Ted McCaffrey of eBay Enterprise presented his talk on Omni-Channel Challenges and Best Practices at our eCommerce Town Hall in June 2014. Learn why Omni-Channel is a must, how to leverage physical stores as well as prioritizing initiatives for future success.
3. PROPRIETARY & CONFIDENTIAL
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.
5. PROPRIETARY & CONFIDENTIAL
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
6. PROPRIETARY & CONFIDENTIAL
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
7. PROPRIETARY & CONFIDENTIAL
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
9. PROPRIETARY & CONFIDENTIAL
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
10. PROPRIETARY & CONFIDENTIAL
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
11. PROPRIETARY & CONFIDENTIAL
• 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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12. PROPRIETARY & CONFIDENTIAL
• 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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13. PROPRIETARY & CONFIDENTIAL
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
14. PROPRIETARY & CONFIDENTIAL
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.
15. PROPRIETARY & CONFIDENTIAL
Time
InventoryAccuracy
100%
90%
80%
70%
50%
1 year0
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
16. PROPRIETARY & CONFIDENTIAL
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
17. PROPRIETARY & CONFIDENTIAL
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
18. PROPRIETARY & CONFIDENTIAL
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
“ “
19. PROPRIETARY & CONFIDENTIAL
Low
High
Hard Easy
Ease of Implementation
BusinessImpact
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
20. PROPRIETARY & CONFIDENTIAL
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
23. PROPRIETARY & CONFIDENTIAL
LEGAL NOTICE
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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/
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