11/1/2023 0 Comments Zer inventory sheetIn effect, the research shows that retailers who disaggregate the in-store shopping experience from the fulfillment process gain the best of both physical retail and online e-commerce, what the authors describe as “offline-online complementarity.” Fewer returned items overall, and disproportionally lower returns for more expensive items.Buying across 20% more products categories and trading-up to more expensive items.Shopping at a higher velocity, showing a 28% reduction in inter-purchase times.Spending up to 60% more on an average order. ![]() The supercharging effect they documented includes: They buy more and not only do they spend more money, but they also tend to purchase more expensive products.” “It turns out those customers who visit a physical store – after that visit, they return fewer products. “We were able to support the hypothesis of a supercharging effect,” Gallino said. This rich data set enabled them to study what happened when those original customers who transacted online moved over to the physical locations. Over 2 million transactions from nearly 600,000 customers were analyzed to compare orders generated online with those from the company’s then ~50 ZIS showroom locations in the U.S. Santiago Gallino, Wharton professor of operations, decisions, and information, explained he and fellow researchers David Bell, former Wharton marketing professor now with Idea Farm Ventures, and Antonio Moreno, Harvard professor business administration, worked with transaction data from a digital-first men’s apparel retailer (unnamed, but we can guess) for years 2007-2018. And an added bonus, these supercharged customers return fewer high-priced items. What the research shows is that the ZIS showroom strategy not only is more cost-effective for retailers but results in what is called “supercharged customers,” who place larger average orders, shop more frequently and buy across a wider product range. LaFleur for women’s workwear, and Casper mattresses, though legacy-retailer Nordstrom is proving the concept works with its five Nordstrom Local locations. This showroom strategy is one that mostly digitally-native retailers are moving forward with, like menswear Bonobos and Suitsupply, MM. The physical store becomes a showroom where customers can touch, see, and experience the products with customers’ orders fulfilled via e-commerce. And most importantly, the retail staff is freed from unpacking, arranging, and freshening in-store inventory to devote more time to serving the customer. ![]() ![]() Less inventory means smaller store footprints and more money saved. No dollars are tied up in unsold inventory across a chain of stores. Researchers from Wharton and Harvard propose such a radical new idea, called zero-inventory stores (ZIS). Time to think about zero-inventory stores
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