Mastering the Retail Game

No matter how great your products are, returns in retail are going to happen, especially with so many items purchased online. With the variety of new sales channels and fulfillment models, managing returns isn’t as straightforward as it used to be.

Retailers, brands and distributors that work together at better managing returns can reduce how often they happen and how much they cost – not just after the post-holiday returns rush, but all year round. Making the returns process easy also improves consumer loyalty.

Chris has been with SPS Commerce for nearly a decade, and during that time he’s had a first-hand look at how companies in the retail supply chain have succeeded and grown through innovation. He’s consulted with a variety of organizations on ways to use technology to optimize and extend business relationships through streamlined partner connections, enhanced collaboration and supply chain flexibility.

Scott Roti is the senior customer strategist at SPS Commerce with previous experience as an electronics and entertainment buyer at Target, and most recently, director of eCommerce sales and operations at COKeM International.

Senior Customer Strategist, SPS Commerce

Chris Gunderson (CG):   Welcome to the Mastering The Retail Game podcast from SPS Commerce, where we explore the new rules of retail and provide real world advice on how to win by learning from your peers and industry experts.

I’m your host, Chris Gunderson, and today we’ll be talking about retail returns, how to deal with them, how to prevent as many returns as possible, and how to use them to increase customer loyalty when they inevitably happen.

And returns will happen. No matter how great your products are, returns in retail go hand in hand, especially these days when so many items are purchased online, sight unseen. Sometimes the purchase isn’t up to the customer’s expectations and an item has to be returned. This can be a straightforward process when an item is bought in a store and returned to a store.

But what about all the times when it’s not? With eCommerce, marketplaces, drop shipping, buy online pickup in-store, and the variety of other new online sales channels and fulfillment options available, there are now also many ways to return or exchange products.

However, when retailers, brands and distributors work on their trading partner agreements to satisfy new sales channels and fulfillment models, they can be so focused on the sales potential that they often don’t spend enough time thinking about how to address the returns.

Scott Roti and Ben Carlson are here to talk about the post-holiday return season, the ins and outs of returns policies that satisfy customers, and how easy returns processes can be used to increase lifetime customer value.

Scott Roti is the senior customer strategist at SPS Commerce with previous experience as an electronics and entertainment buyer at Target, and most recently, director of eCommerce sales and operations at COKeM International.

Ben Carlson is the sales manager for logistics at SPS Commerce with nearly a decade of experience helping third-party logistics providers meet the expectations of their customer partners. Prior to that, he spent several years at UPS, the globally known leader in logistics for both packages and freight.

Welcome to the podcast, Ben and Scott.

Scott Roti (SR):         Thanks for having us.

Ben Carlson (BC):     Thank you. Nice to be here.

CG:       Hey, you bet. So late in December through about the middle of January is peak return season. With more online sales predicted and completed than ever before, how did retailers prepare differently for returns this year?

SR:        Yeah. I think one thing that’s really starting to change is retailers are now starting to prepare for the returns. As eCommerce continues to grow, they’re starting to know that this looming returns is pending. And I think as part of that, they’ve really started to shift their strategy from the old days of “Try and make the process as painful as possible to deter returns” to actually using it as a way to engage with customers and drive future sales and make it as simple and easy for the customer as possible.

The way that you’ve really started to see this on the eCommerce space is that a lot more stores are doing returns. It’s not that long ago that if you bought online, you may not be able to return to that same retailer store. But then they’re starting to allow you to return at other people’s store. At the end of the day, the goal for these retailers is to consolidate returns and make it as easy and simple for the customer as possible.

CG:       That makes sense. Ben, with your logistics partners, are you seeing them doing anything different?

BC:       Yeah absolutely. No surprise to anyone, returns are going up. You look at any stats that are available, like look at the amount of returns that UPS is handling compared to a year ago, it’s up significantly. And with that is our pain points. If you’re not addressing it, the pain only increases. And I think the opportunity for logistics partners to help with that is more than it ever has been. And so what we’ve seen in our space are, instead of focusing in on getting brands in the door, “Use my service on order execution,” we have a couple of partners that are actually leading with how easy they can make returns and take that problem off the consumer’s plate as a way to then get the normal day-to-day order to shipment process. So that’s one trend that I’ve definitely seen as a result of the influx of returns.

SR:        Yeah, when you talk about some of the data that we’ve seen, I think there was even a… I saw some article from September and they were polling customers on how much did they think they will return this holiday season. And 77% of consumers said that they anticipated returning something – one of the gifts – that they would receive this holiday season. And that’s where a lot of retailers, as they see data like that, they know that this is coming and they can become a lot more prepared to be able to handle that influx of returns.

BC:       Yeah. And something our logistics partners definitely help out with is, is that necessary? Are there things we could do to actually help keep that more inline or even reduce it? So something worth noting I guess.

CG:       I wonder how many of those gifts were from grandparents?

SR:        Totally.

BC:       Fruitcakes.

CG:       Right, exactly. Scott, you’re talking with retailers day-in and day-out. What are some primary reasons you’re hearing for customers returning product, online or otherwise?

SR:        Yeah, I think that you can bucket the reasons into two different categories. You have the logistics and supply-chain side, so maybe it was promised to be there on Wednesday, but it didn’t show up until Friday. Different time of transit type of challenges.

But then there’s the other category of product information. And that’s where we see a lot that can be the proactive side of how can you try and limit the returns? And things that can drive that are maybe the wrong item shipped, or the right product but it was in the wrong size or color. The description may be not clear enough, or the picture may not display the colors as bright and vibrant as what shows up. So there’s a lot of different things there from a product attribute or product description that can really drive the customer experience and ultimately results in returns.

BC:       I just would echo that, really at the end of the day returns are the result of largely something not being what you expected it was, and the easiest place to solve for that is information. And it’s really knowing from a brand perspective, what are your consumers looking for before they make that purchase? And if you have that dialed in, the chances are you can make unnecessary returns, you can reduce those. So that’s what I would say.

SR:        I always go to my jeans example of trying to find the right pair of jeans. Years ago you’d always go into the store and try on countless pairs of jeans until you find that one that fits the way you want it to. Well, in the online space, what that looks like is I may end up ordering five different pairs in the hopes that I find the one that fits me the way that I want it to. The way retailers are trying to evolve that is they may be trying to solicit reviews on, “Does this fit just right? Does it fit larger than anticipated? Does it fit smaller than anticipated?” And really trying to build out the additional content that may not be coming from the supplier or the retailer, but it’s coming from the end-users that are actually getting it. And that data then is able to inform the customer so they feel more confident in their purchase and may reduce the amount of returns in the long run.

BC:       On something that, I would say our logistics partners really stress when they take on any business, is just end-to-end, knowing in advance all the questions around what is going to be our return rate. “What is acceptable? What does this look like? Where is it coming from?” And the more that brands are in touch with their consumers to answer those questions, and the logistics partner in all parties know in advance of what that process looks like, the better you’re going to be able to control costs downstream. And that’s definitely something that our partner community helps with.

CG:       That’s great. I know that blue jeans example really resonates with me, so thanks guys.  Ben, buy online pickup in-store, or BOPIS, was a key trend during the holidays. How does buy online return in-store, or BORIS compare, and are consumers responding? How do retailers prepare for this newest process?

BC:       Yeah. Just personally, I would say the fact that the real gap of ordering on Amazon was, “Man, what a pain in the butt to return. I’ve got to figure out how to ship this thing back. It’s going to take me a while to get my money back.” And retailers were sort of resting on their laurels that, “Maybe I won’t order from Amazon because that returns process is kind of a pain.”

Well, insert Kohl’s, right? So now I can go to Kohl’s, I can return that item, I can get an instant… There’s like no difference now. Or I can go to the UPS store, same thing. I can return it, get my money right back just as if I was in the store.

So that being said, Target and others where the whole concept of buying online and returning in-store is definitely something at the forefront whereas in the past it wasn’t necessarily there. If you bought online you’d have to return online, you can’t go to the store. So I think retailers are responding with flexibility as a result of what others in the eCommerce space have done to disrupt.

SR:        Yeah I look on the buy side. So in buy online pickup in-store, it’s just a different fulfillment model that really allows customers to interact or shop with a brand or retailer the way that they choose that they want to. Offering different options is something that we continue to see it grow in the retail space as each and every person… You and I, we don’t shop the exact same way and retailers should allow us to shop the way that we want to shop.

And I think that mentality is starting to move over to the return side as well. What retailers are really starting to see is that some people want to be able to print off a label, take it to the mailbox and ship it. I hate that way. I would much rather take it to a store and know that it’s taken care of and know that it’s done, get my money back and just move on. So I think the trend of buy online and return in-store will continue to grow, as it’s just another way that customers can make it easier for them.

One thing I saw, and from a retailer perspective, I love buy online return in-store because it takes out so much of an expense of processing a return. I think Target just announced that when they fulfill an order out of their store rather than through their distribution center, it takes out 40 percent of the cost. That’s crazy. And if you think you could almost reverse engineer then and say that that same cost savings could be applied to returning a product as well, and when you look at that, the amount of costs that is being taken out of your supply chain is so, so, so powerful to your organization.

BC:       Not to mention you get that consumer in the door. They process their return now that they’re there, what are the sales that result of that easy return process? So what does that do to revenue?

CG:       That was a great stat about Target. And on a personal level, I remember when Amazon rolled out that Kohl’s return policy and we shortly after that we got a Prime membership so that really resonates with me as well.

What about when there are drop shippers involved? How can retailers and drop shippers better prepare for the influx of returns that happens after the December shopping season?

BC:       Well, I think first and foremost, being in touch with your consumer, how they buy, what they’re looking for, providing the right information, leveraging technology to provide that information in real-time, either at the point of purchase or after purchase is key. And the more you understand what these consumers’ expectations are, and generally speaking, you’re in touch with your business, the better able you are to deal with this on the front end and build a model that’s based on that.

Because the key to managing cost and to working with your partners and having them help you reduce cost, is knowing as far in advance what that looks like so that you can then model off of that, versus deal with unexpected returns or unnecessary returns that then really eat into your margin after the fact.

SR:        Yeah I think, when I look at retailers and drop shippers as preparing for the returns, it’s looking at doing the same sort of exercise that they’re doing for trying to process that Black Friday through Cyber Monday through Cyber Week order fulfillment. So much work and preparation goes into handling the orders on the front end and making sure you’re getting them out in a timely manner. That same level of focus should be given to processing the returns on the backend as well. Each time a customer orders from you or returns something from you, it’s a way that they’re interacting with you as a retailer. And you got to make sure that you’re making it an easy process for them because you want to make sure that they come back to you going forward as well.

CG:       Oh, that’s great. Scott, in the retailers you’re talking with, what can you do to make a customer happy when they have to send back an item so that hopefully they’ll be comfortable making another purchase in the future? What are you hearing from your partners?

SR:        Yeah, I think one of the main things is how easy you are making it for them. When you look at it, some retailers have different processes for however the order is being fulfilled. So if an order goes to a drop ship, versus their distribution center, the return process may be different. Or if they have a marketplace it could be different again.

One of the main things that I’m seeing is that they’re trying to make it be as consistent to the customer as possible. And I think that’s truly the most important thing. Whether it be having that return label in the package, or you sign into your account and you’re able to print off the return label there, just making sure that’s as consistent and easy for the customer as possible.

CG:       Yeah, your logistics partners, if I think of a 3PL or a carrier, what are they doing to help that scenario?

BC:       Well, they’re certainly helping on execution and keeping your costs in line and leveraging technology wherever possible to reduce costs and increase satisfaction. And one thing is just, I’ll put my consumer hat on for a minute. If you think about the various places that you order from and the various return policies that exist, everything from you basically show up and you’re in a court of law and you have to explain with documentation, and we’ve all been through that and it’s a very limited window. You know, am I happy with that process and am I probably less likely to buy from them? Absolutely.

The other extreme that I thought about that was kind of interesting on this topic of making it as easy as possible for the consumer, is making sure that you’re in line with their expectations. So, an example that I had, last year ordered a rooftop carrier for my car. And it was all around a trip that I was going to take and ended up not needing that rooftop carrier for that trip. I ended up doing something different.

And this thing sat in my garage for close to six months. A couple things fell on it, scratched it up pretty good. And I bought it from REI, who we all know has an amazing return policy. And I thought with the lens like, “I’m going to go back there and see maybe if they’ll give me half or, you know, because it is damaged and it’s been quite some time. I mean I could have used the thing the entire summer, right? And let’s see what they’re able to do.” Well, they didn’t even look at the item, they gave me full money back and I was just so blown away by the fact that they did that. And it was almost to the point where I’m like, “That’s really unusual and you did not need to do that. I’m probably as equal to buy from you as I was before.” And it’s just more of a question of, was that really necessary? And I mean I think it was great. It obviously it worked out well for me. But I’m planning on either getting an in-store credit for half, or maybe even having to go to Craigslist with it.

So it’s just a matter of, “While that return policy is great, is that the right return policy in line with my expectations as a consumer?” So I decided to throw that out there when we’re talking about expectations.

SR:        Yeah.

CG:       That’s a great example. It seems like they surpassed your expectations-

BC:       Wildly.

CG:       … wildly on that example.

BC:       Yeah they did laps around it.

CG:       Scott, are there some examples of retailers that are doing this really well, and what can others learn from that?

SR:        Yeah, I think some of the mass retailers are a little ahead of the game in the sense that they are trying to allow customers to return the way that they want to. Just like the way that they’re making customers be able to buy the way that they want to.

So I think if you look at like a Walmart and Target, they’ve really made it, regardless of who you’re purchasing from, whether it be Target or a drop shipper or a marketplace seller, if you’re able to take that into their store and return it and make it be as easy as possible. So I look at them and I think they’re leading the charge and making it a positive experience to return.

Then I look at the other end of the spectrum and I look at some of the digitally native brands, and the ones that as you’re scrolling through Instagram that you always see that are trying to sell products to you. It’s only eCommerce. They don’t have any brick and mortar stores. Well, they may not have any stores, and what they’re doing is they’re partnering with third parties. And whether it be a third-party logistics provider or be a third-party service and they’re partnering with stores that aren’t theirs. And you can go and return that product, and it’s so seamless. You’re just able to provide your email and they look up and they’re able to find your order, they check it in and you have the money right in your pocket that day.

I think that’s really important. As people look at their money, they don’t want to be tied up in a return process for a week, two weeks, three weeks. Some people really need that back right away. And I think some of these digitally native brands, by partnering with third parties are able to get that back to you and that’s really important.

BC:       Right. Yeah and again, it just goes back to expectations as a consumer. Do I expect the same process for an item, an apparel item, that I do with buying a deep freezer? No, me as a consumer I don’t. And it’s just really identifying what those expectations are from the consumer and then taking it upstream and partnering with the people that are doing execution on returns for you and/or other shipping. The closer you’re dialed into your consumer expectations, again, the better you are able to model cost and make the process better and thus driving satisfaction. So that’s more generally what I would say. But yeah, there’s a wide array of policies out there and some do great, others don’t.

SR:        Yeah, and I think the policies can vary, but even the dates and things can really vary based on the type of product that you’re selling. I know someone like Apple and Lululemon, they only have 14-day return policies. But if you look at their products, it may or may not, there may be reasons for that. Like Apple, they don’t want to throw out this expensive technology that could be outdated in 14 days for all we know. And then you have other ones like the REI example that you talked through.

BC:       Yeah. It’s that balance of what are my customer’s expectations? And then really within that confine, not necessarily just generally saying let’s make returns as easy as possible. But within the consumer expectations within that guideline, leveraging technology, leveraging information, leveraging processes and looking at it as something that, “Is this something I want to be doing in-house? Or is this, am I world-class at it?” All those things within the confines of consumer expectations, will I think be a good place to be a guiding principle.

CG:       So it sounds like, if I’m hearing you guys right, basically what Amazon did with Kohl’s and that partnership, a lot of other smaller retailers or smaller online pure plays are really following that model and it’s just become a consumer expectation. Would that be a good way to summarize this section?

BC:       It summarizes the last decade.

SR:        Yeah.

CG:       Absolutely. Absolutely, absolutely.  Scott, so what are the best ways to prevent returns all year ’round? Whether the item was bought in-store or bought online and drop shipped from a vendor?

SR:        Yeah, I think there’s two ways to look at it. One is really having a clearer, detailed return policy, that is consistent. Too often retailers that sell multiple different categories may have different return policies for different product categories. And as you go through that checkout as a customer, you just want to make sure that you clearly understand what the return policy is for that product. So I think that’s one portion.

Then the other one is when it comes down to product data and attributes. So that’s where it plays into the apparel or other products where you just want to know how does it fit, what does the colors look like? All of those different features that the product has, the more clear and more data that you can provide to that person that when they’re buying it, the better to limit returns.

BC:       Yeah to echo that and something I hear from our partners is, there’s so much information available but it’s tough to get all systems and people on the same page and the more you can do that and leverage the information available to that consumer within their expectations to make a good choice will only help, and a key… Just a super-low-hanging fruit thing that I hear is that managing accurate inventory, and that snapshot, providing that to the consumer. It’s a real struggle that a lot of brands will start with a logistics partner, is not being able to do that and provide accurate inventory information. And that’s something that somebody in that space that specializes in that could help.

CG:       That’s great. And I’m sure our retailers out there are very interested in preventing returns so thanks for that feedback.

So Ben, how can accurate inventory information reduce the rate of returns?

BC:       Well, let’s just take it… Easy to put your consumer hat on for a minute. If you’re buying something and there’s time sensitivity to it and they say you have it, and all of a sudden you’re one day into that process and all of a sudden they don’t have it and it’s going to be a week later, chances are you’re going to be getting money back. And there’s a, like a credit and a return. So having the inventory accurate, which a lot of, of course our partners help with and streamline that will do a number of things. It will allow you to make decisions.

For example, maybe I’m really overstocked in the West Coast and I’m getting a lot of orders on the East Coast. Maybe I should make a change. If you don’t know that that exists and you don’t have accurate inventory information, you’re not able to do that and you’re going to continue to lose out on sales on the East Coast. That’s just an example of that. So it just drives consumer satisfaction obviously, having as much information at the time of purchase as possible.

CG:       So coming out of the holiday season I immediately thought about what I need to buy for Valentine’s day right now. So thanks for the reminder there. And Scott, how about you?

SR:        Yeah I think, any commerce, the purchase starts with an inventory feed. And the more that you can have that accurate clear picture of what inventory is, the more likely you are going to be able to capture the order and get it to them on time. So much of what happens is, the inventory may not be right and it ends up resulting in a canceled order, a backorder, delayed shipment. If the product’s not ready to ship right when you say it is, it could ultimately result in a return. And I think that’s one of the key things to eCommerce, is that inventory accuracy. And that’s a lot of what we do here, is making sure that we are able to provide that for our customers and our retailers.

BC:       Yeah. Also worth noting, I can order from you ten times and not ever remember the nine times that it went super-well, and it’s that one time that it’s not accurate, how are you going to respond in that time? And if you don’t respond how I think you should, I’m never going to order from you again even though you did it right nine times out of ten. So it’s just stuff will happen. Even if you get all the systems perfect there still will be issues. It’s also worth knowing how are you going to respond to consumers when things don’t go exactly right.

SR:        Yeah, yeah. Consumers don’t know who all plays a role in getting their order to them. They don’t know that it may be the warehouse worker, it may be a 3PL, it may be drop shipped. And then all the carriers and all those different people that touch a package from the time it’s ordered to the time it’s delivered on your door. What they know is, did it get there on time when you promised it would be? And I know I’m guilty of tracking my orders relentlessly. I get made fun of all the time by my friends and family as being that guy that’s tracking.

But it’s what our expectations are now. As we look at different retailers that are leading the way in the space, we have that visibility and we have that knowledge. And if something’s going wrong in the supply chain, we know. And we want to know why. And if it goes wrong, it could lead to us not shopping from that retailer again, just like what you said.

BC:       Yeah. And Chris, to your point, each time more information, more real-time information is provided, that becomes the bar. You don’t go back to the world of not knowing where your UPS truck is in your neighborhood and potentially even flagging the driver down. We’re not going to go back to the stages where that isn’t available. So if you’re not, as a brand and a logistics partner, keeping up with the expectations of the consumer that are being put out there each time a huge milestone technologically is reached, you’re behind obviously.

CG:       Yeah the bar is always being raised. That’s for sure. We’ve talked a lot about making returns easy for the customer. Scott, are there ways to streamline the returns process for retailers and suppliers?

SR:        Yeah, I think there’s different ways to look at it. And I think one of the main things is upfront, is trying to determine is this core to your business? And trying to figure out are there other solutions? And it may be that there’s a third party out there that could have software or the processing, either way. There’s different factors of that, that could just make it easier from the customer’s perspective and ultimately easier and more cost-effective for you as the retailer.

BC:       Yeah. I guess what I would add to that, of course I would always suggest looking at processes that could be outsourced and determining is this a core competency and all of that. That’s worth definitely noting.

That said, when you do figure out what you want philosophically your return policy to be in line with consumer expectations, what technology exists out there to make that process easy? It’s something just super-simple. Maybe I’m an online retailer and I’m shipping direct to consumer based on my website traffic. Maybe I include a return label in there with an already identified RA number. So if that consumer decides to return it and that hits the system, that’s already in there and it makes everyone’s life easier. The information’s available, the consumer has that label already there. That’s just an example of leveraging technology.

SR:        So true. And the other thing is that that makes it easier on the front end. But then think about how that helps the retailer or whomever is processing the returns on the backend. Once that shows up there, they have that label and it tells them everything they need to know. It tells them, why was that returned, when was it returned, who was returned from, and make sure that that credit back to the customer is happening in a timely manner as well. All those things are very challenging and it can all be solved by a simple barcode. So yeah, it’s really important to try and put through some of those technology improvements upfront.

BC:       Yeah, and what I hear from our partners in the logistic space is, the worst case scenario are receiving a bunch of returns and not having any idea why. No visibility-

SR:        Trying to find the order.

BC:       Yeah. That is worst case scenario. So if you set the bar as low as that and try to improve on that and try to get in line with your consumer expectations, you’ve got a ton of options out there to make that process better.

SR:        So true.

CG:       Yeah. That sounds like a package that’s going to sit there for a while, right?

BC:       Right. And we’ve all been in warehouses where that occurs. The blind shipments and all of that.

CG:       Well Ben, I’m going to throw this question out to you first. Do you have any final advice for retailers and suppliers that want to streamline and reduce returns?

BC:       It really, it begs the question like, really anything in your business process, is this a core competency of mine and am I executing on this well? And if the answer to those questions are no, look at outsourcing it. I think returns, there are very few people that manage returns perfectly and if that’s eating into your margin and not meeting your consumer’s expectation, there are a ton of people that specialize in that. We have a lot of logistics partners that help reduce cost and increase consumer satisfaction, that you could look at outsourcing. So that’d be my recommendation just more generally. Is this worth doing in-house or is this worth outsourcing? And if so, outsource it.

CG:       Thank you so much. And Scott, same question for you with more of the retailer perspective. Do you have any advice for retailers and suppliers that want to streamline and reduce returns?

SR:        Yeah, I think as consumers are changing their expectations on how they want to buy from retailers, their expectations on how they want to return to retailers is changing as well. So I really encourage retailers to look at what is the end-to-end return process look like and continue to focus on trying to make it as simple and easy as possible. By doing that you’re going to build brand loyalty and brand trust. So focus on the customer and then everything else will fall into line.

CG:       Couldn’t have said it any better. And what a great way to cap off this time. Thank you Scott and Ben for joining us and sharing your knowledge with us today. I really appreciate it.

SR:        My pleasure.

BC:       Anytime. Thanks for having us.

CG:       You bet.

Thanks for listening to this episode of Mastering the Retail Game. You can read transcripts of this podcast, review show notes, and listen to other episodes by visiting spscommerce.com/podcast, or by subscribing to the podcast on your podcast player. Join us on the next episode of Mastering the Retail Game for more advice on what you need to know to win over today’s consumers. Until then, this is Chris Gunderson signing off.

Explore the new rules of retail and get real-world advice on how to win by learning from retail experts and peers in the industry.

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Omnichannel sales and strategy are driving the adoption of APIs in retail. This mode of data transfer has its advantages and is particularly well-suited to the industry.

Explore why retail companies are starting to use APIs for their drop shipping and logistics communications, and how it can complement your EDI operations.

With over twenty years in the complex world of EDI, Bonnie Keyworth adds value to retailers and suppliers by designing solutions for a variety of ERPs and for any transaction required in their supply chain. As a Senior Solution Strategist with SPS, she enjoys the variety of projects and the new challenges each one presents. Working closely with customers on common goals is a top strength for her, which drives her toward success with every endeavor.

As an expert in retail fulfillment, Tony offers a unique viewpoint on using the latest retail technologies, including the SPS Commerce Retail Network, RFID and more to drive innovation and growth. At SPS, he is responsible for using graph-based architecture to drive meaningful insights and expand the value of the SPS Commerce Platform to customers and partners.

Group Product Manager, SPS Commerce

Bonnie Keyworth (BK):  Welcome to the Mastering the Retail Game podcast from SPS Commerce, where we explore the new rules of retail and provide real world advice on how to win by learning from your peers and industry experts.

I’m your host Bonnie Keyworth, and in this episode we’ll be talking about APIs and why e-ommerce is driving their adoption in retail. We’ll discuss why this mode of data transfer is used, and when and if you need to educate yourself on it. Without delving into API development details, we will explore why retail companies are starting to use APIs for their drop shipping and logistics communications, and how it can complement your EDI operations.

Today we’ll be talking with Tony Thrasher from SPS Commerce. He is the mastermind behind our company’s API strategy and has been working with our retail customers to vet how and when to publish APIs that matter. Hi Tony, welcome to the show.

Tony Thrasher (TT):  Hi Bonnie. Thanks for having me. I’d say mastermind is a little heavy, but thank you regardless for the introduction.

BK:  You bet. Okay. Glad to have you here. So before we dive into why APIs are able to address market demands for retail, can you briefly describe what an API is for our non-technical audience?

TT:  Sure. So APIs are really simply, just a way to exchange data between two systems, or think of those as two computers. Right? The analogy that I use is think of two different systems as two islands. And in order to connect those two islands, you’d build a bridge. So in this case the bridge is really the API for exchanging data, performing an action, et cetera, et cetera. So that’s the way I like to think of it at a very, very high level.

BK:  So I’m going to back you up one more step and even for the more nontechnical, what does API stand for?

TT:  Application Programming Interface.

BK:  And that’s something we can pretty much forget, right? Because …

TT:  Yeah, you don’t have to know about that at all.

BK:  Okay. Because, I’ve been in IT for years and years, and I don’t know how long it was before I finally found out what API was.

TT:  Yeah Acronyms are fun.

BK:  Okay. Why is API such a trend in retail right now?

TT:  You know, I really think, Bonnie, it started with eCommerce, omnichannel, that explosion, whatever word you want to use to describe that. And really it comes with the pressure that the consumer has been putting on any merchant that wants to find products in many different channels, have the right product content, how do I get a personalized shopping experience, et cetera, et cetera.

And the industry has really embraced API as a solve for some of those experiences. So you look at APIs in personalization, like I mentioned, how many likes of this product do I have on Facebook, inventory levels, product content, shipping, et cetera.

So APIs are really exploding in retail because of the fact that you have this end consumer that wants to interact with and have a cohesive experience across all these different channels. So these retailers and different folks that are in the retail space are looking at ways of exposing this data, exposing it to developer communities to build innovative ways of selling and just getting more orders and getting items and goods to end consumers in a more streamlined way.

And when you look at some of the stats, and I was refreshing myself before I came up here, but if you look at programmable web, in 2013 they had something like 115 retailer, quote unquote APIs, that they would say were out there. And I just checked before I came up here, and it’s up to over 22,000 in 2019, so it’s exploding. You seen that explosion, the economy of API’s, et cetera, et cetera in other industries. But retailer is certainly feeling it too.

BK:  Incredible. That’s quite the increase. So what about drop ship orders? We’ve talked in other podcasts about the data needed to support that model, and it’s often a challenge. So could you speak to that a bit?

TT:  Yeah. When you look at the drop ship scenario, kind of at brass tacks … the way I’m defining drop ship in this instance is when we have a supplier or vendor that’s shipping on behalf of a retailer. So that retailer wants it to look like the goods came from them at the point in time which it gets delivered to any of our doorsteps, for example. You look at the way that previously the retailer would have all the information necessary to close that sale. Well now they have to be able to share things like inventory information. The order that needs to go out to that supplier to get fulfilled is extremely quick. It’s no longer ship this giant truckload of things to my DC. They need something that can be acknowledged very quickly. Yes, I can fulfill this to your end customer and get it to their doorstep.

So you look at the product content, the inventory, and then the ordering process, and all of those processes have sped up incredibly with this new business model. And that’s where we’re seeing a lot of retailers tipping towards API to satisfy some of those requirements.

BK:  So APIs, are they also being used to facilitate logistics with retail?

TT:  Yeah, we see a lot of API and have a lot of conversations regarding APIs with our logistics partners. And you look at what these companies are up against. Take 3PL, for example, working on behalf of a supplier, and they are taking orders and shipping orders through all these different channels, marketplace, eCommerce, retail, and certainly you look at marketplace and eCommerce, those are typically API-based systems that they’re interacting with. So these logistics companies become very accustomed to interacting with an API and they want to do that for those retail orders as well.

And then you look at a carrier situation where they might be getting asked to, “Hey come pick up this load,” or, “Hey can you come pick this up, can you go deliver this? Can I print my labels for UPS via an API call?” All those types of things. You see a lot of carrier consolidator plays out there, companies that are pulling that together, extending it to rate shopping, et cetera, et cetera. So logistics companies, big time.

And we’ve started to partner with our logistics customers and partners in a lot of ways regarding some of the APIs that that SPS offers as well. And they’ve been very interested.

BK:  So in addition to order volumes, what about, I imagine, adding items or SKUs daily? That’s something that’s involved as well?

TT:  Yeah. When you look at product content and all the different locations that we as consumers see product content. Honestly, a lot of that is powered by an API somewhere, that has that information or inventory. Like, how do you know that when you’re shopping on Facebook that the inventory is X? And then when you’re shopping on this eCommerce store, it’s X and et cetera, et cetera. It’s because that information is being shared across the web by different parties of the supply chain.

BK:  Right. Well, I suppose it’s a great fit for your Walmart and Wayfair where they want to get their items up and loaded right away for the shopping carts and such. So, are APIs a good fit for retail communications like Walmart and Wayfair? Is that always true?

TT:  Yeah. Well, we’re seeing a lot of retailers taking a fresh look at how they’re collaborating with their suppliers and their supplier community. So they’re going to look at the way that they collaborate on item information, inventory, information orders, shipments, and all these different business models. And they’re going to look for opportunities to improve.

So we’re seeing Walmart, for example, publishing APIs around product content. Walmart also has a bunch of APIs that are out there around product reviews and different things of that nature to support their marketplace.

Wayfair actually just rolled out a program to their supplier community, specifically 100% API as a means of them getting up to speed and really they’re looking at as “I want to collaborate, I want folks to be able to extend my reach,” and API is an option for them to do that.”

BK:  So, whether a retailer uses an API or EDI or other format, what factors should a retailer consider?

TT:  Yeah, you get into this age old API versus EDI, and when’s EDI going to go extinct, because API is going to take over the world. Like that whole banter, Google it, have yourself a thrilling hour.

But at the end of the day there’s pluses to doing EDI. There’s pluses to doing API. EDI comes with a standard format. It’s been around for a long time. You know when you’re getting a purchase order, what it’s going to look and feel like. There’s some built in security pieces there that you don’t have to be quite as intentional about, as you do as with the EDI landscape.

But API is also faster to implement. We’re talking typically days versus months. It’s something that you can get implemented very quickly without having to set up mail bags and do some additional configuration that happens with EDI. It’s also really good at that real time communication. So when you’re talking about transactions like inventory or things of that nature that need to be communicated instantaneously, API, we’re seeing people definitely lean in that direction.

So, at the end of the day you’re looking at a business process that typically, at least in our world, centers on the collaboration between a retailer and downstream parties of the supply chain, and the technology that you’re using is the technology. And sometimes one might work better than the other, but at the end of the day it’s focusing on that business process that’s the most important.

BK:  So SPS is typically known for EDI and cloud-based solutions. How does SPS support APIs?

TT:  So yeah, we’ve been working with APIs both internally for how we build our products and our services and deliver on those commitments. And then also externally, we connect to several system APIs. We connect to retailers via an API. We’re publishing APIs of our own via our development website for folks to be able to connect with and interact with our network through API.

So again, there’s obvious advantages to API. There’s some advantages to EDI, and we really promote the thought that these two technologies are going to continue to work together on it, and obviously a big investment for what SPS Commerce has done, been very successful at, and will continue to be successful at, is our ability to collaborate with the retailer and that doesn’t matter whether you’re doing EDI, API, or blockchain or whatever the heck comes next.

BK:  All right. Wow, that’s great. And I love your using the word collaboration, because it really sounds like the business activity is what should dictate what’s needed, not just what the latest tech fad is. Right, Tony?

TT:  For sure. For sure.

BK:  All right. Healthy collaboration is the way. Great to know retailers have options, Tony. Thanks so much for sharing your knowledge of API with us today. Quite informative.

TT:  Thanks for having me.

BK:  And thanks to you, the listener, for choosing this episode of Mastering the Retail Game. You can read transcripts of this podcast, review show notes, and listen to other episodes by visiting SPSCommerce.com/podcast, or by subscribing on your podcast player.

Join us on the next episode of Mastering the Retail Game for more advice on what you need to know to win over today’s consumers. Until then, this is Bonnie Keyworth from SPS Commerce wishing you a rewarding journey in the ethereal world of EDI and cloud-based solutions.

Explore the new rules of retail and get real-world advice on how to win by learning from retail experts and peers in the industry.

Retailers are constantly updating their systems and advancing processes to keep up with today’s digital-savvy consumers. Each one of these changes not only requires their associates to adjust, but often requires action and reaction on the part of suppliers and vendors in order to achieve their highest potential. These changes may include adding a new sales channel or fulfillment method, deploying a new system such as a WMS or ERP, or opening a new DC.

When you’re thinking about making a change, how do prepare your trading partner community to work within your new environment?  What needs to happen to minimize the amount of disruption in the supply chain? How do you maximize adoption within the timelines and timeframes you’ve mapped out? This episode explores how and when to engage your trading partners in big change management projects.

As a customer success executive at SPS, Brandon Pierre works alongside many retailers and suppliers to develop strategies to address their merchandising and supply chain business objectives. With more than 14 years in the buying organization at major retailers, he has experienced first-hand the opportunities of the digital era and how technology can transform the consumer experience through improved retailer and supplier connections.

Senior Director for Customer Success, SPS Commerce

Warren Knapp (WK):  Welcome to the Mastering the Retail Game podcast from SPS Commerce, where we explore the new rules of retail and provide real-world advice from your peers and industry experts to help you succeed.

I’m your host, Warren Knapp, and today we’ll be talking about how companies can engage their trading partners to bring about transformational business plans and mutually beneficial growth opportunities.  For more than seven years, I’ve worked with retailers who are trying to keep up with consumers’ need for variety, speed and accuracy. During that time, I’ve also worked with the suppliers who play a crucial role in ensuring retailers are successful in meeting those consumers’ expectations.

As retailers evolve, so do their systems and processes. These changes may include adding a new sales channel, like drop ship, deploying a new warehouse management system or ERP system, or opening a new DC. Each of these changes requires adaptation from the suppliers as well.

When you’re thinking about making a change, how do engage your trading partner community to adapt to your new environment? What needs to happen to minimize any disruption in your supply chain? How do you maximize adoption within the timeframes that you need?

In this episode, we’ll discuss how and when to engage your trading partners, as well as how to improve compliance across your network overall.

Here with some real-world advice is Brandon Pierre, a former merchant who now serves as the Senior Director for Customer Success at SPS Commerce. Welcome to the podcast. Brandon, thanks for joining us.

Brandon Pierre (BP):  Yeah, absolutely. Thank you. I’m really excited to be here.

WK:  So when we think about these big changes that retailers and buying organizations are making and the supplier facing side of that as well, where they’re going to be asking their vendors to do something, can you just give us some examples of the types of changes that invoke that type of supplier need?

BP: Yeah. Well, we typically see this in a few different areas. You know, one of the, probably most common ones is around when retailers and buying organizations are implementing new systems. Whether that be a new ERP or warehouse management system or new point of sale system, oftentimes those can trigger in order for a buying organization to actually get value and use that system, there’s something different that they’re going to require out of their supplier community. So that’s, I would say probably the most common.

The other thing is just there might be a new process. You know, they have a new warehouse coming on board and they’re automating some components or maybe looking at an entirely new fulfillment model. You know, so if they were shipping in bulk and now doing cross dock, some of those activities certainly will require a supplier to change the way that they maybe engage with that retailer to things like just changing processes, in terms of what teams are doing, what and how they work together.

And, you know, lastly, one of the areas that we’re continuing to see a lot of growth is just adding new sales channels. So whether that’s an online sales channel where they’re shipping direct from the supplier to their end customer or where they’re starting to fulfill orders out of their stores for online, various different ways of getting products to the customers are now starting to, you know, really require retailers to engage with their suppliers on a new, a new way of doing business together.

WK:  Yeah. So let’s say we’ve gone down the path and there’s a decision that “Hey, we actually are doing something.” So we’re doing something with our drop ship relationships or we’re doing something with our WMS and we’re going to need our trading partners to help us in meeting what we need them to do. The question that comes to mind for me is timing. At what point do you reach out and really bring those partners into the fold on what you’re trying to do?

BP:  Yeah. You know, that’s a, that’s a really complicated area to start to explore and you know, and we see certainly examples where retailers and buying organizations will go out to their vendor community a little too early with the change and they’ll start to prepare or attempt to prepare their suppliers to get ready for a change. But they really aren’t clear on what that change is or when it’s coming and sometimes you can create extra noise if you go out too early.

The other challenges is if you get too far into the process, and we certainly see a lot of examples of this, where you haven’t given the vendors know the appropriate time to actually prepare for doing business a different way. And so it is, I mean, it’s a great question and it’s, it’s definitely a challenging dynamic. I would say this is where SPS does spend a lot of time consulting with our buying organizations as we typically try to get out early in the process and start to get a sense for how far along is the buying organization in terms of technically what they’re going to be looking for and when they’re going to be looking for it and how it’s going to impact their relationship together. Because when you start to get those things lined up, you can start to get a pretty good sense for when it might be the right time to communicate to your vendor community.

I would say, you know, beyond that, and it’s, it’s hard to put a true number on it, right? But  anything short of like 12 to 16 weeks, I would say if you’re getting inside of that window and you’re just starting to talk to your vendors about a change you’re going to be making, you’re probably not giving your vendors enough time. But you know, anything too far beyond that without a clear path starts to get you a little bit too far in advance.

WK:  Well, it’s got to vary a bit based on the type of project to do. I would think maybe there’s some smaller impacts versus some larger ones.

BP: Yeah, absolutely.

WK: Along with the notion of really some of them nuance there, do you look at all the vendors in the same way or is there some strategic priority in terms of how you approach them?

BP:  Yeah, you know, that’s a really good question. We oftentimes we’ll hear this concept of we’re thinking of moving forward with this change, but we may just want to pilot this with a certain handful of vendors. And so I certainly think the expectations you have of your vendor community may differ based on the size or the type of relationship you have with them. But one of the things we try to coach our retail organizations away from is not necessarily just looking at a specific segment of vendors to roll out a change with. Because the reality is if you’re going through that business change and you’re going through, you know, changing the way your organization operates, just testing that out with a few vendors? You go through a lot to just get a handful of vendors to go through that change.

And quite honestly, whether it’s five vendors or a hundred vendors, reaching out to them and engaging them is going to take the same level of effort. And so you know, really, when we start to talk about how to prioritize vendors, it’s truly looking at “What do you as a business want to get through?” Don’t think about the number of vendors, think about what you’re trying to accomplish from a business and then start to figure out how you’re going to target those vendors as kind of a starting point.

WK:  Yeah. I have to make small groups present some challenges too because the reality is that vendors talk to one another….

BP:  Yeah.

WK: …and if your requirements go too far a field in the same type of fulfillment model that you’re going to end up with probably some vendor thrash there just because you’ve created confusion probably inadvertently.

BP:  Absolutely. And it also, you know, as you start to get to these small groups of vendors, you start to try to attempt to do things for one group of vendors versus a different group of vendors. The next thing you know, what you set out to begin with in streamlining things starts to take on a very different look and feel. So that’s part of where we spend a lot of time with buying organizations up front is “Help us understand how your vendor community is made up today. And then let’s talk about an approach where you can go to them with a standard way of working.” So that you’re not taking a very fragmented approach across your entire vendor community because that can be really hard to both to execute upfront as well to manage ongoing.

WK:  So knowing that it’s a balance that you got to work through there. Any advice or items that you would look at and say, “Hey, these are some key things to sort of get your house in order before you start reaching out?”

BP:  Yeah, I look at a couple things that I would say you’ve got to have in place when you, when you’re really ready to engage your vendor community on the change that you’re embarking on. The first area would start around some of the messaging. You need to be able to be very clear on why you’re doing it. What are the requirements that you’re going to be looking for and requiring of your suppliers? Being clear on what’s changing and why now. And one of the things that I would say retailers oftentimes struggle with is, “Well, what is the benefit to me as a vendor to do this with you?” And you really need to be able to be crisp and clear on that.

And quite honestly, sometimes the answer is just, it’s just going to allow us to be better partners together and more efficient. But sometimes it’s, you can expect to see this level of cost savings or these reduced days of product sitting in our supply chain because we were very inefficient at processing orders. But you’re going to want to think through that because that messaging is really critical to be able to get your vendor partners on board with the change. And then the other thing is, as you think about the changes in the requirements, you’re going out to your vendor community with- it’s understanding what’s already out there in your industry.

Oftentimes we’ll see retail organizations that come to us and they’re just starting to do EDI. Well they don’t have a lot of good context for what their vendors are capable of and what they should be asking for. But it’s really important that you’re able to, when you think about what you’re asking for and why, understand what your vendors are already capable of what’s standard in the industry.

And that’s where we spend a lot of time with retailers as they start to prepare to reach out to the vendor community. It’s understanding what you’re trying to do and what the industry is already capable of and how do you marry up those two conversations. But I would say those are kind of the key decision points for me. If you, if you’re messaging sharp and prepared and you know what and how you want to talk to it, and then you clearly have a, a good vision for what the requirements are going to be, then you’re ready.

WK:  All right, so you’ve made the decision to move forward with the change. You’ve had some discussions around who to have as a part of that for your supplier group. As you start to think about reaching out, what are some of the challenges that come up?

BP:  Yeah, I would say, well, what’s fascinating is quite honestly, it’s even knowing who your vendors are and who you contact. It might sound pretty crazy to say this, but you know, when you think about the way that the buying organizations kind of have all that information related to who their vendors are and who to contact, oftentimes you’ll find that those are in the buyer purchasing teams’ Rolodex, someone’s email, could be an Excel grid. I mean, I know that buyer, up until my last days, I was still using a Rolodex and that wasn’t that long ago. So you know, it is a challenge and, and oftentimes when these retail organizations are looking to roll out this change and talk to their vendor community, we oftentimes tell them it’s going to be the long pole in the tent to actually knowing who your vendors are and who you talk to at those vendors because those are the individuals you need to be engaging with when you roll this out.

And so I’d say that’s probably one of the more challenging areas in what oftentimes is funny is even as you’ll see retailers try to roll this out. They’ll tend to pull information from an accounts payable or some sort of system and then you’re talking to the billing contact over at your vendor who may or may not be able to make that decision on behalf of the company. So it’s really important, that’s where all of the work starts to happen is just getting to that right individual and decision maker and it can be really challenging to navigate.

WK:  By the way, for those that aren’t familiar with a Rolodex, it was a car system used on many years ago that allowed people to put contacts in and flip to them while they were making phone calls. (laughter) All right. So moving beyond that. So you’re bringing up a point there that I think is really interesting and that around, Hey, we ended up with an AP contact because accounts payable actually had someone we could talk to or they had it readily at hand. What I was thinking was though is you still have many people at your organization that may talk with your suppliers. So many people talking to suppliers leads to the risk of mixed messages. So what do you need to think about in terms of communicating the initiative internally before you’re reaching out to suppliers?

BP:  Yeah, you bring up a really good point and that’s an area that we focus a lot on with buying organizations and it’s around this idea of what you know, so wherever this project is initiated from could be in the technology team, the supply chain team, somebody in merchandising looking for a new way of kind of doing business. It is absolutely critical that you as an organization have taken the time to get the alignment across the leaders of each of those different functional areas and make sure that everyone has the buy-in and conviction that the business is going to stand behind as a whole. Because you hit on it, Warren. You have a number of folks that are talking to your vendor partners. You have a number of folks that are making decisions when you get in the trenches and start to roll out this change.

And if they have not heard from their leaders that they are on board, they have the conviction, this does need to happen, you will see that start to fall apart. And quite honestly it’s pretty amazing where you’ll see a buyer, you know – it could be a CIO of a company, a major company that’s running the initiative – but a buyer hasn’t heard from their head merchant that it’s really important to that head merchant and part of their initiative. And what you’ll see is the vendors will start to reach out to the buyers and the buyers are like, “I haven’t heard anything from I leader that says I need to do this, so I’m not going to do it.” But the CIO is actually, he’s already told the board they’re going to be rolling this out. And it’s amazing how many times you’ll see that happen.

It’s absolutely critical that you get that alignment, that leadership buy in and alignment upfront, and it is at the executive level. I know that can be challenging and hard and somewhat of a daunting task for folks who are looking to take on these change events. But it’s critical and without it, oftentimes you’ll see programs really start to fall apart. So it’s important that you determine kind of who needs to be in the room, who needs to be bought in, and then, and then really start to create that messaging to get everyone bought in.

WK:  You know, one, it’s going to be a challenge, too, if you do have a case like that. If you’re not aligned and if a supplier is informed by a buyer they don’t have to do it, and then you’re trying to go back to them later on. All of a sudden you’ve slowed things down. And I’m sure it’s from the supplier perspective, they’re thinking, “Well, I didn’t have to do with the last time. What’s changed?” So I’m sure, I mean, you’re creating a lot of work for yourself, I would imagine.

BP:  Absolutely. And that’s the one thing we always say is it’s that first moment of truth with your vendor community when you reached out to them and said, “This initiative is what we’re looking to move forward with.” The moment anybody in your organization comes back with any hesitation, your vendors will immediately kind of jump on that. You know, not jump on it necessarily in a negative way, but it creates some doubt in their mind that if they go through with it on their end, are you really going to stick behind it or not? Because you don’t seem to know about it or you have questions about it. And so yeah, that alignment- I can’t even. You know, we attempt to put a weight on it, but you can’t even put a weight on it in terms of the importance of it and actually effectively rolling out change.

WK:  Do you have any advice for organizations how to disseminate that? I mean, I think about some of the organizations that I work with and you think about, “Okay, well the merchandising team is on board, but then wait does second, there’s also our procurement team that’s probably involved with some of the day to day back and forth with suppliers or vendors.” Any advice on how you would push that through? Because you could potentially have a lot of people.

BP:  Yeah. You know, that is a great question and I don’t have an easy answer for it quite honestly. Usually we attempt to find an individual or a champion within a buying organization that may or may not be attached to the project that has the ability to align across various folks in the organization. It could be title, but oftentimes it’s not even title. It’s just understanding how the makeup of the organization works and who needs to be brought in, and that’s usually where we’ll start with the either the project sponsor on some of these or else the project managers is starting to figure out who in the organization can get the folks aligned and bring the right folks into the room. And usually you need to find somebody that’s pretty good with kind of change management has those relationships that are across the company that can get folks into the room.

That’s where, I would argue, buying organizations do need to look to partners like SPS in some of these initiatives. “So okay, if I get the right people in the room, what types of conversations do I need to have with them? I haven’t been through a big change program like this. I haven’t asked my suppliers to do something this big. What does that look like?” And that’s where we really lean on if you can help us get these players from your organization in the room, that’s where we can start to come in and talk about what some of the best practices are and what the impact will be if you’re not able to follow some of these best practices and to start to think about this as an organization.

WK:  So there are a lot of different variables going on here, which always leads me to- well, change can be challenging. So can you talk a bit about for organizations taking on a change like this, how important is their, really frankly, company culture when it comes to change management?

BP:  Yeah, it’s absolutely critical. You know, oftentimes I’ll say technology is usually the easy part. And I know that might get some cross looks from the technology folks that might be listening to this, and that’s not to downplay it. There’s a lot of work that needs to happen with the technology side, but that’s usually the piece that ends up being executed really well. When you start to run into challenges- And so, okay, now we’ve built out the technology, “Now I’m capable of doing this. Now my vendor partners are capable of doing this, but it’s a different way of doing business.” And my business, my teams that run my business have gotten really accustomed to doing things the way that they have.

They’ve been really successful at doing business the way that they have. Why should they be doing it differently? And I can speak to this as a buyer for many years and coming out of a buying organization, buyers are sometimes the hardest because they’re really good at what they do. But they get very set in their ways. They get very comfortable with Excel, they get very comfortable with email, and those aren’t necessarily the most efficient ways for a business to run. And, and as you know, as companies make this change, that’s the challenge that they’re working through. And so you’ve gotten through the process of going out to your vendors, you’ve gotten the technology put in place. But really staying behind this as a culture, as a business, we’ve got to adopt this in order to keep up with what our consumers are looking for is absolutely critical.

WK:  All right, so let’s go down the path of, you’ve really rolled out this change, the project’s rolling and going along with that, there are always the bumps that come up along the way. And so we just talked a little bit about, I think it was a great explanation you gave around the cultural shifts, but are there other steps that have to get made to really ensure that cultural piece stays ingrained?

BP:   Yeah. Gosh, there’s no, honestly that question, there’s a lot there. And I’d start with, you know, there’s the cultural piece is we spend a lot of time- and you heard me talk about getting executives up front. Well, what we’re seeing a lot of need for is, okay, well once that technology’s in place and the new capabilities are in place for the retailer and their vendor community, we then come back to them. We spend a lot of time with the executive team saying, “Okay, here’s what we learned about you. Here’s what we learned about your vendor community”. And it’s important that retail organizations take that time to say, “Okay, well now what’s next? How do we want to really keep this change driving and going forward?” And quite honestly, it usually entails a high level of cross functional teams within the organizations working together. Working together across technology, supply chain, merchandising, finance: you know, it really touches all those parts.

But it’s continuing to make sure that the change in the day to day way that the business operates is really being seen through and trained on and coached on and developed on. And I would say that’s probably the most like critical area to kind of start as you get through this change and start to get into the adoption side. And that’s not even getting into the whole, you know, compliance monitoring side of it.

WK:  That’s actually I, we’re just going to ask about us. And so we’ve, you’ve talked a lot about here, the alignment internally, we’ve talked about reaching out, having the right contact at suppliers to move forward. But there is that element of, “Hey, it’s great we did this initially. How we make sure we’re doing it for the long term.

BP:  Yeah. Yeah.

WK:  Any advice there for folks on how to think about that strategy?

BP:  The compliance piece is really where we start to look at it and we say, you know, there’s a whole component of this around vendor management and data flow monitoring that starts to play into this, regardless of what change you put into place. Oftentimes we use this concept of a vendor scorecard and vendor relationship management. And that’s not intended to be a negative thing, it quite honestly can be a great alignment tool between these buying organizations and their vendor partners to say, “Hey, remember we rolled out this change here with our expectations? It looks like you’re not sending this document with this data piece. And as a reminder, here’s the impact that it has on us when you don’t do that.” Or “It looks like you’re doing really good in this area, but we’re struggling in this area. Let’s talk about how we can start to help each other.”

And SPS certainly plays a key role in being able to help retailers and buying organizations do that, but there becomes a point in time where you do have to enable those folks that are owning the vendor relationships to just have that as part of their ongoing dialogue. Because you rolled out this change because it was critical to your business, that should be a part of that ongoing dialogue between your buying and purchasing team and the vendor community on how they’re performing. It’s just another, another metric, another thing you’re looking at similar to the way that buyers will talk to their vendors about how their sales and items are performing well. Some of that could be impacted by how well they’re adopting this new change you put in place as well and tying that conversation together is really critical.

WK:  I really liked the point you made there about this is what it’s costing us. I think the tendency when you hear about compliance is to jump immediately to the really large retail organizations that are doing chargebacks and direct fees and I think there’s an awful lot of room there for other partners really to look at it as well. Maybe it’s not a direct cost to you, but it’s something that we’re tracking and that can be an awfully beneficial conversation helping suppliers to understand the value to you.

BP:  Yeah. It’s funny that you bring that up, the whole compliance relation to charge back. I feel like those two are falsely used interchangeably. And they’re not, you know, it’s certainly historically, sometimes if a vendor is not compliant with a retailer, they will use chargebacks. But we tend to get into these conversations with retailers, and I would argue, compliance is as much about education in a business relationship as it is about a charge back. Like, sure, you can charge them back, but they’re probably going to be taking that money out of somewhere else. So rather than just charging them back, which sometimes is just required to get them to take note, but rather than just focusing on the charge back, the compliance really can be about relationship and education that we can see move the needle significantly. And I would argue oftentimes even more productive than actually layering a charge back into the conversation.

WK:  All right. Well do you have any other final thoughts or advice for companies who are thinking about these types of transformations and really focusing on how do we do it well?

BP: Yeah, I think  you know, for me, it would be when you start to undertake these projects, especially, you know, I talked a little bit about the change in the culture, and what I would argue is, we tend to work with retail and buying organizations that are really successful at what they do

But change management technology layered into supplier relationships? They aren’t doing that a lot. You know, they tend to be successful based on the way they’ve done business and how they’ve done business. And so really my advice would be, when you start to look at that change look at kind of what are the things we need to be considering? What are the things we need to be preparing for? Are we certain that this is important to our business? Because it will be requiring change on both myself and my vendor partner and I really need to think through, “Okay, well when that happens, do I have a strong firm grounding in this is absolutely the right business decision for us?” Because any little friction, any little pushback that comes up along the way is really going to test you and you’ve got to be confident that “Yes, this is where we’re going to go.”

And once you have that in place, some of the stuff we’ve talked about today is all that much more easy to start to implement. But if you don’t really have that firm ground in that “This is absolutely critical and here’s what it’s going to deliver for us for our business,” and “This is why it’s important,” it can be hard to see some of that through. And we see that all the time. You know, we’ll have CIOs and CEOs that come to us with the change that they want to pursue, but it sounds nice or it might be nice to kind of go down that path. And then they start to go down that path. And a couple of vendors are like, “Well, this is going to cost me some money. Are you really sure you want to do this?” And then they’re like, “Nah, I’m not really sure.” And next thing you know, you went out to your vendor community without that conviction and you’re kind of seen as a less strategic, less thoughtful organization and individual. And so that’s where I continue to come back to, you know, you’ve got to think about how important this is to you and your business. And then we can start to work through some of the stuff that’s related to how do you get your organization onboard? How do you develop that messaging? Getting your vendor community- those things will start to fall in place so long as you really have that conviction around moving forward with the change.

WK:  All right, so clear conviction, a clear vision for where you want to go, figuring out the right pieces around how you’re going to contact your suppliers, really looking at your culture and embracing the change.  Anything else you can think of?

BP:  Yeah. Yeah, that’s a good question. I guess, you know, we talked a lot today about some of the things that I would term that are best practices for how to get an organization ready for change. And those are some of the tried and true principles and practices that we see put in place. You know, the last thing I guess I would comment on is just more so of providing the organizational lens to the future. You know, one of the things I love about what we do when we work with retail organizations that are working through these big changes, is they truly do start to see the impact and benefit that it has on the organization when they get through this change.

And you know, one of the best examples I have is we were recently just onsite with a buying organization with about 50 folks from their purchasing team. And when we started to go through some of the tools and things that they were now all capable of, you could see the excitement and passion for how they were thinking differently about how to manage their business. And these are the same folks that were having to comb through their Rolodex to find the vendor information, they were having to respond to the vendor questions. And you know there certainly was some involvement from them and some challenges with them as they look back on the process. But having them kind of see the outcome just further reminded me of just the need to paint that vision for your organization, that what you’re embarking on is going to have this type of business impact. You’re going to see a day, four months from now, where you’re going to have an improved business process where you’re spending two hours less following up with your vendors or you’re going to be driving two times the amount of sales because you’re not having inventory bogged down because you didn’t know where certain shipments were at.

And it’s that ability to kind of set that vision and execute on that for the company. But it’s, it’s fun to watch as organizations go through this change and start to see the real impact because it absolutely is enabling them, you know, to leverage the things that they’ve always been really good at. But also adopting that to what things they could be doing even better.

WK:  Well, this has been great and just some great advice, some great, great observations there. And it’s not often you hear of a Rolodex referred to twice in 20 minutes this day in age. So thank you so much for the time.

BP: Right. Yeah, absolutely. Thanks, Warren.

WK:  Thanks for listening to this episode of Mastering the Retail Game. You can read transcripts of this podcast, review show notes and listen to other episodes by visiting spscommerce.com/podcast or by subscribing through most major podcast streaming services. Join us on the next episode of Mastering the Retail Game for more tips on to win in the new retail environment.

Until then, this is Warren Knapp signing off.   

Explore the new rules of retail and get real-world advice on how to win by learning from retail experts and peers in the industry.

More and more retailers and suppliers today are adding drop shipping as a fulfilment method. Also sometimes referred to as direct-to-consumer, drop shipping is essentially when a supplier, vendor or brand ships an online order on behalf of a retailer. The retailer never has physical possession of the product, and the consumer never knows the difference.

Drop shipping programs take careful collaboration, communication and trust between businesses. This episode explores what it takes to start a drop shipping program, as well as offers tips for expanding existing drop shipping programs.

Kristin is a results-oriented leader with over 20 years of experience developing, motivating, and directing high-performing teams, while managing multi-million dollar programs. She has extensive experience in building customer partnerships for Fortune 100 level clients with a proven track record of achieving results. Previous to her time at SPS Commerce, she worked in director roles at Digital River and Knoa Software.

Bekki Windsperger is a Consumer Product Goods (CPG) industry expert with more than 30 years of experience in developing and supporting Business to Business (B2B) integration, with a focus on optimizing and automating Supply Chain and Item Management business processes. Before she came to SPS Commerce, she held positions at Supervalu, Pillsbury and Best Buy.In 2017, she was named as a Supply & Demand Chain Executive “Pro to Know.”

Senior Customer Strategist, SPS Commerce

Drop Shipping Guide
Drop Shipping 101 Infographic
Drop Shipping 101 Webinar Video
The Direct-to-Consumer Journey from the First Order Through Automation (Research)

Kristin Ploetz (KP): Welcome to the Mastering the Retail Game podcast from SPS Commerce, where we explore the new rules of retail and provide real-world advice on how to win by learning from your peers and industry experts.

I’m Kristin Ploetz, your host for today’s podcast. In this episode, we’ll be talking about the importance of having a drop ship program.  Drop ship is also known as a direct-to-consumer order model. Drop ship is used when a vendor or brand fulfills an online order on behalf of a retailer and ships directly to the consumer.

Since the product is sent directly from the vendor, the retailer does not maintain the inventory or ever have possession of the physical product during the order cycle.

When the consumer receives the order, it looks like it came directly from the retailer with their own branding. When this is executed well, a drop ship capable vendor is a superstar in the eyes of a retailer while remaining behind the scenes to the consumer.

Today we’ll focus on the key factors to consider when adding or expanding this capability for retailers and vendors. A successful drop ship program requires careful collaboration, communication and trust between businesses. As both an avid online consumer and supply chain professional, this topic is very close to my heart, so I’m excited to be talking about it today.

Joining me is my colleague Bekki Windspberger, who is a Senior Customer Strategist at SPS Commerce. Bekki is a Consumer Product Goods industry expert with more than 30 years of experience and she’s here to share her experience and expertise in mastering a drop ship program. She previously held positions at a national grocery retailer, national electronics retailer and an international food manufacturer before she came to SPS.

Her expertise ranges a wide variety of areas such as developing and supporting business to business system integrations, item management systems and processes, and optimizing and automating supply chain. In 2017, Bekki was recognized as a pro to know in her field. Welcome to the Podcast, Bekki, and thanks for joining us today.

Bekki Windspberger (BW): Thank you Kristin.

KP: In the introduction, I briefly touched on what drop ship is, but now we’ll unpack that and go into the details. Becky, let’s start with why retailers are pursuing drop ship as a fulfillment option and the need to find the vendors who are drop ship capable.

BW: First, and this one is probably the most important, is that more and more consumers are making purchases online and the retailers want to be that go-to site. As their online sales grow, retailers are looking for vendors to help fulfill the volume of orders in a timely manner to meet the customer’s experience. Another component to add in drop ship capabilities is the ability to expand the product assortment without the added cost and risk of carrying inventory. If the consumer’s standing in a retailer’s store and likes a product, but wants it in a different color, the retailer can now save the sale with the option to ship directly to the consumer’s home. And along those same lines, retailers are much more likely to test a new category on their website as there is lower risk, lower cost and lower effort to offering these new products online versus in store. If the offering’s a hit, the retailer may consider stocking the products on their store shelves as well.

KP: So what you’re saying is it costs less because I don’t have to carry that inventory and I can take the risk of expanding my offering digitally because I don’t have to buy it all. That’s great. It sounds like there’s a lot of benefits to the retailer. What are the benefits for the vendor to invest and offer drop ship as a fulfillment option?

BW: Well, when you think about it, a lot of what I talked about from the retailer perspective really applies to the vendors as well. It allows the supplier to expose the retailer’s customers to more of their catalog. It can open relationships with new retailers, and realistically it should drive additional sales. Retailers are seeking drop ship vendors out, so just having that capability already in place gives the supplier a leg up on their competition that may not be offering drop ship. And then once the suppliers master drop shipping for one retailer, they can expand that capability with additional retailers with just some minor modifications. So proven drop ship program with statistics to back it up are a major selling point for retailers looking for drop ship vendors.

And then once a drop ship competency is built out, it opens the possibility to join marketplaces, build out direct to consumer sales channels, but of course, this requires operational excellence. You don’t want to expose yourself to the customer until you know what you’re doing. So those are the most common benefits to both retailers and suppliers, but there could be more depending on the company’s long-term strategy.

KP: Okay. You mentioned that retailers are looking for drop ship vendors. How do they most commonly source those vendors with drop ship capabilities and then start the relationship?

BW: What we normally see is the retailer looks at expanding the assortment with their current vendor community. They’ll start carrying every model in every color and every size online while still just keeping the top selling skews in their stores. Otherwise, the retailer finds new vendors through trade shows, conferences, or even through third party sourcing companies that align retailers with vendors, and capabilities, and product lines, kind of like a match.com.

KP: Oh, great. And does it work both ways? Do vendors typically use the same method to let retailers know about their drop ship capabilities?

BW: Yes. A lot of what you talked about from the retailer’s perspective also applies to the vendor. Drop ship vendors that are already working with a retailer have an in. When they want to expand they may just reach out to retailers and say, “Are you looking at doing drop ship? We have the capability. Do you want to move forward?” Otherwise, they do attend the same trade shows and conferences and so by advertising it they just make a visibility through that. And then of course the third party sourcing is always another option.

KP: Okay, so focusing on the retailer for a moment, what is important for the retailer to consider when they’re evaluating a vendor for a drop ship relationship?

BW: You really need to look at the drop ship vendor as an extension of your brand because in the end the consumer is going to hold the retailer accountable for their order experience. A retailer must have confidence that the vendor will be able to provide a consistent branded experience to the consumer. So here are some things to take into consideration.

First, confirm the vendor has the capability to fully support a drop ship order model with automation. It just can’t grow in a sustained drop ship without automation of information being exchanged.

Secondly, the retailer has to know the vendor can provide visibility to current inventory sales of products that oversold. Kristen, have you ever ordered something online to only be told days later that it would not be fulfilled? I know that I had, and it put a bad taste in my mouth, and I’ve been hesitant to order from that retailer again.

KP: Oh, agreed. And anybody who’s ordered something during Black Friday and then later told they couldn’t have the item because it was out of stock knows what that’s like as well. My own experience has gone both bad and good but when I’ve worked with a good e-tailer, I now have the expectation of that full automation where I understand and know the status of my shipment the entire way right up to the point where it arrives at my doorstep. So anybody who’s providing less than that, I have no confidence in buying from.

BW: I agree with you there. And last, they should define upfront how returns are going to be handled with the vendors. So if a consumer buys a product and they don’t like it and they return it, what do you do with it? Does it go back to your store? Do you have it shipped to the vendor? All that needs to be defined upfront and it has to be part of the agreement between the vendor and the retailer. Nobody wants returns, but they’re a reality.

KP: Okay. What should the vendor be considering when they set up their drop ship programs?

BW: Automation is probably going to be the help for all of this. Theoretically you can do drop ship without automation but there’s a great risk. What happens if you get a hundred orders in five minutes? You’ve got a risk of missing an order, or risk of manual errors by manually keying the data, and if you want to do it for the most important retailers, it’s required to consistently hit their strict turnaround times at all phases of the order. So manual processes will slow that down. Fundamentally, you need to have the right people, process and systems in place to fully support your retailer’s requirements.

KP: Let’s go back to sourcing for just a moment. When a retailer has found a vendor that they do want to work with for drop ship, what is the next step to formally establish that agreement and the relationship?

BW: You really have to have specific requirements defined for drop ship and that needs to be communicated as either part of a master agreement or a vendor guide. Sharing your compliance and having that well documented is important. It may just be an amendment to a contract with the current vendor, but however you need to consider that there might be different terms and pricing may vary for drop ship, so that needs to be part of the updated agreement.

KP: Okay. From a retailer perspective, what details are the most important when preparing to expand my product assortment for drop ship?

BW: Well, first off, you need to have a clearly defined process for capturing and storing item data. It’s important to consider what data you require to set up the item in your system to order, but also what data is important to drive the end consumer to complete the purchase. And this can be challenging if the retailer expands into new categories that require different or new attributes you’re not familiar with.

Next, they need to review both the quality and quantity of data that their vendors can provide. For example, product images are often one area where the quality can be a challenge. You may find that smaller suppliers may have nothing more than an iPhone image, which may not meet your quality standards for your website.

Often suppliers are unable to meet your full data requirements. Some just haven’t caught up to the demand of their item data, or they may not have a central repository, which would make it difficult for them to access the information and to keep you up to date.

KP: Okay. So understandably, the quality digital content for each product is critical to being able to sell to your consumer. What happens when a retailer finds a vendor they want to work with, but the vendor can’t provide the quality digital content that’s required for their product lines?

BW: So if the vendor can’t provide it, the retailer should consider staffing in the intentional workload they would need to do to mine the data themselves. There’s third party providers that can do much of that work for the retailer or the vendor, but it certainly isn’t cheap. Overall, it’s probably most important to be reasonable what you’re asking for and the more you ask for the likelihood of delays to provide the data increases, which can mean lost days of sales.

KP: I can really see that from both sides, at least in my own experience as a consumer. I recently was price shopping a piece of furniture online and the best site that I viewed had multiple pictures, the full set of dimensions, information about the materials, and I could confirm exactly what I wanted. And even though that wasn’t the lowest price, I bought that because I had high confidence that it met exactly what I was looking for and then avoided that risk of having to return it.

BW: Absolutely. I certainly agree with you there.

KP: So once a vendor’s live and ready to drop ship, what needs to be in place to ensure production runs efficiently?

BW: So there are four things. Monitor, monitor, monitor and measure. So you need to be able identify how you will monitor and manage vendor compliance. What systems do you have in place to provide this visibility? You also need to have people and a process in place to work with your vendors to resolve the errors quickly to avoid losing customers.

KP: Well, clearly monitoring is important and I would agree with that. What advice do you have for vendors who want to take a step forward toward adding drop ship to their capabilities?

BW: So if the vendor’s just getting started, they need to get ahead of it by following the process all the way through their warehouse. How do they take in orders? How does that product flow currently? And how will that change for drop ship so that they can build up drop ship and continue to improve the process? They have to ensure that communications with the retailer’s on point and timely. So if there’re going to be delays or an order can’t be fulfilled, the retailer needs to know to keep the consumer informed.

Automating this through electronic communication such as EDI can streamline the communication significantly and that ties into the next piece of advice, which is to find a way to automate your inventory updates for your retailers. Timeliness of this information is critical, especially during peak seasons, as you mentioned, Black Friday. So we’re seeing some retailers moving from a daily fee to even hourly or more often during the holidays.

And last, it includes item data. Retailers need those details for their product pages and the more complete the information, the more likely consumers have the necessary information to make the purchase. They’re not touching and feeling the product so that’s got to be available for that on the website so that they know what it looks like, whether it has buttons, zippers, whatever, to ensure that they know what the product is when they make the purchase and that they get what they ordered, which eliminates or reduces returns.

KP: Well anybody who’s done shopping on Black Friday can certainly appreciate the importance of inventory awareness if you’ve ever tried to purchase something on a great deal and then found out there was nothing left. So you’ve made it very clear that monitoring is critical to success. If the vendor’s already doing drop ship, what should they be monitoring to identify where they need to improve?

BW: They should be working to evolve their drop shipping program to be better and faster because eCommerce is just not standing still. Timelines are getting shorter with next day deliveries and in some cases same day delivery is becoming the norm.

So look at your data, track your performance to help identify where fixes or changes can improve the process to move faster and become more accurate. What are your fill rates? Are you shipping on time? Are you experiencing more returns than usual? And if so, what are the reasons? So the consistent monitoring helps identify the issues so they can continue to tweak the system and people and processes so they can perform better going forward.

In the end, demand for drop ship will continue to grow and it can be a win, win, win situation all around. Retailer’s able to offer up more products, which should attract sales. Supplier gets more of their catalog and the retailers’ assortment and may establish new relationships and drive sales. And the consumer gets what they want when they want it.

KP: Great advice on all the areas of drop ship order model. Becky, this has been a great conversation with valuable information, not only about the importance of drop ship, but also the key aspects of getting started and improving operations. Thank you so much for visiting with us and sharing your expertise.

BW: You’re welcome.

KP: Thanks for listening to this episode of Mastering the Retail Game. You can read transcripts of this podcast, review show notes and listen to other episodes by visiting spscommerce.com/podcast or by subscribing through most major podcast streaming services. Join us on the next episode of Mastering the Retail Game for more tips on how to win in the new retail environment. Until then, this is Kristin Ploetz signing off.

Throughout the year in the Minneapolis – Saint Paul area, technology professionals come together for a variety of events and activities to share their knowledge, experiences and skills with others. The result is a more collaborative culture across the Minnesota tech community, one that is already recognized for innovation and entrepreneurship.

This episode explores some of those events, in particular those hosted by local non-profit organization Minnestar and those in which SPS Commerce participates. Often the two organizations join forces to host events together.

CTO, SPS Commerce

Minnestar
Minnedemo
Minnebar
CodeDay
Hack the Gap
Hack the Heat

I’m your host Sam Olson, and in this episode we’ll be exploring the ways technology professionals are coming together in the Twin Cities to share their insights, enthusiasm and knowledge with others in our community. The result is a more collaborative culture across our region, one that is already recognized for innovation and entrepreneurship. Today we’ll be speaking with Maria Ploessl, Executive Director of Minnestar and Jamie Thingelstad, Chief Technology Officer for SPS Commerce. Both SPS and Minnestar have undertaken efforts to nurture Minnesota’s local technology community and these two organizations often join forces to host events together here in the Twin Cities. Welcome to the program, Jamie and Maria.

Maria Ploessl (MP):   Thanks for having us.

Jamie Thingelstad (JT):   Thank you.

SO:   Of course. Gotta tell me, what makes the Twin Cities such a great place for technologists to live and work?

MP:   I guess I could start with that. The Twin Cities tech community has grown so much in the last five years, and I think we’re starting to get a lot of the attention of being such a hub in the North and in the Midwest. Some reasons for that being a really smart and strong educated workforce here. One thing that is unique for the Twin Cities is that we have a big diversity of industry, meaning we have med tech, we have agtech, we have retail, we have a whole bunch of different industries that we’re strong in and we also have a diversity of size. So we have one of the largest, if not the largest, concentration of Fortune 500 companies per capita in the US and we also have a growing and thriving startup community here. So I think the ecosystem really speaks to it. It’s really growing. We’ve a great quality of life too. I don’t know. Is there anything you want to add to that?

JT:   Yeah. I think that in addition… I completely agree with the items that Maria brought up. We’ve also had a growing technology scene going back decades, going back to some of the early generations of technology that started here with some of the foundational tech companies that are around, Unisys, Honeywell, etc. still laying that groundwork. But then, we have had a very passionate community that has kept that ecosystem thriving over many years. Whether that’s your startups, established companies, your great organizations like Minnestar that keep that community together. And it shows and you look at the number of meetup groups that we have, the number of conferences that we have, the Twin Cities Metro has been an area that just consistently has a longstanding tech population.

SO:   Well, and Maria, building off of that Minnestar’s played a big role in developing this dynamic community. Can you tell me more about it and why it’s unique?

MP:   Definitely. So, Minnestar’s mission, we exist to build, nurture, and engage those interested in technology through meaningful connection. So, we’ve been around since 2006, we’re a nonprofit. We’re focused on people and community. Actually, Jamie was one of our very first board members. You were our first a –

JT: Yep. First chairman.

MP:   First chairman of the board. So, when we talk about building meaningful connection in the community, and we’ve been doing this since 2006, a big way that we do that is through events. Two of our big ones that we run, is we have Minnedemo and Minnebar. So Minnedemo, if you’re not familiar, it is a demo and showcase of Minnesota made technology. So, we have this kind of saying in there, no slides. People are going to go up there and they’re going to plug in, they’re going to show what they built.

SO:   Love that.

MP:   It’s awesome. And so, it’s really a showcase to connect and to get inspired. It’s tech show and tell. We have one actually coming up this week at the Riverview Theater on Thursday the 10th. We do that roughly three, four times a year. And then we also run Minnebar. And if you’ve never heard of Minnebar, you should definitely come out and check it out. It is one of the largest and longest running tech unconferences worldwide. So if you’re not familiar with an unconference, it’s a participant led community generated conference, so anyone can submit a session. And because of that, every year we’re seeing different sessions. We see stuff from AI to entrepreneurship, security, marketing, drone racing. You see a whole bunch of different things all coming together for this massive knowledge share. Last year Jamie, I think we had 1,400 people?

JT:   Yeah, yeah.

MP:   And about 150 different sessions throughout the day.

JT:   1,400 people who are passionate about technology taking a Saturday, usually a really delightfully pleasant Saturday in April in Minnesota to just spend time learning about technology.

MP:   It’s awesome.

SO:   It sounds awesome to me.

MP:   Yeah. The next one is April 25th and we always have that all day. All of our events are free and open to the public, to anyone with an interest in technology.

SO:   That’s awesome. That’s really cool. Who typically attends the Minnedemo events and how have they inspired your members to share their passion of technology?

MP:   So Minnedemo is, we always say it’s for everyone, right? A lot of the folks that come, it could be a developer, an entrepreneur, investors, designers. My sister is a nurse and she is at every single Minnedemo because she just like seeing what people are building and it’s inspiring, seeing people have this thought and this idea and this dream and then build it and the community really rallies around them. And we also see sometimes folks are attending these events and it inspires them to go out and build their thing. And we’ve seen folks who have been longtime attendees then present that thing that they got inspired to build.

SO:   So, the passion of one becomes passion of many, just right then and there.

MP: Yeah!

SO: I love that. Jamie, why have you chosen to directly participate and promote these local tech communities?

JT:   The answer is pretty simple. I’m part of the technology community and I want to see it continue to grow and thrive and get bigger. I want to be able to, 10, 15, 20 years down the road still see amazing innovation happening in the technology space here in our local community.

SO:   I love that. I think so do we all, and you’ve been a supporter of Minnestar for several years. What about this organization particularly, personally inspires you, as well as your teams?

JT:   So, the thing that I have always been drawn to with Minnestar is that I often refer to the organization as the flywheel underneath a lot of what happens inside of the Minneapolis and the Twin Cities tech scene. We’re not specifically focused on only startups. We’re not specifically focused on any type of technology. We’re really operating at a level lower and connecting people who are passionate about technology. I can tell you from that has derived a lot of startup activity, a lot of projects inside of established companies and a lot of just having fun. And so I like the fact that Minnestar, it looks at its success in a very broad way. Not looking at a single metric or a single industry, but a very broad way. Just saying, “Are we catalyzing that kind of activity here in this community?”

SO:   And I like the idea that I could tell one of my friends personally, even if they don’t have the biggest tech background in the world, “Hey, you need to go attend this Minnestar event.” And that sounds like they could get a lot out of it if not become personally inspired.

JT:   I’m routinely asked by people that just moved to the region and they’ll say, “How do I get introduced to what’s happening?” And it’s like, “Well, number one, go to Minnedemo. That’s the very first thing you should do.”

SO:   Absolutely. And Maria, then, why did you choose to get involved with Minnestar?

MP:   When I was very first new to the Twin Cities tech community… I’m kind of a boomerang. I grew up in St. Paul, moved away for a number of years and moved back. And when I was kind of reentering the community, actually, the first community event I went to was a Minnedemo and it was during Twin Cities Startup Week at Riverview. And I remember pulling up and the line’s down the block and I’m like, “What is going on? This is incredible.” And I was really new, I didn’t know a whole lot of people and I was standing in line and there is this one guy who saw me, who I knew and he was kind of VP level at a company in town and he saw me, he knew that I was by myself and that I was brand new to the community.

And so he took upon himself, he’s like, “All right, you’re going to sit with me, I’m going to introduce you to all these people.” And that feeling of inclusion and that feeling of welcoming and really that extending that hand into a community was something that I had not experienced before. And it really, really stuck with me. So, throughout that previous role I had Minnedemos, Minnebar, all the Minnestar events were something where I felt like that was really unique and I felt really lucky to have that experience and I really wanted that to be replicated and we always, myself and the board, really want to cement that feeling for folks that are coming to the community, that they have a network of folks who are there ready to welcome them and help them get plugged in.

SO:   Makes sense. Jamie, why does SPS participate in or put on these kind of activities?

JT:   We have a corporate value of giving back and we want to give back to our communities that we’re part of and we’re part of a number of communities. And one of those that we look at is our local community where, this week we’re hosting two events that are part of Twin Cities Startup Week. We have long been one of the hosting partners for the DevOps meetup group in the Twin Cities area. We also hosted one of the cloud meetups for a number of years. We’ve even made our space open to organizations that are running events. Like there’s a group that runs a hackathon for high school students and we’ve hosted that, where they come in and spend 24 hours in a row building solutions and we hosted that as well as had our team members involved in that.

And then the last one I call out, we have a Women in SPS Technology team that also engages with the outside community. This weekend I was at Hack the Gap and we had a very strong presence there. We’re both helping mentor teams that were building solutions and just making sure that we’re part of helping solve that diversity gap that we have in technology as well. So, it’s part of our give back value. And we also think, by the way, we get a lot out of that because our team loves to do it and things that make our local community stronger, make us stronger.

SO:   How does participation in these communities impact the customers that we serve?

JT:   In a number of different ways. I think for us, first of all, sometimes we have customers that are in those communities and it’s a way to actually connect with them directly, but I think we also take away a lot of best practices, a lot of innovative ideas. When our team gets involved in these organizations or in these events, they get to see some of what’s happening outside of our four walls and those ideas come back into our organization and make for better solutions as well. And then it’s rewarding and engaging for the team, which helps them bring their full self to the solutions that they’re building.

SO:   Absolutely. I know I had a couple fellow SPSers that attended the Hack the Gap event and had a great time and got a ton out of it. So I really love that we continue to participate in and host these kinds of events. Are there any last messages, Jamie and Maria that you’d like to include that we haven’t already discussed?

MP:   I think just, I always encourage people to get involved in their local community. If that community is the Twin Cities, do a talk at Minnebar, show up to a Minnedemo. support and mentor junior devs and young entrepreneurs when we do Minnedemo back to campus. There’s a ton of ways to give back in the community and it always makes our community stronger.

JT:   Yeah. And I think, as you build out capability, as you build out your team in a community, really being thoughtful about how you bring value back to that community is important. And so I would say that, get engaged, give a talk and that’s a great way to get out there. And if you don’t feel like doing that, just be active in the meetup circle, and share your ideas with the broader community. You’ll get a lot out of it, at any level that you participate.

SO:   And of course, as you said earlier, both of you extend a hand, right?

JT:   Absolutely. Yeah.

SO:   Absolutely. Jamie. Maria, thanks for your time. Thank you so much. Appreciate it.

JT:   Thank you.

SO:   Thanks for listening to this episode of Mastering the Retail Game. You can read the transcripts of this podcast, review show notes and listen to other episodes by visiting spscommerce.com/podcast or by subscribing through most major podcast streaming services. Join us on the next episode of Mastering the Retail Game for more tips on how to win in the new retail environment.

This is your host, Sam Olson, signing off.

Explore the new rules of retail and get real-world advice on how to win by learning from retail experts and peers in the industry.

Managing item data for hundreds or thousands of products isn’t easy. Every retailer and vendor has a different idea of how much product information is sufficient to satisfy their requirements. Each organization also wants the data in their own unique format and language. Trying to maintain all that information can get real complicated, real fast.

Streamlining item data management is not only achievable, it can be extremely helpful for the retailers, the vendors and even the consumer. Standardized item data is easier to disseminate across sales channels. Detailed product information helps consumers make decisions on what to buy, especially when it comes to digital channels.

Bekki Windsperger, a Consumer Product Goods (CPG) industry expert with more than 30 years of experience, has spent much of her career optimizing and automating supply chain and item data management processes. She had some advice to offer on streamlining item data management for businesses at any point in the supply chain.

With over twenty years in the complex world of EDI, Bonnie Keyworth adds value to retailers and suppliers by designing solutions for a variety of ERPs and for any transaction required in their supply chain. As a Senior Solution Strategist with SPS, she enjoys the variety of projects and the new challenges each one presents. Working closely with customers on common goals is a top strength for her, which drives her toward success with every endeavor.

Bekki Windsperger is a Consumer Product Goods (CPG) industry expert with more than 30 years of experience in developing and supporting Business to Business (B2B) integration, with a focus on optimizing and automating Supply Chain and Item Management business processes. Before she came to SPS Commerce, she held positions at Supervalu, Pillsbury and Best Buy.In 2017, she was named as a Supply & Demand Chain Executive “Pro to Know.”

Senior Customer Strategist, SPS Commerce

Bonnie Keyworth (BK):  Welcome to the Mastering the Retail Game podcast from SPS Commerce, where we explore the new rules of retail and provide real-world advice on how to win by learning from your peers and industry experts.

I’m your host Bonnie Keyworth and today we’ll be talking about setting up new items in your system.

Deciding to carry a new item is just the beginning. It has to be set up and made available for purchase, and every day a new item isn’t ready in your system is another day you’re losing potential sales. But far too often the process can take weeks. Streamlining the new item setup process can shorten that time to just a few hours.

Today we’ll be talking about proven techniques for quick, error-free new item setup with my colleague Bekki Windspberger, Senior Customer Strategist at SPS Commerce. Bekki is a Consumer Product Goods industry expert with more than 30 years of retail experience, leading initiatives where item setup was a critical step. Before she came to SPS, she held positions at Supervalu, Pillsbury and Best Buy.

Welcome to the podcast, Bekki.

Bekki Windsperger (BW):  Thank you. I’m glad to be here.

BK:  So let’s take a step back here a little bit and talk about what we mean when we say new item setup. Is it exactly what it sounds like?

BW:  It is pretty much exactly what it sounds like. Whether you’re a vendor offering a new item or a buying organization looking to carry a new item, you’ve got to be able to mutually identify the item within your systems. The buyer needs to be able to, at a minimum, capture the item identifiers to be used for ordering, price they’ll be charged, product descriptions and other data needed to order the product from the supplier. But there is additional data required to publish the item to a website.

BK:  Ah, of course, the complexity begins.

BW:  Yes, it does. If the retailer is offering buy online or pick up in store, the consumer will want and expect to know more details before they place an order.

BK:  Bekki, please share some examples of the additional data needed for the consumer.

BW:  Think about how you as a consumer shops. Depending on what you’re searching for, the information you need or want to make your decision varies significantly. For instance, clothing. At a minimum you want to know the size, the colors, whether it’s women’s, children’s, plus sizes, what is the makeup of the material as well as other product information about the item. But probably most important one or more images so you, the consumer, knows what it looks like.

BK:  Right. I’ve even seen some websites that list the height and size of the model wearing an item. What other types of products and industries deal with this?

BW:  Well, if it’s a grocery item you’d want to know the size of the item. Is it a 17-ounce jar or a five-ounce jar? Nutritional information and probably really important to some people, does it contain any allergens such as nuts? When you’re looking for a new laptop, you likely want to know operating system, storage capability, capacity, screen size, RAM and things like processing speeds.

BK:  With all these variables per item, what is the typical current process for item setup?

BW:  The industry norm is exchanging spreadsheets.

BK:  No. Bekki, say it isn’t so.

BW:  I’m afraid so. Depending on the buying organization’s systems, they may be able to import the spreadsheet, but it’s still very common that they’re manually keying the information into their systems. That manual data entry can be inaccurate and time-consuming.

BK:  Sure. As many know already, where there are manual processes, there is room for error.

BW:  Sure. There are some buying organizations that may have a portal where the vendor is expected to manually enter the data. This can be very time-consuming for the vendor and still be error prone. Either way, setting up new items or updating existing items in their system is only as fast as the people managing the process.

BK:  How long are we talking about with this process you’re describing?

BW:  Well, it could take anywhere from days to weeks to finish the setup, especially if there’s a lot of back-and-forth between the retailer and the vendor trying to get all the information needed and to get it right. For every day that the item isn’t available to consumers though, you’re losing sales. The faster you get it set up in your system, the faster you can start selling the item.

BK:  Ooh, and what about latest fashions and fads? Speed must be critical.

BW:  That’s for sure. If it’s the latest hot new fad, losing that opportunity can, in the end, cost the buying organization money. Remember how hot the spinners were when they first came out last year or the year before? Buyers couldn’t get enough inventory to satisfy the demand, and those that jumped in late missed the fad and ended up with inventory they had to discount and take a loss on.

BK:  Where do the spreadsheets come from? How do retailers even get them?

BW:  Well, it can go either direction. The buyer may give the vendor a spreadsheet and ask them to fill it out, or the vendor can provide their own spreadsheet. Wherever the spreadsheet comes from, it’s easy to run into problems.

BK:  I imagine so. There’s manual effort on both sides.

BW:  The vendor may provide a spreadsheet that also doesn’t have the information the buying organization needs, which of course then results in delays with the back-and-forth. The buyer may ask for information that the vendor doesn’t even have readily available.

BK:  What issues should be considered?

BW:  Beyond the obvious problems of possible incorrect data, the bigger issue is that, at any one time, the vendor could be dealing with hundreds of different spreadsheets from different retailers, one for each of the buying organizations that they work with. If you don’t have a good process for sending and receiving these files, it gets even trickier. Are you receiving them by mail? Sending them by mail? If so, are they all going to the same email address? Or could they be in one of several different email addresses? What happens if someone goes on vacation or leaves the company? The data just gets lost.

BK:  Your mention of managing hundreds of spreadsheets sounds overwhelming. How does one go about making this process easier?

BW:  Suppliers should look at automating the exporting of the data from their source of truth for new items and changes. This can streamline operations as well as ensure accuracy, and it saves time and headaches for all parties. In the end, the consumer has the right information.

BK:  Well, this is sounding much better. How can buying organizations get started with speeding up and streamlining item data management?

BW:  First, everybody needs to realize that item setup is complicated and confusing. It’s probably going to take time to identify who all touches or owns the data and identify all your processes to get it automated, but it’s going to be worth it in the end. You need to adhere to the process. If the expectation is that the vendor provides all data via some automated process or spreadsheet, the buyer should not go back and ask for the same data via another method.

BK:  What needs to happen for working with partners?

BW:  Well, before the buying organization approaches their trading partners with their new item data setup requirements, they really need to figure out the attributes that are really needed. If you can’t articulate what you need and why you need it, you’re not going to get it. Also, the information needed could vary on whether the item is offered online, in a store or both.

BK:  Definitely. When I buy online, I need to know I’m getting the right everything. So I’m more likely to buy from a site that has the most product detail.

BW:  Sure. The number of details the consumer needs to trust their e-commerce purchase is much higher and different than the items that they can touch and feel in the store. So you need to gather insight on what customers and consumers are searching for on your website and what information is actually driving them to make the purchase. Take into account that there needs to be a balance, however, between which attributes are required and which could be optional.

If you go in asking for too much information out of the gate, your vendor or supplier could have a hard time finding the details and meeting your requirements. You don’t want them to just enter incorrect data to appease your requirement.

BK:  Sure. So if this is new information for our listeners, what do you recommend for integrating this new improved process?

BW:  If you’re just getting started, I would recommend a crawl, walk, run approach. What do you absolutely need now? What could you do with later? And what would be nice to have? Prove out your processes on the most essential data first and add more a little further down the road as you’ve refined your process and listened to your customers.

There are various ways to approach it. Maybe start with a specific category or a vendor that has a large number of SKUs or those vendors that have products that change every season. Of course, you can always jump in with both feet and require it from all vendors. No approach is wrong, but you need to be prepared and have the teams impacted onboard.

BK:  Are there standards or guidelines that can be helpful for narrowing down the information you need or should include in your requirements?

BW:  There are global standards that can be used for item attributes. There’s global product classification, UNSPSC, among others. For example, EDI standards include an 832 catalog used in retail and the 888 which is used in grocery. Another great example is the National Retail Federation has standard color and size codes assigned, which allows for trading partners specifically in the apparel space to have a consistent way to communicate size and colors.

If and whenever possible, try to stick to standards. When you start asking for one-off things, it gets difficult for the suppliers to support each buying organization.

BK:  Very understandable as even though these are EDI standards, quote, unquote, we know companies may use elements within that standard vastly different than their partners do. What happens if the data you’re looking for isn’t readily available?

BW:  That’s a very good question, and it’s bound to happen. So you need to have a plan to determine workarounds if your trading partners don’t have the data. Do you have someone in your company that’s going to be able to analyze and measure each product that doesn’t have complete dimensions? Will they be entering this data manually? If so, into what system? How will this information be kept up-to-date?

Or maybe it just doesn’t meet your standards. Some vendors don’t have nice photo studios to take the quality of images you require. Are you willing and able to take on that work? If you really want the data, you’re going to have to figure out a way to get it when it’s not available.

BK:  Knowing where workarounds are needed is dire. Any last words about new item setup?

BW:  This isn’t a one-and-done. In terms of crawl, walk, run, even when you’ve reached your automation goals, the retail landscape is constantly shifting as online purchases increase and product details become more important than ever. The list of potential items and attributes that you and your trading partners should offer to persuade the customer and/or keep your supply chain moving will change and grow over time. Just think about cell phones.

BK:  Great example. Those are forever changing.

BW:  I recall my husband had one of the first cell phones that came in a briefcase, and you put an antenna on the roof of your vehicle. You couldn’t text, take a picture or surf the internet. Look at what you expect from your cell phones now and the information you look for when upgrading your current phone.

BK:  Indeed.

BW:  Who knows what technology the future holds? It’s an ever-changing landscape.

BK:  Right. I’ve seen websites that offer a try-it-on technology, like eyeglasses. You’re able to virtually see yourself before purchasing just that right product. Well, this has been some great information you’ve shared with our listeners today. Thanks so much for your time, Bekki.

BW:  Absolutely. Anytime. Thanks. Bonnie.

BK:  Thanks for listening to this episode of Mastering the Retail Game. You could read transcripts of this podcast, review show notes, and listen to other episodes by visiting spscommerce.com/podcast. You can also subscribe through most major podcast streaming services. Join us on the next episode of Mastering the Retail Game for more tips on how to win in the new retail environment. Until then, this is Bonnie Keyworth from SPS Commerce, hoping your new item setup process becomes spreadsheet free.

Explore the new rules of retail and get real-world advice on how to win by learning from retail experts and peers in the industry.

The next episode of Mastering the Retail Game is here, just in time to get you pumped and ready for the holiday shopping season. Every year, retailers and their trading partners revamp their processes, update their technology, open new sales channels and fine tune their strategies. But everything has to be ready to go when fourth quarter hits.

Now is a common time for completing those updates and making adjustments to those updates before the busiest shopping season of the year rolls around.

In this podcast, our host Kristin Ploetz and our SPS expert David Verette explore this “system readiness” process and the critical factors involved. Davis is the Vice President of Retail Sales at SPS Commerce and has helped businesses in the retail industry perfect their trading partner relationships for nearly 20 years.

“Certainly you can implement technologies, process, communicate these requirements clearly, but to assume that the supplier is capable of stepping into these new order fulfillment models without fully vetting out the process and capability could lead to catastrophe. Putting the time and effort into these validations in advance will help increase the odds of a smooth holiday shopping season.” – David Verette, Vice President of Partner Sales, SPS Commerce

Click on this link to view the full transcript of episode Retail System Readiness for the Holiday Season.

You can find more episodes of Mastering the Retail Game by visiting spscommerce.com/podcast or by subscribing wherever podcasts can be found.

Explore the new rules of retail and get real-world advice on how to win by learning from retail experts and peers in the industry.

Businesses in the retail industry are constantly making improvements to their systems, processes, sales channels and strategies. Timing is important, though, as everything needs to be ready to go when the busiest shopping season of the year rolls around.

The end of third quarter is when retailers, grocers, suppliers, distributors and others are completing and fine tuning their retail system readiness. No one wants to have a critical system or process failure after the holiday shopping ramps up.

David Verette, who has helped businesses in the retail industry perfect their trading partner relationships for nearly 20 years, explores retail system readiness for the holiday shopping season.

Kristin is a results-oriented leader with over 20 years of experience developing, motivating, and directing high-performing teams, while managing multi-million dollar programs. She has extensive experience in building customer partnerships for Fortune 100 level clients with a proven track record of achieving results. Previous to her time at SPS Commerce, she worked in director roles at Digital River and Knoa Software.

Vice President of Partner Sales, SPS Commerce

Kristin Ploetz (KP): Welcome to Mastering the Retail Game podcast from SPS Commerce, where we explore the new rules of retail and provide real-world advice on how to win by learning from your peers and industry experts.

I’m Kristin Ploetz, your host for today’s podcast.

In this episode, we’ll be talking about how retailers are preparing their technology and processes for the coming holiday shopping season.

Throughout the year, retailers and their trading partners have been adjusting technology, processes, sales channels and strategies, with the goal of having everything in place in preparation for fourth quarter.

Many organizations will designate a “tech freeze” in the weeks leading up to Thanksgiving, where they are “freezing” all changes to systems, and usually only making exceptions for critical issues.

That means by the end of third quarter, everything needs to be ready to go to avoid the risk of failure during the busiest shopping days of the year.

So July, August and September are a common time for completing and fine tuning those updates before everything gets locked down for holiday.

To discuss this in more detail, I’ve invited my colleague David Verette to explore the process and critical factors involved.  David is the Vice President of Retail Sales at SPS Commerce and has been here for close to twenty years leading the teams who help retailer’s distributors and grocers perfect their trading partner relationships. 

KP: Welcome to the show, David.

David Verette (DV):  Thanks for having me, Kristin.

KP:  David, in past blogs and podcasts, we’ve talked about the seasonality of retail technology updates. We’re nearing the end of the third quarter now, so retailers who are implementing technology changes are finishing them up before the big holiday shopping season. Would you say the back to school shopping season is a good time to assess how new technology or processes are performing?

DV:  Absolutely. At this time of the year order volumes are starting to increase, but not to the levels we’ll see in the coming months. As you would expect, we are seeing people shop in a variety of ways, both in store and online. For retailers who have made key investments in their omnichannel strategy, they are using this time to pilot the full range of order fulfillment models, such as buy online, pickup in store, drop ship from their own inventory in their DCs or stores, and certainly working out the kinks in their direct ship from vendor to consumer fulfillment model. Getting this all tested and any associated change management processes worked out well in advance is essential for the holiday season. The variety of volume of the way people are shopping is very similar between these two seasons, clearly with bigger volumes coming in Q4.

KP:  There’s a lot of layers here. Let’s unpack that a little bit. What areas should retailers be reviewing right now to predict how well their processes and systems are going to perform during the increased volume of the upcoming holiday shopping season?

DV:  Good question. They really need to look at what is their weakest link in their current fulfillment processes. For those processes still being handled manually, what are those manual processes impacting in terms of efficiency? Do they have the required visibility and communications streams with their drop ship suppliers and fulfillment centers, in order to optimize inventory across the entire supply chain? That’s one question. If you’re still deploying changes, are suppliers ready for these changes that still require maybe work and change management on their end? Have they determined and implemented the correct score carding metrics to secure the desired engagement levels required by all parties across the fulfillment process? I know I’ve mentioned this before. however, is there a confidence level that every possible inventory location across their supply chain can fulfill orders successfully in order to provide the desired customer experience?

KP:  That’s a lot to consider. What are the most common trouble spots, where system and processes are likely to break down and cause a negative impact?

DV:  Well, to be sure the implementation of the new technologies and associated change management processes do heighten the chance for some fire drills during go live experiences, which is oftentimes why retailers have kind of an all hands on deck during this time period. Anytime you modify existing requirements or change the way you are processing orders and the resulting fulfillment activities of these orders, you do introduce risk. For everything to work in unison, retailers must determine the balance of maintaining one foot in the old world while piloting new processes that require supplier engagement in the new world. It is rare that a retailer would ever cut over everything in one fell swoop. However, this makes it all the more challenging, as those impacted within the retailer now have to manage two distinct processes as the retailer stages the transformation over time.

KP:  Sure. Okay. Then on the other side of the supply chain, what should suppliers and distributors be doing now to maximize their success when drop shipping for their retailers during the high volume of holiday?

DV:  Well, if they leverage a 3PL for eCommerce fulfillment, are they compliant with the retailer’s drop ship requirements? Do they provide inventory status per the schedule specified by the retailer? Are they providing tracking information within the ASN, branded packing slips and label requirements? If they are filling all order types out of their own inventory, are they set up for success in terms of automation of communication, order and fulfillment processes, accurate inventory updates?

For drop ship, speed to order fulfillment and delivery are critical. Fulfillment centers no longer have the luxury of staging orders over several days. To meet today’s requirements orders must be shipped the same day they are received. The faster the better. Failing to do so can increase transportation costs, as sellers turn to expedited shipping to keep customer satisfaction high. Plus, the faster you can process orders as late into the day as possible, the more orders you can accept for standard delivery, creating the potential for increased sales and improved margin. Regardless of fulfillment method, it is critical to have systems in place that provide constant visibility to the order status for all parties.

KP:  David, these processes may have most recently been tested during Amazon Prime Day or Prime Days, as it was. We’re not looking at dollars so much as we’re looking at the spike in transactions, but at SPS we saw a shift of 13% on Monday and 16% on Tuesday of Amazon Prime Days, compared to our previous Monday and Tuesday volumes. Do you think these numbers help predict the volume of the upcoming holiday shopping season?

DV:  Well, anybody in retail knows ’tis the season for order volume spikes, that’s for sure. It really depends on what you’re offering and what your discount or sales strategy is. Amazon Prime Day is one big sale over just one or two days. There might be a ramp up with other sales happening ahead of time, but it’s a week at most. The holiday shopping season starts earlier and earlier, with Black Friday still being the official kickoff, followed immediately by Small Business Saturday and Cyber Monday. But then it fits and starts until Christmas Eve. I think there will be more volume spikes on those three days, depending on what type of retailer you are, and then probably just higher than normal sales for the following weeks. It’s not over really then, as you know. You then have the post-holiday markdown rush of customers and the flood of returns starting on December 26th and into the New Year.

KP:  Let’s focus on the critical inventory portion of the holiday shopping season. By now, retailers have had their orders in, and products from overseas are on their way or have already arrived. With anticipation of high demand and sometimes long lead times for delivery, is there anything retailers can do now to lower the risk of inventory issues in Q4?

DV:  Escalating consumer expectations is the key challenge for businesses, especially around the drop ship order fulfillment model. This challenge focuses around the pressure to deliver excellent customer service, ease and convenience of ordering and tracking shipments, really kind of near instant service levels. The partnership and communication between retailers and suppliers is critical to ensure both parties are prepared for operational excellence during this time period, beginning with consistent and accurate visibility in inventory. Ability to meet demands across all order models.

The retailer has to trust that the supplier can provide visibility to current inventory levels, so product is not oversold and they can handle the forecasted volume in all fulfillment models during peak periods. If you’re planning to source additional trading partners or SKUs, confirming the supplier has the ability to fully support order models with automation, in order to avoid expansion of manual processes over this increased volume, is essential. Last, define up front how returns are going to be handled with the supplier. You need to have that established from the start.

KP:  That’s a great deal of information to consider, David. Do you have any other advice that you’d like to offer for retailers and suppliers as we close out today?

DV:  Well, certainly you can implement technologies, process, communicate these requirements clearly, but to assume that the supplier is capable of stepping into these new order fulfillment models without fully vetting out the process and capability could lead to catastrophe. Putting the time and effort into these validations in advance will help increase the odds of a smooth holiday shopping season.

KP:  This has been some great information, David. Thank you so much for sharing your expertise and joining us on the podcast today.

DV:  It was great to be here, and thanks for having me.

Thanks for listening to this episode of Mastering the Retail Game. You can read transcripts of the podcast, review show notes and listen to other episodes by visiting spscommerce.com/podcast or by subscribing wherever podcasts can be found. Join us on the next episode of Mastering the Retail Game for more tips on how to win in the new retail environment.

Explore the new rules of retail and get real-world advice on how to win by learning from retail experts and peers in the industry.