What will it take to truly connect inventory management systems between brick-and-mortar stores and ecommerce (and still grow)?

Retail has come far from brick-and-mortar locations in shopping districts stocked with goods to satisfy foot traffic. It transformed regularly over the past 100 or so years from highly localized, independent, single shops that served a tiny geography to incredibly complex inventory management beasts.

These are only a few of the major shifts retail has gone through:

  • Mail, catalogs, and call centers extended the reach of stores beyond their towns
  • Online brands that grew enough to have stores of their own
  • Brands abandoning physical retail altogether or scaling it way back
  • Outsourcing models with a drop-shipping, 3PL, or 4PL partner
  • Omnichannel fulfillment offering up every product, in every channel, regardless of the physical location

If the terrain changes, so must the tires.

We explored the evolution of the customer’s experience in a previous article. As with everything though, if the presentation has changed, the technology behind it needs to as well. 

This new connected inventory management model can’t be successful with segregated systems and antiquated practices. To keep up, the backend must be modernized.

Retail isn’t dead; it is just evolving into another form, and the tactics and order management system need to support that. Modern retail delivers whatever the customer wants, wherever and whenever they demand it by utilizing 5 concepts and systemic inventory management systems to connect in-store and ecommerce inventory as a seamless omnichannel experience.

#1: Connect back-of-house inventory management to POS

What is seen can be sold.

Point of Sale (POS) solutions were designed to automate functions at the register. They went beyond a simple cash register and allowed for more information to be presented to the floor team.

POS was an incredible evolution for retail shops from the introduction of hand scanners and the wide use of UPCs to automating store inventory fulfillment and bookkeeping tasks.

Most of these systems haven’t significantly evolved since the mid-’90s though. Many are still on-prem, isolated, and lack integration with warehouses and third parties. Even many mom-and-pops use a payment processing solution like Square. But, addressing inventory management and sourcing issues within these systems is crucial to truly connecting brick-and-mortar to ecommerce profitably.

If the retail store is part of your ecommerce fulfillment strategy, it shouldn’t be a data island. You’ve made a big investment in your inventory. Don’t miss a chance for your team to sell it!

  • “It’s out of stock, but it’s at our store across town”
  • “You’d still like it, we can ship it from the warehouse”
  • “We’re out of stock, but our supplier has more and it can be shipped directly, fast”

Demand comes through many channels. It should be addressed with every asset available, and that requires inventory management systems with the expected in-store functions, engineered for the speed and precision of an ecommerce warehouse. 

 

Learn more: See how to deliver efficient, accurate in-store operations like BOPIS for a seamless customer experience every time. Read Psycho Bunny’s story.

#2: Rethink all inventory as “available”

Tear down (inventory) fences and manage all inventory as one. Geo-fencing is an antiquated retail model.

There was a point where products could be “sold the wrong way, in the wrong channel”. Retail inventory would be virtually “fenced” off from ecommerce. In extreme cases, the product would even be “geo-fenced” to ensure cross-regional sales could not occur.

Try to imagine a retailer today not wanting to sell to you because you were in the wrong ZIP code and your allotted inventory was exhausted!

The market craves a zero-turn connection between in-store and ecommerce. Now, goods are available to promise, or they aren’t. 

Data sharing, no excuses

Going beyond that, access to your supplier’s inventory – or even the original manufacturer’s – has never been easier, so there’s no excuse for fences. Data sharing has quickly gone from specialized paid service, to tricky manual integration, to an out-of-the-box feature. In the process, retailers think of channels as paths of demand as opposed to strict guardrails that shouldn’t be violated. 

Connecting in-store and ecommerce will require technology like Bright Order, our order management software that combines enterprise inventory with intelligent functionalities. For example, configurable rules-based routing, efficient transfers, and pre-ordering will give the customer what they want with the highest degree of fiscal responsibility. 

The highest value on inventory is when it’s sold to the customer quickly. Stop getting in the way of that.

Make All Inventory Available to Sell

Talk to Deposco about how to quickly connect all your inventory seamlessly.

#3: Save on shipping; let the customer choose

Ship when it’s needed; no faster.

When things arrive before they are needed, we have to store them. Either we incur extra actions, like put away, and retrieval, or they remain on the docks waiting for their intended purpose, like a cross-dock or releveling. 

In operations, Just-in-Time (JIT) is attempting to time the arrival of a product – finished or raw material – to its intended time of consumption. We think about JIT on the replenishment or manufacturing side, but we don’t generally consider it on the inventory management and fulfillment side.

We restock the warehouse ahead of demand based on lead time. Then, in turn, we send trucks for store replenishment aligned to seasonal cycles.

The concept also applies to outbound fulfillment, although it’s often neglected or completely ignored. 

Do your customers really need that product the same day, next-day, or 2-day? 

  • It’s costly to the business to ship it that fast
  • The customer doesn’t always need it that fast
  • Waste is the result – time, storage, and money

In the past year, customers who prefer same-day or next-day shipments decreased from 18% to 10%. They’re de-prioritizing the need for speed in exchange for environmentally friendly options, convenience, and predictability.

If consumers give you a week to ship, take the savings.

The business saves if you can slow down fulfillment or move it closer to the customer. Sourcing from a location closer to the customer can easily shave 10-15% off the shipping cost. Not to mention, expedited handling usually incurs special waving runs and inefficiency to hit SLAs the customer doesn’t need. 

Let the customer choose their must-arrive-by date, similar to how most retailers place their own purchase orders. It might be surprising how many opt to save on shipping vs. get it immediately. That restraint translates to consumer savings, too. 

Does your inventory management system have the features and flexibility to support those options? 

Deposco Bright Order isn’t just about routing orders based on cost consideration. Although that is key here, order management can consider when something needs to arrive and will place orders into a pre-order status. Those orders will not be released until they need to be processed. Thus, orders go out when needed vs. as soon as possible, increasing efficiency and savings.

#4: Automate to remove bottlenecks

Render unto robots!

Parallel to advances in inventory management systems, several warehouse automation tools have begun entering the supply chain space. Historically, heavy automation has been used almost exclusively in the warehouse but recently, many firms are looking at deploying a wide variety of automation in retail as well.

As stores evolve into micro (or local) fulfillment centers, the cadence of non-traditional retail tasks will increase. At the same time, many disciplines in both retail and warehousing are struggling to attract and retain labor.

In response, many are hesitant to unlock the true power in their retail real estate for fear of worsening the situation.

This is where it’s good to look at both the process demands on the store as well as the future needs of the brand. 

  • How many orders will be sent to stores, realistically?
  • What tasks do not need human intervention?
  • What is the payback period or time to value?

Small-scale picking solutions and bin systems are starting to make their way into the retail space. Self-service kiosks allow customers to place their orders or to ask for things from the back room to be delivered to a pickup window or locker. A solid vision of the customer experience combined with creative deployment will be important.

That’s just on customer-facing problems. The same automation could remove the pain of splitting retail workers’ time between serving customers, providing human experiences, and processing orders. Automating tasks that don’t benefit from oversight just helps your store associates focus on what they do best – delighting customers.

The possibilities are exciting.

#5: Let warehouse tech do what it does best, in the store

Finally, what about your tech stack? Keep it simple, but not too simple.

When stores were stores and DCs were DCs, many firms chose to pursue a two-stack mentality. Different solutions solved for narrow parts of the business. Often, these inventory management systems only worked together with a heavy lift from the IT team. And they probably wouldn’t jive well if different software providers were involved.

If everything is a “warehouse”, then why can’t you run all of your fulfillment from your fulfillment center stack?

Does your back-of-house inventory management system benefit from being “built for retail”?  It doesn’t. 

It’s better to bring your warehouse processes to the store. There are several immediate benefits:

  • You use a single WMS, ensuring the above benefits are features, not bugs
  • You use a single OMS solution, ensuring full inventory awareness and the best routing
  • You use a fulfillment-style POS, allowing for direct order entry from your retail stores

This approach has been improved by the prevalence of SaaS solutions that are designed for effortless integrations. Instead of buying into large enterprise suites that are more disruptive than “transformative”, why not acquire focused solutions as needed? Stop overspending on solutions you may or may not need years down the road. Plus, the acceptance of open API software integrations means you can create a solution that’s right for you.  

The key is to focus on ensuring that your platform will cover the breadth of your business – from warehouse to order management to stores. Keep your inventory management tech stack simple. It makes it easier for your customers to buy what you have to sell – and easier for your team to serve them without juggling a bunch of tech that doesn’t work together.

Inventory management systems to connect everything

As the lines between channels blur, technology must address the corresponding need for cost controls and higher degrees of information transparency and decision-making. Having a firm grasp on the customers you want to serve and how they like to be served will be the difference between evolving with – or even creating – the market and being left behind.

Cobbled together, on-premise inventory management systems aren’t going to cut it anymore. Focused SaaS omnichannel retail fulfillment solutions are the only way to deliver truly connected experiences that capture and retain customers. Is your software partner similarly focused on what’s needed to succeed in this new retail environment?

Request a demo to see how Deposco’s solutions easily connect your store and ecommerce inventory management. Or check out how Deposco helped Feature achieve a 52% increase in daily shipments while increasing SKUs by more than 78%.