If you’re not already using brand analytics to help increase margins and market share, now’s the time to start. We’ve seen successful brands increase revenue from online retailers as much as 20% simply by tracking and acting on the right metrics.
When you’re just getting started, it can be difficult to know where to begin. So to help, we’re going to walk you through what it means to effectively monitor one of the most important pillars of e-commerce success with retailers: assortment and availability.
By closely monitoring and acting on a few key metrics in this area, you can help ensure your retailers are not only selling the right products but also have them in stock at all times. This, in turn, will translate into increased overall performance for your brand.
Ready to get started? Let’s dive right in.
Why measure stock performance?
If checking on your retailers’ listings sounds like a relatively simple strategy, that’s because it is. However, it’s also one of the most important metrics to get right.
After all, successful e-commerce distribution can only happen when retailers have your items listed and in stock. If consumers can’t find or buy products, your retailers won’t see sales — and you’ll miss out on profits.
But while the idea may seem straightforward, in practice this type of brand analytics can reveal all kinds of complications.
For example, when running product assortment reports you might discover that some retailers are choosing to distribute some (but not all) of the products you’d like for them to get in front of customers. Or you may find that some partners have chosen to ignore exclusivity arrangements and are selling more items than you had originally intended.
And while the ideal partner will always keep you updated on stock needs, there are many times when that doesn’t happen. If demand is higher than anticipated, for instance, you might not hear from a retailer until long after stock has run out.
In each of these instances, relying on brand analytics can be an excellent way to ensure you don’t miss product assortment and availability issues that could be impacting revenue. You’ll know precisely when a best-selling product is running low and needs to be replenished, and can take swift action any time assortment or exclusivity agreements are being breached.
You can even keep tabs on buy box systems for retailers that have a marketplace component. These premium placements can have a huge impact on sales, so being alerted as soon as you’ve lost the buy box will help you support efforts to win it back — whether that means working together on a pricing strategy or replenishing inventory.
What happens when you don’t measure stock performance?
Of course, you could choose to go with the flow. Plenty of brands get by without implementing an official process for monitoring product assortment and availability.
But are their products performing as well as possible?
In many cases, failing to do anything at all can lead to some unintended consequences — whether the brand is aware of it or not.
For example, imagine what could happen if one of these common scenarios were to play out within the next several months:
- A retailer has committed to listing a large selection of your brand’s products but ends up focusing only on the most profitable items. As a result, consumers have a hard time finding many of the products they actually need. It doesn’t take long for them to become disenchanted with your brand and buy from your competition instead.
- After choosing to keep a few products exclusive to select retailers, others find ways to acquire and start listing them, too. Since you’re not monitoring product assortment, you’re not aware of what’s happening — until you hear it from the furious retailer who responds by canceling subsequent promotional efforts.
- You have an official, agreed-upon product launch date in place. But then a few retailers release early without your knowledge. Your communication plan is ruined and your other partners are extremely unhappy.
- Your retailers haven’t set up notifications to be alerted when it’s time to restock your products. As a result, several best-sellers are staying in out-of-stock status for extended periods. As once-popular items start to lose momentum, sales get diverted to competitors who are then able to increase their market share.
- Third-party sellers with grey market inventory from a different region are attempting to undercut the prices your retailers are listing on marketplaces. Because you haven’t been alerted of the issue, they’re able to claim some of the sales for themselves. To top it off, you then start seeing customer complaints in reviews warning other shoppers of the risk they’ll receive unexpected items with foreign packaging.
These kinds of profit losses happen all the time, to brands of all sizes and across all industries. And they often occur because the brand was unaware of critical changes.
With brand analytics, you can stay up-to-date on important changes and transitions as they occur.
How to get started with stock performance optimization
Once you understand just how much your brand can impact retailer performance from an assortment perspective, the question to answer is:
What, specifically, can you do to make improvements?
Here are a few steps virtually any brand can take relatively quickly and easily:
Check actual SKUs against negotiated assortments. When you have a selective distribution in place or want to keep some products exclusive, check to make sure your retailers are only distributing their assigned assortments. Or, if your goal is to get as many products as possible on the digital shelf, run reports to confirm your retailers are in fact listing all the products they said they would.
Increase the number of listed references. While retailers tend to favor SKUs with high margins and fast turnover, your consumers want access to all kinds of colors, sizes and other options. By monitoring listings to ensure a full assortment across top retailers, you can help ensure products show up in more searches and satisfy more needs.
Remedy critical out-of-stocks. Retailers that rely on manually issued purchase orders to restock may not know when inventory is running low. By monitoring shortages on their behalf, you can help facilitate a fast reordering process to keep inventory moving.
Analyze recurring issues to improve habits. Some out-of-stocks happen because of unforeseeable spikes in demand or supply chain shortages that are out of your control. But others occur because someone ordered too few units or didn’t have the system set up properly. By keeping a record of all instances and their respective root causes, you’ll have the insights needed to help retailers adopt more profitable ordering habits.
Monitor third-party marketplace sellers. If your products are being offered by third-party sellers on e-commerce marketplaces, you run the risk of lost sales and revenue. Should those retailers offer products at lower prices, win the buy box or sell grey market inventory, the cost to your brand’s reputation can be significant. By keeping track of who those sellers are, you’ll be positioned to take swift action when necessary.
Staying ahead of these and other issues doesn’t have to be time-consuming or labour intensive. Simply set up metrics and alerts to monitor on a daily or weekly basis, such as:
- Products that are going out of stock
- Products that are back in stock
- New product that are listed on retailers’ sites
- Products that have been delisted on retailers’ sites
- Third-party sellers who are offering your products on marketplaces
- Third-party sellers who have taken the marketplace buy box from you
While product assortment and stock availability aren’t the only metrics worth monitoring, they are two of the most important areas of brand analytics to get right. Keeping tabs on what your retailers are listing, and how well they’re keeping items in stock, can have a significant impact on revenue.
Don’t miss the other instalments in this Retailer Performance series!