As the pace of eCommerce increases daily, eTailers are feeling the threat of competition from giant eTailers such as Amazon–who live just a click away. As market share is lost, eTailers are often forced into dropping prices to attempt to sway customers back. Price wars never end well, and without a comparable arsenal your business has no chance of competing. Winning is not an option. It is bringing a knife to a gunfight. How then can your business compete against a Goliath with nearly unlimited resources?
(photo of amazon DC with automation)
We will explore the ways your eStore can compete, and even win, against the likes of the Goliath Amazon –using similar technology.
What are the technologies Amazon utilizes? Let’s look at some of the ones they use and explore comparable technologies available on the market you can employ with your small eBusiness budget.
- Autonomous Robots – Pick-Shelf Routing
(image Kiva Robot sell to Amazon headline) https://www.therobotreport.com/the-technology-gap-left-by-amazons-acquisition-of-kiva-systems/
Amazon acquired Kiva Systems, a robotics company in 2012 to solve a substantial challenge with which they were faced. Due to Amazon’s massive selection, selling in excess of 1,000,000 SKUs, the process of locating items for customers orders required Pickers to walk miles and miles a day. Instead of the picker being required to walk to each rack, the Kiva robots routed the racks to the picker, saving the Pickers hours of valuable time.
The fact is, your eBusiness likely sells a fraction of this number of SKUs–making the process of picking items far easier. To compete effectively, your business should develop a well thought out plan-o-gram layout for your store, or bin framework for your DC, both which will aid the ability to eSell effectively. And if you have product you manage and sell online, you are either already a Brick and Mortar, or DC fulfillment seller.
Many new robotics companies now offer fulfillment aiding solutions depending on your companies particular size and needs.
When developing your store’s plan-o-gram consider customer flow–and place less negligible items in the pathway of where shoppers must walk. Themed merchandising provides suggestive selling. These will aid in your ability to locate items sold online.
To determine bin location, review sales to determine what are the top selling SKUs and place them in a quick-pick area located most proximate to the processing station. It is best to organize your product by Category or other “Department” to make the process of locating an item less timely and cumbersome.
Most product sales will follow the 80/20 rule which states that 80% of your revenue comes from 20% of your SKUs, so keep close track of what is moving and rotate top selling items into this area.
Time the picking process of an order so that you can factor this time into your fulfillment costs. Create a process flow-chart and identify each business process handling type. This will help categorize each “touch” made to the product and will help identify bottlenecks within the fulfillment process.
- RFID – Wireless identification of Products
Amazon announced a joint project with Target, VF, and Saks Fifth Avenue looking to expand the business cases for implementing radio frequency identification (RFID) within their supply chain. “RFID is a fascinating technology,” said Dave Clark, Amazon’s senior VP of worldwide operations. “…we are excited to invent new processes and technology using RFID to enhance the experience for customers through better inventory predictability, faster delivery and, ultimately, lower cost.”
Ok first off–what is RFID?
As with many of you–I had heard of the acronym RFID, but I didn’t really understand what it was, or how businesses with inventory could benefit from it.
RFID stands for Radio Frequency Identification. Simply put, it’s technology which allows a business to tag their products with a sticker containing an antenna and microchip hidden inside. The microchip is programmed with a unique serial number which provides incredible benefits.
(Image of Tag with inlay showing)
So what are the advantages of RFID? Let’s look at some of the core benefits.
Inventory Management – Inventory presents a challenge for nearly all businesses. The reason? Inventory is constantly moving and never stagnant. Up to now, businesses only viable method for inventory auditing has been barcode/QR code scanning.
The process of counting inventory using barcodes however, is slow and labor intensive since barcodes must be counted on-at-a-time, requiring each item’s tag first be located, then the barcode scanned. Using barcodes to manage inventory has prompted the industry average of 2 inventory audits a year. These audits often require a complete staff many hours, late nights, and weekends to complete, in an attempt to minimize the disruption of day-to-day business. Or companies must outsource this task to companies such as RGIS (http://www.rgis.com), for those companies who do not have the manpower.
RFID forever changes inventory auditing by allowing businesses to audit 100’s of items per-second, eliminating disruption, and promoting frequent audits. RFID’s ability to read products which are out-of-sight (even in boxes), means that you will have far more accurate (99%), fresh inventory data than ever before. How much faster? An inventory of 50,000 products takes one person approximately 30 minutes to complete.
Why am I only now hearing about RFID if it is so incredible?
RFID has been around for many years, however the technology was far too expensive to implement mainstream. In fact, in 2001 the cost of a single RFID tag was $1.10 cents each. In 2003 Richard Moscatiello an electrical engineer forecasted out this cost 10 years in a report he published. http://www.moscatiello.net/Forecasting%20the%20Unit%20Cost%20of%20RFID%20Tags.pdf The cost per tag now is between 5 and 10 cents based upon volume. This is prompted mass market adoption and has lead to forecasters to estimate the RFID market is expected to grow by $31.8 Billion by 2023.
Today inventory accuracy is paramount. We now live in an omnichannel world–a world in which products must be listed for sale simultaneously to both physical and virtual shoppers. This reality has presented substantial challenge enough to prompt many Retailers/eTailers to keep separate In-Store and Online inventories.
Because selling product omnichannel exposes sellers to a host new challenges, not the least of which is overselling. –And overselling means bad reviews, angry and lost customers, refunding payments, employee hours dedicated to resolving the problem, and many more.
Buying is Selling
If you fail to buy successfully, chances are you will sell unsuccessfully too. Buy well and you’ll likely sell well. Leveraging RFID allows you to be far more targeted when buying, since sellers are able see exactly what items are in stock, and not placing “guess” orders. This visibility allows eTailers to expertly manage inventory often avoided, such as product sold in thin stocks, specialty items, limited runs, exclusive lines, and niche products.
Large retailers typically target the mass market, therefore to effectively compete, make your inventory targeted. To be targeted means you must know where you are aiming. This means you must know your customer. Why do they buy from you? Are you the only one that sells what you sell? That fulfills like you fulfill? You can’t sell to the customer you don’t know. And no one hits the bullseye by accident.
Many long hours are spent confirming the receipt of purchase orders being received, as well as customer orders being shipped.
RFID’s sightless identification capability allows for automatic identification of Purchase Orders, providing confidence of complete receipt of purchased goods. And since the tags generated for the Purchase Order correspond back to that Purchase Order, item level identification of critical data such as Expiration Dates, Lot #’s, and Costs tied to the serial number of your product, previously not possible, since barcodes are not serialized, but rather simply identify the item or “SKU.”
Incorrectly fulfilled online orders account for over $43 of cost to online merchants. These errors cost eTailers time and money, let alone a bad taste in your customer’s mouths. https://multichannelmerchant.com/blog/whats-cost-fulfillment-error-business/
Integrations – (Image of a puzzle)
ETailers today have a large and varied technology stack to choose from to manage each component of their eBusiness. Modern ecommerce platforms such as Shopify (www.shopify.com) and Bigcommerce (www.bigcommerce.com) allow for API integrations which provide a seamless experience between each partner involved in your eSuccess. The more contiguous flow of all business processes, the easier it will be for your eBusiness to scale.
Software platforms such as Shipstation (www.shipstation.com) and Smartshyp (www.smartshyp.com) provide tools which allow eTailers to get shipping rates, book, and generate shipping labels.
Tools such as Stitch Labs (https://www.stitchlabs.com), SKUIQ (http://www.skuiq.com), and Accumula (http://accumula.com) provide a critical role in helping manage the connection between each inventory platform, and software platforms such as Simple RFID (www.simpleRFiD.com) bring the incredible benefits of RFID to the eCommerce world and ensure that inventory systems have good accurate data to operate from.
And software platforms such as Grow (www.grow.com) provide a consolidated analytics platform to view all aspects of your eBusiness including social media, inventory, accounting, sales and marketing, and more.
Whatever tools you choose to be part of your technology stack it’s critical that these puzzle pieces combine to create a seamless user experience.
When winning against the likes of a Goliath like Amazon you can’t fight fire with fire. You must leverage tools and processes which allow your business to be on the leading edge of technology, allowing your business to run leaner and more nimble than a giant.
You must make your eBusiness a stark contrast from the “we-sell-everything” model, and instead make yours the “you-can-only-find-here” model. As Malcolm Gladwell puts it in his book David and Goliath, “Giants are not what we think they are. The same qualities that appear to give them strength are often the sources of great weakness.” It is the very business model these giants employ which leave them vulnerable to the nimble Small eTailer attack.
Become a specialist in your field. Learn how to masterfully operate your sling and stone and you too can successfully defeat these giants on the eBattlefield.