According to the latest research, there’s a "ghost economy" of $1.75 trillion in revenue lost to retailers world-wide each year due to out-of-stocks, overstocks and returns. What would you do with your share of that nearly $2 trillion? Depending on the size of your store and the percentage of your stake in those collective losses, that’s practically another revenue stream fluttering away.
Losses on stocking issues and returns have always been part of retail operations and will never truly go away: they’re simply impossible to avoid 100% of the time. BUT you can minimize their impact on your operations while improving profits with the right tools and forethought.
Big Data brings big returns
This was the topic of a recent National Retail Federation article. While they focused on overstocks, out-of-stocks and returns for large national chain retailers, the concepts ring true for college stores like yours: if you aren’t using a good business intelligence tool to carefully analyze your data, you're contributing to that lost $1.75 trillion. “Retailers are taking bold steps to handle overstocks with better forecasting on the front end,” they report. NRF went on to quote Kevin Sterneckert, chief marketing officer for OrderDynamic.
“The first thing is the retailer needs to be able to connect the data they have. In the last 10 years, I’ve never had a retailer tell me they need more data. What they need is to understand what to do about the data that they have.”
—Kevin Sterneckert, chief marketing officer for OrderDynamic
NRF is suggesting strategies like using analytics to better stock outlet stores, but business intelligence has just as important of a role in managing inventory at your flagship store. Tools like MBS Systems Dashboard can enable you to analyze your data and better forecast your needs so you can make informed business decisions and see how merchandise is performing in real time. With the help of pre-built or custom reports, your store can track data including last received date, books and merchandise sold by specific date range and hourly sales by store, so you can effectively move merchandise between locations, clear out overstocks with clearance sales and stay on top of fast-moving merchandise so you don't sell out.
Be fraud conscious
Your store always runs the chance of having to handle returned merchandise. There is cost associated with this, but there's even more cost when some of your return orders are fraudulent.
Be sure to protect yourself when managing online sales. Add a "fraud smart" message to the pricing policy or on your course materials and merchandising pages. Use an address verification system to check for fraudulent addresses. Be mindful of fake hotel addresses or orders that ship to re-mailing services.
And on legitimate orders, oversight is key. The IHL report states returns cost North American retailers $246 billion, and erroneous merchandise was a major factor.
“As digital commerce continues to grow, needless returns also continue to grow,” Sterneckert said in the NRF report. Sterneckert mentioned a contest his company held in which shoppers submitted photos of erroneous, mismatched or damaged orders they received: “In all, we had more than 400 images of ghost economy examples over just a few weeks."
You don't need the budget or resources of multi-million dollar national chains like Walmart or Nordstrom to be able to minimize lost revenue. With the right tools and strategies, stores of any size can pull dollars out of that lost "ghost economy" and into the real world.