Just-in-Time Merchandising Can Help You Meet the Needs of the 'Now Economy'
Today’s "Now Economy" demands unprecedented adaptiveness in retail planning cycles. In the era of “I see it, I want it, I’ve got it,” traditional seasonal planning can no longer meet accelerating shifts in consumer expectations. As a result, retailers are now adopting vendor-fulfilled models like drop-ship and marketplace — but while this represents a step in the right direction, it’s only one component of a data-driven retail planning solution.
To create an agile supply chain that responds to shifts in consumer demand, retailers need to forecast trends, stock inventory consumers actually want, place that inventory where customers will find it, and still profit after shipping costs. That’s why retailers need to adopt an approach in which fulfillment-model decisions are driven by data on customers’ actual purchasing behavior.
Fast-Changing Customer Preferences Have Made Traditional Seasonal Planning Models Obsolete
Retail planning was previously focused around a few key trends each year. Aside from holidays like Christmas and events like Black Friday, retailers might seek to capitalize on weather-driven trends, like warm coats in winter; or seasonal peaks like home improvement and lawn care during the summer. Across all these cases, planning teams were optimizing for a few major sales events per year — and spending months preparing for each of them.
Today, patterns in consumer demand have become much more challenging to predict. In the Now Economy, it’s no longer practical to anticipate shifts in buying behavior months in advance. Customers have become more fickle, with the expectation that they can find any product they want online, or through another vendor. In response, many retailers need to embrace just-in-time merchandising.
Just-in-Time Merchandising Increases Efficiency and Accelerates Planning Cycles
Back in the 1990s, one of the pioneers of a just-in-time approach was Dell. The company carried no in-house inventory, but instead built its supply chain around relationships with specialty manufacturers. Customers would customize their purchases during the ordering process. When an order was placed, Dell would order each component from its manufacturer, assemble the final product, and ship it to the customer. This kept inventory overheads minimal, while enabling Dell to deliver highly personalized products.
In today’s Now Economy, this needs to evolve to a just-in-time merchandising approach to keep retail adaptive and cost effective. For example, say you’re planning to carry some fancy $40 candles for the holiday season, but need to choose between 100 different artisan candle manufacturers. How can you make sure you’ve got the inventory customers want? By leveraging just-in-time merchandising — i.e., bringing a few candles onto your website every few weeks and checking which ones sell most on a season-adjusted basis. And you can do this all on a weekly basis, rather than a seasonal one — provided you connect the components correctly.
Connecting 4 Key Components Will Accelerate Your Planning Cycles and Enhance Your Efficiency
To leverage timely consumer feedback and make rapid, informed merchandising decisions, you need the following four components:
- Access to a commerce network in which suppliers are already active and available: This will enable you to wire up the digital plumbing and quickly execute inventory pivots. And the more extensive your commerce network, the better. More qualified suppliers help you have the right products available at the right time.
- A proper content tool: Such a tool makes it easy for team members to publish each product’s name, picture and description to your website.
- Flexibility in which vendor-fulfilled business models you use: You can shift between drop-ship, marketplace, and even traditional supply chain models, depending on which creates the least overhead for a given item.
- Analytics on your sales: You can look back and compare each vendor’s performance on a seasonally adjusted basis, then use that data to drive next month’s iterations.
With these four key components in place, you’ll increase your adaptiveness and accelerate your planning cycle by allowing consumers themselves, through their purchasing behavior, to help your team make up-to-the-minute inventory decisions.
Bryan Dove is the CEO of CommerceHub, a provider of cloud-based ecommerce fulfillment and marketing solutions for large retailers, marketplaces, consumer brands and their suppliers.
CEO and Board Member with Global Product, Marketing, and Technology expertise. Transformational leader with multiple examples of delivering outsized returns through customer-centric product and marketing strategy combined with creating unique company cultures that attract and retain best in market talent. Successful operation of businesses operating in over 100 countries and facilitating more than $25Bn sales per year.