For years, trust between a customer and a vendor on the internet was about payment security, making sure that credit card and similar information was safe and kept out of the hands of cybercriminals. More recently, the focus of that trust has shifted, according to Nicola Kinsella, senior vice president of global marketing at Fluent Commerce, an eight-year-old Australia-based company that offers a cloud-native distributed order management system.
“The last few years have seen massive changes in our culture, and values have shifted,” Kinsella told Digital CxO. “In a world that is changing – and not always for the better – trust is becoming more and more important. People crave security and reliability, even if that is just in their retail choices. We certainly see that with consumers who value retailers delivering on their promises more than ever before.”
In the highly competitive and omnichannel modern retail environment, following through on those promises means ensuring that the product a customer buys is the one that shows up at their door and that it’s delivered how and when the customer is told. Violate that trust and the customer may not come back, and cancelling an order is a huge breach of trust.
Order Cancellations are a Problem
According to a recent survey by Fluent, retailers too often are struggling to make good on those promises, plagued by ongoing sales cancellations and unfulfilled orders that are damaging the trust they’re trying to build with customers.
In its Inventory Data Accuracy and Promising report, the survey of 1,003 retailers and direct-to-consumer brands found that 38.6% of retailers cancel at least one of 10 orders, essentially regularly disappointing 10% of their customers. Only 6% of retailers and brands cancel less than 1% of orders. The top 26.5% cancel less than one in 20 orders.
“While canceling 1 in 20 orders may not sound like a lot, it means that for every million orders, 50,000 customers don’t get their goods,” the report’s authors wrote. “Given the cost of customer acquisition, it sounds like a problem worth solving. And it turns out most retailers and brands agree.”
Worldwide, 72% of retailers and direct-to-consumer brands say reducing canceled orders is important, they wrote. They’re right, according to Fluent’s Kinsella, noting both the omnichannel nature of retail and access to myriad competitors around the globe is making customers more fickle.
“Social media and social selling have opened up another world of retail for younger demographics,” she said. “They won’t seek out tried and tested retailers as much as follow products and services they desire, depending on what their algorithm feeds them. But what if they click on one of those ads and try to purchase the product they just got excited about but then it’s not available? Frustration follows and that retailer will have wasted their chance to gain a new customer as well as their advertising spend.”
Inventory Visibility is a Challenge
At the heart of the problem is the poor visibility retailers have into their inventory. Fluent’s survey found that 58% of retailers and brands have less than 80% inventory accuracy. It’s an issue that Fluent has been highlighting for several years.
“The goal is to reduce friction and disappointment in the purchasing journey for the consumer,” Kinsella said. “The earlier they know what is available, when, where and how, the better. This empowers them to make choices that suit them. Choices they can then rely on being fulfilled. It puts more control in the customers’ hands and will increase conversion rates and decrease canceled orders.”
There are a number of factors contributing to the problem of inaccurate inventory. Key among them is that many retailers are using outdated inventory data housed in enterprise resource planning (ERP) and point-of-sale (POS) systems, according to Fluent. Other challenges include integration issues with legacy systems and siloed inventory data. Moving away from those systems will help, Kinsella said.
“Don’t use middleware as an inventory tracking tool,” she said. “The same goes for your ERP software. Both are great at their respective jobs, but neither is cut out to track your inventory availability in real time.”
Look to the OMS
Distributed order management systems (OMS) are the way to go, Kinsella said. Such systems and services not only can orchestrate orders but also can take in and intelligently process inventory data at scale and virtually segment the inventory, she said. According to Forrester Research, such software gives organizations enterprise-level visibility into their inventory and manages orders, customer service, and store fulfillment.
With its own platform, Fluent finds itself in an increasingly competitive space that includes established players like SAP and IBM and a growing number of smaller and more specialized vendors. It’s also a growing global market, according to Forrester, which is predicting that revenue will grow from $1 billion in 2021 to $1.9 billion in 2026, growing an average of 12.3% a year.
“Order management has a huge impact on customer experience — even though it’s not on the ‘experience’ side of the modern commerce ecosystem,” Jitender Miglani, senior forecast analyst for Forrester, wrote in a blog post last year. “Business investments to meet soaring customer expectations for excellent experiences are driving the OMS market growth. Consumers’ expectations require near-real-time data (such as inventory availability) in the path to purchase.”
According to Fluent’s survey, improvements are happening. A key is ensuring fresh inventory data is making its way from backend systems to digital channels and right now the top 7% of retailers are sending updates every five minutes or less, with some also doing live calls rather than relying on cached data.
That said, only 26% of retailers and brands update online inventory data every 30 minutes or less and for 51% of such businesses, their data is more than an hour old.
Another step some businesses are taking is sharing inventory data with their advertising platforms, making it less likely that an ad will be showing a product that’s actually out of stock. In the survey, 24% of retailers said they are – or plan to start in the next 12 months – doing this.
All this will help businesses keep their promises to customers and keep those customers coming back for more, Kinsella said.
“Inventory data management is crucial to be able to have a continuous flow of accurate data from all sources and provide reliable shopping experiences,” she said. “It is also crucial to have this data clean to then be able to benefit from any AI solutions the retailer chooses to use on top of that.”
Techstrong TV
Digital CxO Podcast
