A new type of holiday is becoming increasingly popular with retailers — but it’s one that requires extremely careful planning before launch.
The monster success of Amazon’s Prime Day and Alibaba’s Singles Day has inspired other retailers to launch their own “holidays.” Online home furnishings giant Wayfair, for example, held its second “Way Day” in April.
Chain Store Age spoke with Chris Sarne, senior director, global retail strategy and solutions management – omnichannel, Oracle, about how retailers can lay the foundation for a profitable sales holiday of their own making. These limited-time, proprietary sales events can drive significant short-term increases in purchase volumes and customer traffic, both online and in-store.
Following are excerpts from Sarne’s thoughts on retail sales holidays, and how retailers can apply solutions and strategies to maximize profitability, operational efficiency, and customer satisfaction.
What is prompting the increasing popularity of retailers creating their own holiday sales events?
The success that Amazon has driven with Prime Days is taking retail by storm. Retailers want to drive traffic to their sites and stores in a similar way. They want a level of brand enthusiasm where they can count on customers buying during the timeframe of the sales holiday, and off the timeframe, as well.
Retailers can drive this type of brand enthusiasm by offering things like deeper discounts, general discounts, or free shipping. You want to drive people to your site who are not looking for a specific product. We like to call it the ‘drive to interaction,’ where a customer buys something and tell everyone about the fact they bought it.
How should a retailer prepare for a sales holiday?
Preparation for a sales holiday is extremely important. Retailers need to think about exponential growth. This means volume-testing solution responsiveness for interactions with customers that will see an exponential spike. You need to be aware of the ‘Oprah/Ellen’ effect – your site could crash or you might run out of inventory. Retailers haven’t accounted for increased traffic levels resulting from the new public relations and social messaging out there.
One retailer Oracle spoke to had real trouble with spikes in visits and shopping cart activations. Their systems couldn’t handle it and customers were forced to use an online waiting room and anticipate their shopping, which made for a less than optimal customer experience.
Retailers need to rethink their commerce technology and order management solutions. You need to process orders and get products to warehouses. Throughput is king. Shipping clear, or getting all orders on the warehouse floor out before the end of the shift, will make your CFO happy.
Also, omnichannel retailers must look at store operations. Emphasize to associates that a sales holiday may not just be about handling increased store sales, but about doing things like managing buy-online-pickup-in-store orders. Properly educate and equip them to handle every task.
If your stores perform distribution at peak periods, make sure you have all your packaging, like bags and tie-ins with FedEx and UPS, ready. Leverage every corner of your enterprise to help support the supply chain when heightened sales holiday demand comes in.”
What kind of tools can help retailers promote a sales holiday?
Traditional advertising is super important, but social media is the best way to deliver promotion of a sales holiday. Word of mouth helps drive enthusiasm. Facebook and Twitter feedback on the sales holiday shopping experience is immediate and raw. You can get stats on how well your promotions are doing. You can take sentiment analysis of social chat about your brand and put it into your CRM system.
Your best customers can use social media to become brand ambassadors. They are differentiators in retail. People become loyal to a brand at a certain point, so they are looking forward to the next item in a product line. You gain loyalty by selling good items with a quality customer experience.
How much of a factor is speed of shopping in a retail holiday?
“People will do pre-shopping. They will know what they want to buy and expect to execute transactions as soon as the clock hits midnight. Catalog quick order solutions have existed for 15 years – they allow customers to log into an e-commerce site, enter the SKUs of products they want to buy, and check out.
“Having a clear view of inventory is important to this type of omnichannel success. Any omnichannel customer journey built in error or out of sync with inventory will not have an accurate available-to-promise.”
Can you discuss inventory management further?
It starts with planning and knowing what the customer wants. Retailers must look at customers individually.
Retailers need to create a segmentation and microsegmentation process, and build it into their planning. They need to know what customers want and where they want it. They may want to pick up online orders in the store, with the immediate gratification of getting them the same day. This means orienting store staff not only to sell products, but also for pickup and fulfillment. There are new ways associates must deliver the brand promise.
Another inventory avenue to explore is having vendor drop-ship partners. You can capture otherwise lost opportunities with drop-ship networks and fulfillment. You don’t have to store or situate inventory. Again, it’s about throughput.
In addition, retailers need to have returns anticipation. In apparel, 30 to 40% of items purchased come back. It’s sad but true. Retailers need to look at what comes back balanced from a historical perspective. A customer may typically order three different sizes of an item and send two back – you can create a profile and predict which two sizes will come back. You may be able to find a store where you can resell them at full price.”