Derek OCarroll, CEO at Brightpearl, on how some retail innovations may be future game-changers but automation is THE tool of the here and now for retail SMEs
It's easy to get enticed by the latest news on how artificial intelligence will revolutionise retail or how consumers are clamouring for AR-based m-commerce apps. While it’s smart to follow and track the “future of retail” discussions, it’s just as important to live in the now. Put simply, SMEs need to ensure their business is running smoothly and is profitable before spending capital and resources on touchscreen mirrors in changing rooms.
To start with, a key “now” strategy for small to mid-sized retailers is to implement automation technology – no longer reserved for the big retail players like Amazon – to streamline their unique back-office operations. Within their retail management system,merchants can create an endless array of rules that define specific workflow actions and conditions to process automatically as opposed to manually performing each function. Not only does this result in greater customer satisfaction, but it also reduces operational costs by performing back-office tasks faster, more efficiently, and with fewer staff.
Let’s look at three areas of operations and day-to-day back-office processes that truly benefit from automation technology.
Automation: Pick, Pack, Ship
Let’s say there is a SME retailer, a sporting goods company – we’ll call them Outer Heaven – that stocks over 1000 SKUs at three warehouses located across the country. With an average of two SKUs per order, Outer Heaven’s team fulfills around 400 shipments per day.
Under manual operation conditions, when an order came into the system it took several staff to perform the back-office processes of pick, pack, and ship. Management also discovered that staff were not consistently assigning order fulfillment to the closest warehouse to the customer, costing the company unnecessary shipping costs and longer delivery times. Some manually generated order confirmations slipped through the cracks, which resulted in increased order status requests from customers and added stress on the company’s support staff.
By setting up specific automation rules designed to support Outer Heaven’s unique operation, these formerly tedious challenges were resolved. Customers received packages more quickly because orders were automatically routed to the appropriate warehouse, and multichannel support enabled automatic updates of inventory levels at the appropriate warehouse in real-time. Both management and the customer could view the order status online, while a status email was triggered and sent to the customer once the package had been dispatched, along withtracking information.
Finally, while not a huge portion of its business, Outer Heaven sells internationally, so an exception rule was set up to manually review international orders to prevent fraud.
Automation: Doing More with Fewer Staff
Soon after setting up the automation rules, Outer Heaven introduced a new product line, adding another 40 SKUs to its offering. Thanks to the savings made in operation costs, it had the budget to put towards several social media marketing campaigns, which boosted sales for new products and increased exposure for the brand.
Even with the increase in orders and sales, Outer Heaven was able to continue to meet demand and provide superior customer support with fewer staff than before. This
automated efficiency enabled two members of the order processing and packing department to be promoted to sales, furthering their competitive edge and market reach.
Automation: Flash Sales
The topic of flash selling has been a contentious one over the years, with some outlets achieving great success while others experience significant drops in profit margins and strains on their business. This is why strategic consideration and thorough planning are required before merchants flip the flash-selling switch.
For Outer Heaven, its motivation for running a flash sale was to entice and attract new customers.
Once it had the products picked and determined its promotion channel and awareness campaign, the flash sale got the green light and the company was ready. So was its back-office operation, because of automation.
The results were extraordinary. The average 400 sales per day jumped to 1000 in just eight hours.
Orders still sailed through the system with ease, assigned to the appropriate warehouses and shipped out the same day. Customers all received order confirmations that their new goodies were on the way. Inventory was updated in real time, and purchase orders were generated to restock the quickly sold goods.
Outer Heaven had 600 new customers who had the potential to become Outer Heaven fans after experiencing excellent service, quick receipt of their orders, and a new awareness of its products.
The icing on the cake was the few hundred orders that came through with additional products at full price, driving up the merchant’s upselling metrics and potential for increasing CLTV.
No additional staff were needed to more than double their shipments in a few short hours. But its marketing team now had a proven power tool it could use to grow their business and expand their reach, while controlling costs and staying profitable.
When it comes to what customers truly want – their desired product in stock, same or next day delivery, a smooth buying process, and knowing when their order is expected to arrive - automation technology enables SMEs to deliver it all. It streamlines their back office while reducing operation costs and increasing their bottom line, freeing up money, time, and resources. Once this is in place, these retailers will be able to invest in new technologies that will keep their businesses relevant and competitive far into the future.