Predictive Analytics, Omnichannel Fulfillment Help ALDO Group Be More Profitable
With 3,000 points of sale in over 100 countries around the world, ALDO Group, a designer, manufacturer and retailer of footwear and accessories, sought a solution to help it better optimize its inventory across its online and offline sales channels. After a thorough vetting process, ALDO announced that it was partnering with Celect, a predictive analytics and inventory optimization solution for retailers, to help optimize its order fulfillment objectives.
In this interview with Total Retail, Marc Chretien, director of e-commerce operations at the ALDO Group, addresses how the retailer is making better, faster and more profitable order fulfillment decisions through the use of predictive analytics.
Total Retail: Why is ALDO Group investing in tools and technologies that can better enable omnichannel fulfillment of its orders?
Marc Chretien: As a fashion retailer focused on delivering a quality product to customers in a time-sensitive manner, the ALDO Group is constantly looking to evolve and adapt its supply chain technology. The digital and omnichannel shift is critical to the survival and success of retailers, which is why the ALDO Group devotes significant resources to its technology projects. Technologies like the ones provided by Celect allow the ALDO Group to optimize certain inventory position opportunities that emerge when dealing with an omnichannel fulfillment network.
The ALDO Group’s goal is to get product to its customers as quickly as possible. Celect's technology helps by consuming demand patterns across the entire network and then identifying opportunities at the specific product level in different locations. The Celect Fulfillment Optimization module helps ALDO Group more accurately detect customer demands in real time, and provides it with the ability to intelligently leverage store inventory to fulfill online orders.
TR: What behaviors have you seen from your customers that led you in this direction?
MC: Customers have become very flexible in their purchasing patterns and have embraced omnichannel, leading them to expect these options from retailers. A customer that shops online today may shop in-store tomorrow, and they expect the same product options, pricing, etc. To that end, inventory placement needs to become more flexible. A strategy that ALDO Group has adopted is placing the most possible inventory in-store (vs. distribution centers) where both the walk-in and the digital customer can access it.
The Celect technology is a great compliment to that strategy and allows ALDO Group to more accurately predict customers’ demands in real time and, subsequently, determine which stores have inventory opportunities. This provides the company with the ability to intelligently avoid selling from locations that are more likely to sell out, while targeting stores more likely to experience a lower demand for a particular item. In 2017, a substantial amount of the ALDO Group’s e-commerce transactions were fulfilled from its stores, effectively creating hundreds of mini distribution centers servicing customers more rapidly.
TR: What are the challenges associated with omnichannel fulfillment? How is ALDO Group's use of Celect's analytics solutions helping to address those challenges?
MC: The ALDO Group is a complex organization that offers products through various channels, including in stores, on mobile and online.
An issue for companies operating with an omnichannel fulfillment strategy is how to intelligently leverage store inventory to fulfill online orders. We observed that a specific product could be both overselling and underselling in two different regions at the very same time. Customers’ buying habits are becoming increasingly unpredictable and, as such, it's often difficult to accurately forecast demand down to a precise location.
The Celect Fulfillment Optimization module consumes demand patterns from across the company’s network and identifies opportunities at the specific product level in different locations, reacting in real time with fulfillment decisions. The technology is helping us intelligently leverage our stores’ inventories to fulfill online orders, all the while ensuring that there's optimal stock for customers visiting our brick-and-mortar locations.
TR: What level of training is required of your store associates to get them ready to start fulfilling online orders in-store? How is this task being worked in with their other responsibilities?
MC: The ALDO Group has been fulfilling online orders from its stores since 2007. The process is simple and has been added to the daily tasks for which a store associate is responsible for. Store associates are notified of online orders via an electronic platform and, once received, are responsible for preparing the order to ship. This includes locating the product in-store, ensuring it's clean and ready for shipment, preparing the shipping label and mailing out the product. This often occurs in a matter of just a couple hours, and overall, averages less than 12 hours, including overnight hours and even peak periods.
Store associates play an integral role in Aldo’s success both in-store and online, and these tasks are incorporated into a new associate’s training. In some cases, a store may have a dedicated associate that only processes online orders, while in others the tasks can be completed by a store associate or a stock person.
A key to the success of the ALDO Group’s omnichannel fulfillment initiative is the company’s customer-centric approach that places the customer's happiness as the top priority, whether it be in-store or online. The fulfillment of online orders from our stores is just another way for us to meet the needs of our customers.
TR: What are the business benefits that the ALDO Group hopes to realize from its omnichannel fulfillment efforts?
MC: At this point in the ALDO Group’s transformation away from pure retail, the optimization of its omnichannel fulfillment efforts will give the company more structural speed and allow for more flexibility in its inventory initiatives.
One of the larger business benefits concretely observed is incremental brick-and-mortar conversion. With the Celect Fulfillment Optimization module, the ALDO Group is able to analyze in parallel the advanced “Celect logic” against the simpler “distance-based logic,” which would see orders being fulfilled from the store closest to the customer. With this comparison, we've successfully tracked brick-and-mortar sales that would have been lost had online orders been fulfilled using distance-based logic, as opposed to leveraging the analytics provided by a system like Celect. As such, the orders of two customers, not one, can be filled.
ALDO Group is excited to continue its growth with Celect through predictive analytics and inventory optimization. We will continue to leverage the technology’s real-time calculating ability across thousands of customer orders and factor in countless more data points to make its systems operate even more efficiently. The fulfillment optimization initiatives put into place to date have proven very successful, and have produced strong results for the company. We look forward to continuing this positive trend and further optimizing the efficient fulfillment of customers’ online orders from across our global network.