WHY IT MATTERS: Digital Transformation

I love to read these weekly interviews. More often than not they are about products and companies that I did not know existed but that I found super interesting. I can't read them fast enough but thought I'd share anyways.

BTW, I discovered shoplocket by accident. They provide a very unique eCommerce platform where you can sell few products - just one or two will do! It addresses a real need for startups and entrepreneurs. They are also under utilized because their platform can be used to test a new idea, a new product, a new eCommerce offering, even for large retailers or brands. Oh well...

The BestBuy omni-channel strategy document was made public in Nov 2012 and is available online. Sheds light into the company current state versus competitors and the strategy to regain its position.

Retailers have been doing forecasting for a long time, predicting from previous sales and market conditions (and their best judgement), what to order for each one of their stores. When you have hundreds of stores, this is not a simple tasks, and it often requires years of experience - if you want to do it well. Because forecasting errors are very costly, resulting in lost sales or products that stay on shelves or racks and must be transferred to others stores, or worse, discounted at the end of the season.

I've worked on systems - from simple excel spreadsheets to more complex applications - that automate the predictive aspect and provide tools to facilitate the forecasting process. But never were the tools using invidual client profiles  to make the prediction. They always used global store-level or regional sales numbers. 

So, at least in theory, established retailers can have a leg up.

But Amazon may (again) shock retailers into a digital transformation, bringing their individual client sales data into account when doing the forecast. This will require retailers to include individual customer transactions and possibly their "wish lists" and online search information, to include in your forecasts. Data is there but few reatilers have the systems or the integration to bring this data in a timely manner to the "forecasting team" desk.

Amazon has been doing this with "replesnishment" options where they send you products on a regular schedule, so you don't have to "shop" for them: they come at your door at a predefined interval you control. And they give you rebates for sticking to your schedude (predictability is invaluable in a supply chain!).

If you do, then your forecast will undeniably be better. If you don't companies like amazon, with lower overhead, will send your clients products before they even consider going to store to see what's on the shelves!