Small Business Retailers: 5 Tips to Prepare for Success
August 27, 2015
This guest blog post is by Grainne Shaughnessy, Content, PR & Events Manager, at Brightpearl.
Year over year, more and more of the retail community has shined a light on the business benefits of a multichannel model. In 2014, eCommerce sales grew to over $1.4 trillion worldwide. Meanwhile, retailers that were historically online only, were opening flagship stores to extend their reach into the physical store experience.
It has come down to having a presence where your customers are shopping, from online marketplaces like eBay and offering a user-friendly mobile shopping experience to brick and mortar stores and pop-up shops. If you’re thinking of expanding your physical retail operation into new online channels but are still relying on spreadsheets and pivot tables, things could get out of hand fast. The following tips will show you how to prepare for channel expansion and how to best utilize a cloud based retail system designed for multichannel retailers.
Tip 1: Start With Accurate Inventory Counts
One of the biggest advantages to a multichannel retail system is how it connects all your on-hand inventory in real time. You have visibility into all the products which are ready to sell in your store or online, together in one place. When one piece sells, it updates that data across the board in real time. This prevents double-selling of a product and can also trigger a new supplier purchase order when stock gets too low.
The key to inventory accuracy is starting with a clean slate. By doing a stocktake you're able to confirm exactly what you have in stock. This is when those excel spreadsheets can come in handy. Export your product list to include:
Current in stock quantity, including zero quantities (for a single warehouse)
Warehouse location (if appropriate)
It’s recommended you halt actions such as receiving supplier purchase orders, allocating inventory, fulfilling orders, or picking items for shipment during the stocktake. To get a truly accurate inventory list you need to prevent disparity in your numbers. Once your stock take is completed, any necessary corrections can be entered into the spreadsheet, or if you have one uploaded into multichannel retail system. During this process you can discover and tag damaged goods that are not fit for sale, thus removing them from stock. Now you’re starting with accurate inventory levels.
Tip 2: Review Your Returns Policy
Customer expectations of an in-store buying experience differ greatly from what shoppers expect (and even demand), when it comes to returns of online purchases. Most in-store return policies are typically straightforward. Returns are accepted as long as they accompany the receipt and exchanges are made within thirty days of purchase (there are exceptions to this, of course, including sale or discontinued items).
When customers buy products online, especially apparel purchases, there is an inherent risk that the item will not fit properly or the color they anticipated was not what they received. Having a flexible returns policy will provide your customer with peace of mind, knowing that if it doesn’t work out, they can return it free of charge and you’ll even cover the cost of shipping.
If you are expanding from a physical store to an eCommerce offering, this is a policy that will require internal reviews on the best approach, but one that can increase your competitive advantage. You’ll also need to determine how it impacts your cost of goods sold (COGS) from channel to channel by accessing your reports, which can be broken down by channel, SKU and customer. A multichannel retail system has the ability to connect your inventory and accounting transactions, so that data is always available at any time. This readily available insight allows you to make adjustments as needed in your pricing for both shipping and inventory helping you to maintain margin and business goals.
Tip 3: Review Your Customer Service Procedures
As with your online returns policy, online purchases require different interaction procedures compared to in-store purchases. For a physical shop, your focus is on having knowledgeable and friendly staff that are readily available to assist customers on the shop floor, or on the phone. Delivering a pleasing shopping experience and providing an expedient check out process is paramount.
Online sales can require that you extend your customer service reach even further, including sending order confirmations via email. Once the products have been shipped, an added touch is sending email notifications, along with a tracking number and, if a partial shipment was required, makes it easy for customers to monitor the receipt of their order.
You may also consider incorporating chat support, which is an added cost but an option preferred by online buyers. It’s important to continue providing some form of support, possibly this could be extending your phone support hours to evenings and weekends when people are likely to be buying from your eCommerce store.
Tip 4: Review Your Pricing Structure by Channel
The decision to increase or lower prices is a tough one, which can add complication to your business. When expanding into marketplaces, like eBay, it’s wise to review your pricing structure within your product line, review profit margins, COGS and sell-through numbers. Shoppers often turn to marketplaces to save money and get a cheaper price.The result may show that for certain products, you’ve got wiggle room to be more competitive on price online while retaining your current retail pricing for in-store. Or you might find that a product is selling well on eBay in Europe, for example, so you may want to think about increasing the price due to the increased demand. This flexibility is made easy within a multichannel system, which has the ability to assign different pricing based on the sales channel.
Monitoring these metrics will give you the data to make changes as needed, up or down, based on your sales volume and if competition heats up on certain product lines. If you’re selling more of a certain brand or product line, you may be able to negotiate better terms and pricing with your supplier, or even drop shipments to avoid carrying stock on sporadically purchased product.
Tip 5: Plan for Employee Training
From impulse buys to major purchases, purchases can hinge on factors such as familiarity, confidence and trust, which often boils down to how competent and knowledgeable your staff are. If employees don't know about policy changes, differing processes between channels, and of course the benefits of a particular good or service, chances are the consumer won’t convert. Therefore, some training or tuition is usually required.
Before you hit the “go” button to a launch a new sales channel for your retail company, all players need to be on deck. Assessing your employees’ skill set, especially in the area of computer literacy, will enable you to plan for the time needed to get everyone up to speed on the multichannel system, managing the ecommerce store, and monitoring your marketplace sales.
By incorporating this knowledge into your company’s operation manual, or creating checklists you have an opportunity to empower your staff’s personal investment in the success of your company’s new expansion and growth.
To learn more download the free white paper, “7 Reasons Every Growing Retailer Needs a Multichannel System.”
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Brightpearl is a supplier of multichannel retail management software for SMBs, allowing you to manage your accounting, orders, inventory, CRM and sales channels in a single cloud based system. Trusted by over 1,300 retailers worldwide, it enables you to gain the efficiency and insight you need to grow your retail business.
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