For consumers, there’s nothing more frustrating than being told a store has 10 of the latest 1080-dpi HDTVs, only to discover on arrival that the item is sold out. Well, perhaps there’s one thing more frustrating-actually buying the big flat panel and being told it’s not available.
That’s the digital Achilles’ heel in one of the hottest features of e-commerce: buy online and pick up at a local store. Such services allow for the convenience of online shopping without delaying gratification while the product is shipped through the mail. But retail store inventory systems can’t provide accurate enough inventory status to ensure products will be available when the customer shows up to collect.
Retailers call it the “supply chain black hole.” If a product is sitting in a warehouse or stockroom or sold at a point of sale, the retailer knows the product’s exact status-assuming it’s been entered properly in the inventory tracking system and no products have fallen off the pallet.
However, when a product is on the shelf or shopping floor, any number of things can happen to prevent accurate inventory. Misplaced or miscounted stock, items held by customers in carts, shoplifting and inventory coding errors can give retailers an inaccurate snapshot of what they have available for sale.
If an online customer tries to purchase a product while it’s in the black hole, the purchase will go through online even though it may be out of stock.The supply chain black hole is a persistent challenge to retailers, but particularly problematic during the holidays-especially as more consumers turn to online shopping to avoid long lines at crowded malls. When the inventory system fails, it will likely fail on the products in highest demand. In other words, it fails where retailers and consumers most need it to work.
John McAteer, head of retail at Google, sees some retailers separating their inventory for online and offline. This can certainly improve accuracy, but it can also add an element of inefficiency and frustration. If a brick-and-mortar manager is about to run out of some ultra-popular toy-and he or she sees a store full of customers who would give anything to buy one-it’s frustrating to see 800 in the online reserve inventory.
Some stores, McAteer says, are now storing online merchandise in the field, which means they’re inventorying product in the stores’ backrooms for online shoppers. Do the store managers play by the rules or do they opt to reallocate some of the online inventory?
But online remains retail’s footnote. “Some 70 percent of consumers still prefer to buy in-store,” McAteer says. What’s attracting that 70 percent is the compelling sights and sounds of the physical store. But online actually has the edge here, with the ability to use all the multimedia capabilities inherent in the Web. Web-created videos-whether by retailers or consumers-are the latest craze.
In November, Amazon rolled out both its own Amazon-created videos-on its most popular gift products-and a program to help site visitors create and post their own videos.
“I think video is becoming a very important part of the overall online experience,” said JupiterResearch analyst Patti Freeman Evans.Bill Bass, an e-commerce pioneer who lead the Lands’ End Web efforts before the Sears and K-mart merger, and who today serves as CEO of Fair Indigo, sees fewer truly different capabilities online, as e-tailers have matured and are offering their differentiation efforts elsewhere.
“Most companies now see the Internet as having entered the mainstream and they want to start to focus on doing the things that matter to the vast majority of prospects,” Bass says. “They may do a little more video, but it will be things they already have access to,” such as video re-edits of television commercials and trade show presentations.
Another e-commerce trend that was supposed to be big this holiday season and continue growing is the influence of social neworks. It’s unclear how much of an impact they are having, but-at best-the impact seems to be indirect.”There has been a lot of talk about social shopping,” Evans says, but that talk hasn’t translated into sales. “Social and community sites still rank low in shoppers’ minds as useful places to research and shop for gifts. Only 3 percent of users who plan to buy online this holiday season-and 6 percent of those ages 18 to 34-plan to add a wish list or gift list to their MySpace, Facebook or similar Web site page to help their friends and family select gifts.”
Still, reluctance to use a specific shopping service from a social networking site does not necessarily translate into a lack of influence. Evans argues that Jupiter Research polls show consumers rarely say the social networking sites factor in at all.
The assumption for years has been that as social networks grew, the collective wisdom of the community would influence huge areas of members’ lives, from car and clothing choices to dating decisions.
Consider the possibility that the conventional wisdom may not necessarily contradict Jupiter’s conclusion. Even the best of surveys can’t indicate what influences buying behavior. It merely reveals what consumers say they believe influence them. Are the consumers being truthful? And even if they are, do they truly know what affects their buying habits?
The problem with using conventional analytic tools to examine the influence of social networks is that the networks operate so differently from anything that preceded them. They were never intended to be standalone. A viewer enters the site, reads and discusses. But the conversation then moves to IM and mobile phones.
When purchase recommendations crop up in these discussions, they’re organic. Facebook and MySpace are not intended for making sales. That happens directly on various e-commerce sites and in physical stores. In other words, the very nature of this movement makes it difficult to track. Younger consumers tend to be suspicious-rightfully so-of surveys, so they have been known to deliberately give untruthful answers.