Thanks to e-commerce and vast quantities of data, retailers now have a better insight into what consumers are looking for in different locations. With this knowledge, brands are able to tailor the choice of products they sell in store, ultimately making smaller, more frequent orders of products. This streamlined process is an important step to creating a profitable, future-forward retail experience.
FierceRetail spoke with Heath Wells, CEO and co-founder of NuOrder, about how retailers are changing the way that they order products for in-store sales and what this means for long-term growth of a brand.
FierceRetail (FR): What types of retailers (or brands) are changing the way they order products for consumers?
Heath Wells (HW): We’re seeing the greatest change in product ordering among retailers who would previously order seasonally, prepurchasing products far in advance of actual selling time. This seasonal buying is typical of fashion, apparel and kids/toy stores. For those wanting to consistently stay relevant to possible changing trends, however, it can be difficult to commit to inventory so far in advance.
FR: What are the benefits of smaller orders more frequently?
HW: Smaller, more frequent orders come with less risk and only call for small cash outlays. In addition to stocking inventory faster, it also reduces the time between order and sales to end consumer, allowing retailers to keep up with and take advantage of recent trends.
FR: Are there any drawbacks to buying this way?
HW: There is a potential for brands to not have what buyers want because they didn’t lock in order in advance or they ran out of stock and didn’t plan ahead to reorder inventory in time.
FR: What technology is making it easier for retailers to stock and restock in this manner?
HW: B2B eCommerce platforms make stocking and restocking easier for retailers who want to order in small and frequent increments. These platforms give retailers access to real-time inventory data, including what products are available and ready to ship, allowing them to place orders right away. They also offer an online self-serve ordering portal for retailers to place orders as products become in higher demand. Lastly, real-time data allows both brands and retailers to uncover trends they can capitalize on.
FR: What data is important for retailers to note if they want to start stocking fewer items?
HW: Retailers already have a good amount of data about what and how much sells during each season. In order to adopt this strategy though, they need more than just their own sales data; they need to be better connected to their wholesale partners to understand how and when they sell. For example, if your wholesale partner sells all their inventory preseason and you wait until in season to place orders, you may be out of luck. However, you can circumvent this by forming a relationship with your wholesale partner so that they know your buying patterns and you understand their selling strategies.
FR: Can you give examples of a retailer who is making this work?
HW: Target’s new small-format model is a great example of a retailer experimenting with smaller batch orders. In cities, retailers want to use their space more wisely, which means shrinking the stockroom to allow for more room on the floor. Quick ordering will allow Target to carry smaller amounts of targeted products, better using their space.