May 9, 2016

Real-time retail inventories and the customer experience

Mikko Nordlund

Principal Consultant, Tieto

Customers expect advertised products to be available when they need them, but real-time inventory is still a frequent stumbling block for many retailers. Fast delivery times and guaranteed availability is increasingly important to customers - and a way for Nordic retailers to gain competitive advantage in the global eCommerce.

Recently, a friend of mine discovered that their dishwasher was broken. Like a true do-it-yourself handyman, he first tried to repair it himself, equipped with a headlamp and screwdriver. After working on the appliance in an awkward position for two evenings as his wife and kids watched over his shoulder, he was ready to buy a new dishwasher. So he went online and started looking for discounts in nearby white goods stores.

He found a good promotion, went to the store and said that he wanted the exact machine from the promotion and was ready to purchase it right away. Guess what? It was not available in the store and the delivery would take several daysway too long. My friend next asked what is available right nowhe was not going to return home empty-handed nor spend another second on his knees with a headlamp and screwdriver. Luckily, there was another, more expensive model availableand the pressure of a growing pile of dirty dishes forced him to skip price negotiations all together.

In this example, the customer experience would have been greatly improved if the goods promoted online had been actually available in inventory. Do you remember the four P’s of the marketing mix? Product, price, place andpromotion? Place is still a frequent stumbling block for eCommerce as many companies have underestimated the importance of logistics and availabilityor the urge customers have to get their hands on the products they have ordered.

Why is real time inventory increasingly important to customers?

As competition between retail companies continually increases and the number of different purchase channels constantly grows, fast delivery times and guaranteed availability are ways for Nordic retailers to differentiate themselves from global eCommerce players and to gain a competitive advantage. At the end of the day, a major part of eCommerce is the sale of physical productsfood, electronics, clothing, you name it. And getting the product is often time critical.

For my friend with the broken dishwasher, online commerce played a key role in product and store selection. Because items were listed in an ongoing promotion, he believed that the dishwasher he wanted was actually available. However, many companies do not have truly real-time inventories. Antiquated IT systems and processes are one common reason that companies do not have up-to-date inventories.

By ensuring that inventories are well stocked and match promotions, businesses not only enhance sales, but also improve the overall customer experience.From the customer perspective, the basic rule of thumb should be: do not sell items that you cannot deliver on time and in full!


If interested in other 4P’s in real time retail, please have a look at Paulus Maasalo’s blog on dynamic pricing.

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