Online shopping is growing at a staggering rate. U.S. online sales grew by 23% in 2017, according to research firm eMarketer Inc., pushing e-commerce’s market share to 9% of all U.S. retail sales.
With this increased growth comes challenges. “As e-commerce evolves, retailers are facing new pain points,” says Stefan Weitz, executive vice president, technology services at Radial, an omnichannel technology and operations provider. “Today’s consumers are radically less forgiving than they were even a year ago.”
Future e-commerce success relies on a retailer’s ability to optimize its inventory, prevent fraud, and manage labor, Weitz says. “Being well prepared to tackle these challenges—especially during peak shopping seasons—will be the difference between succeeding and failing,” he adds. “And retailers can’t succeed alone.”
Making sure retailers have the right stuff in the right place at the right time can prove especially challenging, particularly as demand for services, such as buy online, pick up in store, rises, Weitz says. “If the retailer has physical stores, a ship-from-store option is helpful. But it doesn’t solve the inventory problem. The retailer still doesn’t know where to put inventory across the chain. Therefore, retailers still end up paying to make sure packages get to customers on time.”
However, technology that analyzes buying data to inform important inventory decisions can help retailers keep up. For instance, Radial recently launched an inventory optimization offering that analyzes a retailer’s sales and customer data, as well as its distribution in stores and warehouses down to a SKU level, he says. The system predicts customer demand, which can help a merchant determine which store and warehouse location to place products.
Nearly every retailer must also figure out how to mitigate risk from fraud. “From last holiday shopping season to this one, Radial had four times the number of potentially fraudulent transactions come through our platform requiring manual review,” Weitz says. “Now more than ever, there’s a real need for retailers to implement a fraud program that focuses as much on making sure they convert the good orders but also stopping the bad ones.”
Radial’s fraud prevention tool, for example, helped footwear retailer Shoe Carnival decrease its manual reviews by 40% and bring its automatic order acceptance rate up to 99%, he says. And because Radial pays 100% of the fraud activity that does get through its platform, Shoe Carnival’s chargeback rate immediately dropped to $0.
Managing labor to handle e-commerce orders is another challenge, Weitz says. “There aren’t many options,” he says. “Retailers with physical stores can implement ship-from store to leverage the down time that associates have to pick, pack and ship —but again, that’s not solving the bigger issue around having human capital during peak seasons in the distribution centers.”
Many retailers find it easier to outsource to a third-party such as Radial that has the resources and knowledge to improve their online fulfillment operations, Weitz says. “Radial is the second largest e-commerce fulfillment provider in the country, with 25 warehouses and 7,000 warehouse workers—scaling to 35,000 at the holiday peak,” he says. “We know how to do this.”
Throughout the years, Radial’s technology has helped many retailers—such as Everlast, Shoe Carnival, and Godiva Chocolatier—navigate and overcome these type of issues.
“Being an e-commerce operation that customers want to come back to is a very different challenge than knowing how to take a digital order and convert it into a package at somebody’s doorstep in a timeframe and cost that is acceptable to you and them,” Weitz say. “Retailers need to understand that in 2018, they aren’t going to be able to do it on their own.”