Inventory Management is B2B’s ‘Beast Behind The Scenes’

In the world of eCommerce inventory management, there are many different orders to be considered, going out in ones and twos to many different locations. That can be overwhelming for B2B merchants looking to deliver on business customers’ expectations – getting their items quickly and efficiently, Amazon-style (without the Amazon). But doing so requires an entirely new “beast behind the scenes,” says Jonathan Bellwood, Founder & CEO of Peoplevox. Bellwood caught up with MPD CEO Karen Webster to explain what that solution looks like, how it caters to a growing omnichannel environment, and how its greatest single benefit brings with it a hefty ROI.

KW: Your business is providing a warehouse management solution for eCommerce order fulfillment. So why does eCommerce order fulfillment deserve its own warehouse management solution?

JB: The answer is really simple. In eCommerce, we have many orders going out in ones and twos to many, many destinations. So it’s a many to many relationship in eCommerce, where as it’s almost a single destination in traditional warehouse. That’s the prime difference.

Another thing is that we find that in eCommerce, there is a huge variety in products sold. Imagine if you sell 10,000 items in a day, many fashion retailers will find that 9,000 of those items are totally different. So that requires a different kind of beast behind the scenes to get that fulfilled.

KW: So eCommerce has been around for a decade or more, and eCommerce providers have muddled along. What is it that you’re doing that’s different and makes it easier for someone who’s selling products over the Internet to do that better with your solution?

JB: The first thing that we’ve made simpler is off-the-shelf connections into the other platforms of eCommerce, such as Magento and ChannelAdvisor. That makes it easy, because integration tends to be one of the issues in IT projects.

The second thing we did is make it easy to deploy. A lot of eCommerce companies don’t have IT people in-house. So having the ability to install an enterprise warehouse system is quite tricky without the resources. So we had about 30 things that we discovered were causing pain to deploy, and we just automated them. That way, we can deploy to a fairly large warehouse, never going there – just doing it remotely.

The third thing is the fact that the picking methods of getting orders out of the door are varied. If one is picking boxes on a pallet, or pallets on their own, that requires a different pick method from if they are picking single-item orders, versus multi-item orders with an average of 2.3 items – or a blend of the two.

The other picking method is, of course, done by those who have both retail stores and an eCommerce division, and they have to operate in some cases in the same warehouse. So we’ve come up with multiple pick methods that are the fastest to get products out the door.

KW: So, as you said, the omnichannel world of ordering online and picking up in store requires a bit of a different system. As you’re tracking what your eCommerce clients are asking for, is that something they increasingly want to do?

JB: We’re seeing that is growing, and becoming a large percentage of all orders going out the door. One of the benefits we do have is that, for every item and every order, we have the information related to where it came from and where it has to go. The drop-off and pick-up in store is very popular.

KW: I think that one of the things that makes a system like yours increasingly important is the consumer’s expectation of getting their merchandise very quickly. Obviously, Amazon has changed the conversation and driven the expectation level of consumers to two days, one day, same day or same hour delivery. Is there any additional requirement of your software to enable the eCommerce players you deal with to deliver on that expectation?

JB: For us, Amazon is a benefit. They keep setting a higher and higher benchmark. The eCommerce companies really want to compete with Amazon, as opposed to getting everything fulfilled by Amazon, and in order to do that, they need an efficient system. So we focus on offering a system that allows them to compete.

The whole trust thing is most important – when a consumer goes online to buy something, they end up buying on Amazon in most cases because we trust it will get delivered on time. But the products will be the same as if they bought them somewhere else. So getting the trust into the rest of the eCommerce world, with as-good delivery, is something that’s still very immature – and that’s really our focus.

KW: There’s also the question of economics – the ability for a giant like Amazon to subsidize delivery and build warehouses all over the place to accommodate faster delivery is obviously something they can do. Smaller retailers aren’t able to do it in that way. How does your software enable a retailer to manage the economics of faster delivery better?

JB: There are a couple of ways. One thing we help with is, because it’s so efficient to pick with our software, we can push back delivery or pick-up times for delivery companies. Carriers can come later and later, and that leaves for a good increase in orders. But it also enables the possibility for carriers to drop off at different hubs, rather than a central hub for the parcel company. So that later cutoff time is enabling people to get things distributed more easily.

The trend we’re seeing in pure-play eCommerce is, while they’re doing well and growing at a good rate, it’s becoming more and more difficult as the high-street retailers wake up and these guys do have the stock centrally as well as in stores.

KW: We’re obviously seeing this retailer now embracing technology to enable a lot of the things that we describe as the “omnichannel experience.” But certainly, between Amazon and some of the pure-play eCommerce players that are able to deliver, the brick-and-mortar stores are not letting the grass grow under their feet to the extent that they can help it.

We talked about order fulfillment, but obviously a lot of times people order their products. How does your platform accommodate an efficient tracking of inventory from the time it leaves the warehouse, makes its way to the consumer, and may have to make the roundtrip back?

JB: Let’s take it from when they decide they don’t want it anymore, and are going to send it back. We think the best thing for eCommerce is least-resistant returns, so Zappos has led the way. The way we recommend it is off the original customer order number – that’s what is used. Documentation is printed so it goes out to the customer. If they decide they don’t want it, the document is already printed – they just fill it in and stick a label on the outside of the box.

When it arrives back into the warehouse, we then scan that document, and it takes operators through a workflow where they can decide at a certain level what should be returned and what shouldn’t. It goes immediately back into stock if it’s a good product.

So we find that we’ve got some clients doing 60 percent returns in female fashion – that’s pretty big. Certain countries around the world have laws whereby it encourages this behavior – they buy three sizes and they don’t have to pay for anything until they’ve decided which to keep.

KW: What about the notion of wish lists now? Obviously it’s a way for retailers to have a list of customers that want items, so when that 60 percent of inventory makes its way back, they can notify customers that what they might want is now available. Is that something your platform manages as well?

JB: Yes. I like the idea of letting customers know when it’s arrived – so there’s no payment taken in that case. There’s another case where there’s a backlog of what customers have purchased, and then there’s wish lists where customers indicate they like products but haven’t ordered them yet. Those two are quite commonly used. From the warehouse management or fulfillment system, we’d pull that through if it’s taken as an order, and it would sit there in our backlog. As soon as product comes in to the warehouse, it automatically allocates the order. We do see that – it’s quite common.

KW: So what type of retailers do you have as customers?

JB: We’ve got three types. Firstly, we have the pure-play eCommerce players. They vary in size from $1 million up to $150 million. Secondly, there are companies that are retail – they have high street and an eCommerce division. In those cases, we typically manage both of their warehouses, but come in through eCommerce. Then thirdly we’ve got the lowest percentage of our client base – brands.
KW: What is the ROI for a platform like this? Obviously, you’re increasing the throughput of inventory and managing things more quickly, getting products turned around quickly. When you talk to potential customers, how do you describe the ROI?

JB: What our existing clients have stated is that the biggest single benefit is that there is 100 percent accurate inventory at any time. Having the accurate, available inventory on a website so the eCommerce company doesn’t oversell or undersell is the No. 1 thing people need.

The No. 2 thing is the productivity of picking. We know that compared to our biggest competitors, we get about 20 percent more productive in picking. And the bigger the warehouse, the larger the advantage. The reason we’ve been able to get that productivity is because we’ve been obsessed with having the best pick methods for eCommerce, based upon the data we’ve seen from orders and products.