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Home » Blogs » Think Tank » Inventory-Based Merchandising: Five Strategies to Meet Consumer Demand

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Inventory-Based Merchandising: Five Strategies to Meet Consumer Demand

March 15, 2022
Zohar Gilad, SupplyChainBrain Contributor

Global e-commerce is booming, and in the U.S. alone, it soared up more than 32% in 2020. Although the pandemic certainly contributed, online shopping isn’t just about a single moment in time. The constant, rapid growth in demand is a massive shift in buying behavior, where consumers can conveniently shop from anywhere and expect near-instant delivery to their doorstep.

But supply chain bottlenecks, snafus and shortages collide with consumer demands. Billions of dollars of goods sit outside ports. There’s a shortage of raw goods, truckers and warehouse space. And delayed availability and shipping drive up expensive returns and support costs.

Regardless of the supply chain problems, consumers have little patience for retailers that cannot keep up. Brand loyalty continues to decline, and shoppers easily click over to the next Google search result to get the goods they want at a price they can afford and as fast as they can get them. Retailers cannot expect, and simply won’t get, much patience from consumers.

One strategy helps separate the leaders from the laggards in this whirlwind: inventory-based merchandising. Merchandising — presenting goods in the most favorable way to drive sales — is not new. We’ve seen this ever since the first market merchants arranged attractive combinations of colors and collections to inspire consumers to click and buy. Now with the aid of artificial intelligence and some proactive thinking, inventory-based merchandising can move fast and intelligent enough to meet consumers’ delivery demands. Here’s how:

Offer real-time, immediate transparency into availability and delivery. Customers looking for a specific item or brand need to know availability and shipping information immediately, not at the end of the checkout process. If a search result turns up “not available,” then instantly suggest something similar and available sooner. It’s a window of opportunity to grab shoppers before they bolt. The last thing merchants want is a canceled order or bad review from a disgruntled customer because they were over-promised and under-delivered.

Elevate items available in a full run of sizes and colors. Just because it “may” be on hand does not mean it should be promoted or presented aggressively. Initial search results and promotions should prioritize items available in all sizes, colors, or other variations to maximize the chance of a match. The best merchandisers bury goods that aren’t available for most buyer needs. Why? Chances are another item will satisfy their need, and there’s less likelihood of “not available for me” heartbreak.

Use location-based filtering. Although consumers can shop anywhere, retailers can no longer source from anywhere. Using advanced technologies to filter based on location, savvy retailers can promote goods that meet a buyer’s needs and are available in warehouses close to that buyer. In general, a shorter delivery route has less likelihood of hiccups, gets goods to consumers faster, and is more profitable. Enticing shoppers to pick up in-store or order from a closer warehouse reduces delivery shopping costs.

Apply automation to make better decisions. Once only for the most prominent merchants, technology is now available off-the-shelf for retailers of all sizes. It dramatically decreases the cost and time of experiments. Technology, like AI, helps merchants make decisions and test beliefs and creative endeavors. AI models learn over time, and the data is available for you to see the cause and effect of new efforts.

Promote, source and fulfill with local partners. American Express, sponsors of Small Business Saturday, found that 80% of adults plan to shop at small businesses this season. Consumers like the idea of shopping small and locally, but they also demand convenience. There’s a massive opportunity for online and down-the-street merchants and artisans to partner in consumers' specific regions and promote their goods.

E-tailers aggressively compete and spend to get traffic to their virtual doors. But now, and quite possibly forever, delivering on those promises requires nimble, active and technology-enhanced inventory strategies to optimize the investment.

Zohar Gilad is co-founder and CEO of Fast Simon.

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