Sales peaks can wreak havoc with omnichannel operations. However, stress-testing your operations can help to optimise the return you get from these events.
With end of financial year (EOFY) sales getting closer, most retailers will already be preparing for peak demand across their operations. But how does this impact a retailer’s omnichannel presence? Retailers need to test that all of their channels can scale up to the challenge, rather than finding out on the day of their next sales peak.
Omnichannel has amplified the costs to revenue and reputation of being unable to meet consumers’ demands. If ERP systems or supply chains fall behind or experience an outage, the effect is now multiplied across a range of channels — some of which, like social media platforms, lend themselves to news quickly spreading of the retailer’s failure.
However, retailers with fully integrated omnichannel platforms will have much more data with which to predict how sales peaks will unfold. That same data may even help retailers optimise peak periods by identifying areas of surplus inventory, then using the sales events to drive demand in these particular areas.
Stress-test omnichannel or face sale-day surprises
The goal of omnichannel is to increase the volume and speed of sales. For retailers, this can cut both ways during sales peaks, when inventory levels and supply chains are most likely to be stretched beyond capacity. An outage to online sales platforms typically costs upwards of $8,000 per minute in revenue — and according to some estimates, that lost revenue makes up only 20 percent of the total cost to the business. Delays in product delivery or customer service responses, which happen all too often when traditional ERPs are overloaded, can rapidly gain critical mass on social media as customers air their grievances online.
When this happens during a major event like EOFY sales, retailers may find customers moving in droves to competitors if a retailer’s omnichannel strategy can’t deliver. Not the sort of result any retailer wants from a tactic intended to boost market share and brand loyalty.
To ensure sales events run as planned — even if sales peaks are beyond their most optimistic expectations — retailers should run load tests on all their channels well in advance. These tests should not be limited to just front-end sales platforms, either; back-end inventory and fulfilment can impact customer satisfaction long after a sale is over. Retailers should pay especial attention to how ERP and supply chain automation perform under extreme loads. Cloud-based ERPs scale their processing power much faster than traditional on-premise solutions, but even they should be tested rigorously so that retailers understand what sort of speed, consistency and costs to rely on.
What should these survivability tests look like? A useful test simulates high demand across all channels, ideally varying which channels experience the largest and most volatile demand. Retailers must also make these tests a collaborative exercise, bringing in their ERP and logistics providers when devising the tests and ways to overcome any breakdowns during sales peaks.
Optimise sale events with omnichannel data
There is, however, another way to prepare for peak demand: using omnichannel data to guide sales strategy. The strongest, most scalable ERP systems already gather this data from all stages of all channels, from point-of-sale terminals to warehouse inventories. With this data, retailers can identify what products and channels are most likely to bear the weight of sales peaks and take one of two approaches to get ready:
- Increase supply to meet demand: If certain products already prove popular among customers, they’re the most likely to run out when a sale event occurs. Retailers can either build up additional inventory manually, or raise the threshold at which their ERPs automatically provision extra stock. That way, top-selling products will likely remain available throughout sales, no matter the peak in volume.
- Influence demand patterns: If a certain product still has surplus inventory, why not adjust the sale event’s strategy to focus on clearing out that stock? Cloud-based ERP systems provide a more comprehensive, real-time snapshot of retail performance than ever before. Based on this intelligence, retailers can use events like EOFY sales to drive more demand to less-popular products or incentivise less-used channels. This approach reduces excess stock, improves margins, and raises the durability of omnichannel infrastructure during a sales peak.
To effectively prepare for peak demand, retailers need ERP systems and front-end channels that can scale up in real-time to meet volume. That much has been clear ever since the start of e-commerce and omnichannel retail. But the most successful retailers will be the ones who use the data from ERP and points-of-sale to turn sale events into a means to optimise inventory and increase margins. Doing so turns the very nature of peak demand on its head. With the right data in hand, sales peaks can make omnichannel operations more sustainable, not less.