she visited their physical stores to make some purchases. In other cases, she bought directly from the web site for convenience. The majority of her purchases came from local retailers where both their merchandise and prices were listed on their web site. However, two appliance purchases were made from a retailer based in New York. All items shipped directly to our home in San Diego for a total of $59 in delivery charges.

This example is typical of the shopping behaviors of 30-something home goods consumers. It illustrates why your web inventory strategy should be the most important part of your overall advertising program because it will determine your future traffic and sales success.

  • Google should be your most important advertising network.
  • Getting your product listed on Google quickly is vital. It increases the chance that consumers will visit you when they are ready to buy, increasing your traffic.
  • Consumers know how to use room planners. You need one and you need to learn how to use it.
  • Consumers do shop online before they visit a store.
  • Consumers search for specific vendors, models, features, and styles. An up-to-date catalog of the merchandise you carry needs to be on your e-tail site. Your customers may get lost on your site (and disappointed) if you display merchandise that you no longer carry.
  • Your customer will be comparing you to your competitors who carry the same models.
  • Consumers will buy online and offline. However, in many cases, they will find you first online.
  • There is little loyalty to brands or retailers. Top customer service, availability of product on your site, fast delivery, and great prices are all expected. If you do not deliver that, consumers will use Google to find someone that does.
    So, how can you take advantage of these lessons, beat your competition, and capitalize on higher traffic that leads to better sales? By executing the 5 SMART steps.

The June/July, August/September and October/ November 2010 issues of Furniture World Magazine, included instructions on how to use the 5 SMART steps of retail inventory management to increase GMROI (Gross Margin Return on Inventory Investment). These articles are archived on the furninfo.com website. To request links to these articles, just email editor@furninfo.com. Now, to help you attract today’s consumers using their preferred media, the internet, here are the 5 SMART steps of e-tail inventory management...

1. Show in-stock inventory on your e-tail site.
2. Make communicating and buying convenient.
3. Automate and integrate.
4. Rework and innovate.
5. Touch your audience.

SMART Step 1
Show your in-stock inventory on your e-tail site.

If the consumer does not find you on the first page of Google, you don’t exist to them. Take this test: while in your physical store, google your top 10 in-stock best sellers using the model number only. Does your store come up on the first page? If it does, congratulations, you are probably working hard to catalog inventory on your website. If your store is not coming up when you google your model numbers, you are losing traffic because consumers are visiting your competitors rather than you when they search for these models.

Google matches search terms with relevant web site content and takes into account the proximity of the store and consumer. Those with sites that display the inventory information that consumers want now have a better chance of getting their business. What information do consumers want? Price, in-stock status, color options, warranty information, size, shipping, related items, purchasing, delivery options, and more.

SMART Step 2
Make Communicating and Buying Convenient.

Today’s consumers want real-time information on your merchandise. They don’t like to wait. However, they will often need your assistance while shopping online. Here are some essential online inventory components that consumers use.

Telephone inquiries. There should be a telephone number on your website that connects consumers to someone in customer service. In this case “customer service” refers to someone in sales. Offline retail has a bad habit of equating customer service with problem resolution. Customer service, to a customer, means help with anything. Your website should have an 800 number that routes consumers directly to your sales professionals. This way they can assist the online shopper properly. You can also easily track, manage, and review calls that come from this number on your website.

Email or text inquiries. Your customer should be able to easily see your email address or text number. A salesperson should respond in less than 12 hours to any email inquiry. Text responses should be immediate during business hours.

Live chat. Live chat allows your customers to speak with you via keyboard while they are looking at your e-tail site. In an age of multi-taskers, consumers often prefer this over email or the telephone. It’s similar to online texting.

E-newsletter sign-up. This allows consumers to get information sent to them about your latest specials and ideas. People will often sign up in the dreaming stages of the purchase cycle.

Room planners. Consumers in the market for room projects will spend more time on e-tail sites that have room planners. As a result, there is a greater chance that they will purchase from those stores.

Related products. Consumers want to see the matching ottoman with the chair and the correct rails that go with the bed. This is a key component when helping them shop and will increase your average sales.

Wish lists. When people are going through the final selection process, they routinely add and change products. Allow customers to do this themselves on your site. Wish lists are quotes. Quotes lead to sales.

Buy now. The purchasing decision will often come at a time when the consumer is not in your store. A husband and wife may just say one evening over a glass of wine, “Let’s just buy this before someone else does and save ourselves the hassle of going down to the store again.”

SMART Step 3
Automate and integrate.

There are two ways to move your merchandise and pictures from your offline database to your online e-tail store. Your goal should be to maintain a mirror-like image of your in-stock inventory on the internet.

You can hire people to update your site daily. They would need to review and compare your offline and online inventory constantly and change information as needed.

The second option is to automate and integrate your inventory. Basically the way to accomplish this is to create a communication system that allows your software to talk with your online shopping cart. The data and pictures are extracted and uploaded from your data server to your web server. Newly stocked items are added. Changes are made. Out of stock items are removed from your e-tail store – automatically.

Customers get up-to-date information and the content is made available for Google to advertise your product.

SMART Step 4
Rework & innovate.

I’m sure that many of you would agree that the return on traditional advertising such as TV, radio and newspaper, has been declining. Countless furniture businesses still spend money on the same old advertising media while their traffic and sales have declined. I’ve also seen some businesses innovate themselves and get a higher ROI on their advertising. This is due to the fact that consumers’ focus has shifted - to internet media. Retail and e-tail are merging together as one.

Retailers that have grown the most over that past 10 years are those that have innovated on the web. A prime example of an inventory carrying retailer that has succeeded is Zappos. It has grown to over a billion dollars in sales while others have shrunk. There are two critical transitions that led to Zappo’s success. One is that they reworked their business model and web site to display only in-stock inventory.

Initially, this decreased the amount of products and vendors shown. However, it assisted their customers by focusing them on what was available for immediate sale. Zappo’s sales tripled after they started carrying and showing the right inventory on their e -tail site. The second transition was that Zappo’s changed their core business values, establishing an out of this world customer service model. The words “WOW” and “delivering happiness” are infused throughout their entire organization.

Great retailers like Zappos continually rework themselves and innovate. This is why they grow and prosper. If you haven’t made a similar change to your business and advertising models, now is the time to do so.

SMART Step 5
Touch your audience.

The more often you “touch” your customers with value, the higher your sales will be. This makes happy customers. Communicating with value means: helping them to navigate the various steps of their shopping experience. You make their buying decision easier by helping, rather than selling. If you do this, your customers will become your friends. Your friends will advertise for you for FREE. They use the best media ever: word-of-mouth advertising.

There are some really fantastic ways that you can use your web based inventory system to help you accomplish this. To demonstrate how you can touch your audience with value, follow this scenario:

  • Mrs. Smith is sitting in her home office. She thinks that she would like a more stylish look. Like that one she saw on her favorite TV show. She starts to look around – at friend’s houses, at various stores, and through general web browsing.
  • Mrs. Smith googles the specific brands, models, styles of desks that she likes.
  • She finds one exact desk displayed on your e-tail site listed on the first page of Google. (value touch 1)
  • She clicks the link. She is taken directly to that desk’s individual landing page in your e-tail store. (value touch 2)
  • Mrs. Smith sees the related items (bookshelf, chair, and lamp) that go with the desk. (value touch 3)
  • She then has a question about the type of wood that the desk is made of. She clicks on your live chat button. She is connected instantly to a customer service representative at your store. In another minute she has her question answered – solid wood mahogany. (value touch 4)
  • She is not ready to buy yet. She wants to get a list of pricing for all the pieces (the desk, bookshelf, lamp, and chair) so that she can discuss it with her husband. She adds all the items to your online wish list. Then she prints out her “quote”. (value touch 5)
  • Mrs. Smith discusses the room with her husband. They are not sure how the items will look or fit. So, they go back to your online store. They use your room planner to get a better idea. They then print the diagram out. (value touch 6)
  • Mrs. Smith signs up to your VIP email list on your site in case you have any upcoming sales. She would also like to check out your e-newsletter.
  • Mr. and Mrs. Smith have some final questions on the delivery or pick up service. They easily find your telephone number and email listed on every page of your site. They call your customer service number and talk to a designer, Lynne. Lynne helps them with the final information that they need. Lynne offers to email them the info, as well, so she gets their contact info while on the telephone. (value touch 7)
  • Lynne sends a thank you email to Mrs. Smith, recaps the telephone call, and gives the hours that she is working. She invites them to drop by or call again. (value touch 8)
  • Mr. and Mrs. Smith go on vacation and forget all about their home office and your store for a couple of weeks.
  • You send out a monthly follow-up email to Lynne’s customers with open quotes/wish lists. Mrs. Smith gets this reminder. It contains a 5% off offer valid for one month. Mrs. Smith prints out that email. (value touch 9)
  • The Smiths get all their paperwork together and visit your physical store. They ask for Lynne, by name. (value touch 10)
  • Lynne and the Smiths discuss the room. They review the room plan (online at your store if needed). They look at the actual product. The sale is completed. (value touch 11)
  • After the merchandise is delivered you email your daily customer satisfaction surveys. Mr. and Mrs. Smith receive theirs. The Smith’s are happy. (value touch 12)

Today, consumers initiate their shopping experience. They start with Google. If they find you, you have a chance of getting their business. If they do not find you on Google, you are invisible. If you give them information and “WOW” them, your word-of-mouth advertising will sky rocket.

Use these 5 SMART Steps of e-tail Inventory Management to help you achieve higher traffic and a better return on your inventory and advertising investment.

David McMahon is a management consultant for PROFITconsulting, a division of PROFITsystems, Inc. For a complimentary discussion and demonstration of how you can become a better retailer and e-tailer, contact David at davidm@profitsystems.com.

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