Dirty Data: The Trillion-Dollar Retail Problem

How many times have you seen a product you love on social media, clicked on the link, and found out it’s out of stock? Or you’ve ordered something online, only to receive a notification that your order has been canceled because the item was oversold. This happens more often than you think, and it’s a huge problem for both consumers and retailers. In fact, the IHL Group estimates that retailers miss out on almost $1 trillion in sales annually due to out-of-stock items.

A recent survey of 1,003 retailers and direct-to-consumer brands revealed that 58% of them had less than 80% accuracy in their inventory data. That means there's a 20% likelihood that the product a consumer wants to order is not actually in stock. Sometimes, the product is available somewhere else, whether in-store or at an external retailer, but it doesn't show up online. That's even worse. The customer is disappointed, and the retailer misses the opportunity to sell the item they have, and no one wins. This is clearly an issue, but how can it be solved? 

Inventory Visibility

Managing stock and data from different places, such as warehouses and stores, is a challenge for retailers. Since the inventory changes constantly, they need to keep up in real-time to know what and where products are available. Retailers can achieve this by using modern systems for inventory and order management that rely on data, ensuring accurate and timely inventory. This will greatly lower the risk of mistakenly selling too much or too little of a product.

Retailers can use a data-driven approach to align sales channels with the latest inventory levels. These systems allow retailers to easily identify trends and adjust their inventory accordingly. Implementing a proper system is crucial for maximizing revenue. This method can be beneficial during high-demand periods such as back-to-school or holiday seasons. This is because it allows retailers to match their intense marketing efforts with their fluctuating inventory levels.

Clean Data

Once businesses can ensure that the quality of their data is sorted, they can start investing in new systems and processes. Integrating modern inventory systems with legacy systems and workflows can be complex. To do this successfully, there needs to be a careful plan, extensive staff training, and a dependable platform chosen. This can achieve a consistent and accurate data flow across all platforms, which will enable interaction with customers based on the most current information. Here are some other areas teams should focus on:

• Demand Forecasting: The ability to predict and meet consumer demand is crucial. By analyzing data from previous sales and fulfilled orders, businesses can uncover patterns of demand. This insight ensures that products are available where they sell quickly. Focusing on fulfillment in areas with less foot traffic. Website search queries can inform retailers of consumer interests. Enabling them to devise effective fulfillment strategies that cater to actual customer needs.
• Capacity or Network Planning: The strategic placement of products is a cornerstone of maximizing distribution efficiency. Utilizing data to assign stores and suppliers ensures that the network is operating at peak performance. This approach guarantees resources are in place for a robust distribution that can adapt to the demands of the retail industry.
• Distributed Order Management Solution (OMS): In the quest for operational excellence, a modern OMS stands out as an indispensable tool. It's the starting point for achieving a balance between demand forecasting and network planning. Look for an OMS that promises a swift implementation, boasts a flexible platform, and offers scalability to grow business. It can streamline operations to deliver on a brand's promises.

There are many ways to use data to create a better customer experience while still adding to the bottom line. Narrowing down what is important to a retailer typically ends up being important to the end customer. By smoothing out the buying process sellers can sell more, and buyers can buy enjoyably.

In today’s market, where cost of living pressures makes customer loyalty more precious than ever, it's even more important to remove antagonizing hiccups from the process. The answer lies in optimizing inventory allocation, distribution, and fulfillment strategies, using data-driven methods. By doing so, retailers can avoid the trillion-dollar problem of dirty data and out-of-stock items, and instead delight customers with products they love and can access anytime, anywhere.