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Martin Kleindl | 12 June 2017

4 replenishment mistakes that can ruin electronics retailers

4 replenishment mistakes that can ruin electronics retailers

Electronics retail is fiercely competitive. Customers expect the latest products at low prices, with fast and convenient delivery and returns. Retailers that can combine low margins with high levels of service will succeed. But poor replenishment can undermine those efforts. Here are 4 common replenishment mistakes that can spell disaster for electronics retailers – and our tips on how to avoid them.

1. Ignoring diversity

The different products electronics stores sell can have very different demand cycles. Failing to respond to that is a big mistake for electronics retailers. On the one hand, you have to stock just the right number of large white goods without taking up valuable space that could be used for faster-moving items. On the other hand, seasonal trends, promotional events and new releases can cause sharp spikes in demand for home entertainment, wearables and mobile devices. If you can’t respond quickly, all you can do is watch customers buy their goods from your competitors. The mistake of ignoring the diverse demand cycles of products has already spelt the end for many businesses, as they try to compete with more agile internet retailers. But there is a solution. If your replenishment system can calculate and forecast demand based on sales history, trends, events and promotions, while enabling you to set rules and parameters such as the amount of space available for large items, then you can order optimal amounts of each item you carry in your store.

2. Poor planning

The lifecycles of many electronics gadgets are getting shorter as innovative new features are added monthly to smartphones, tablets, wearable technology and home entertainment devices. Demand for new products peaks quickly, and when a new model is released, the previous one rapidly becomes obsolete. At the same time, customers who are used to buying from giant internet retailers expect the goods they want to be available not only when, but also where they want them – at the store they visit, or delivered quickly to a convenient location. If you can’t plan effectively to meet demand for new products where and when it occurs, you stand to lose reputation as well as money. Poor planning is usually a result of retailers lacking insight into the demand cycles of a diverse product mix. That can be resolved with a replenishment system that combines a real-time view of your stock across the organization with insight into sales history, influences and accurate demand projections – and that allows you to set rules and parameters for reordering based on the characteristics of each product type. Retailers with these capabilities in place are confident in allocating stock to meet demand at stores and warehouses across the chain.

3. An open door for errors

Too many electronics retailers are still working with replenishment systems that let errors creep in. Some do it all manually, which means that on the one hand, they are likely to make mistakes, and on the other hand, they waste time that could be spent on delivering a better customer experience. Other retailers have embraced automated replenishment, but their systems can’t get up-to-date information from other areas of the business, or they make it difficult for management to deal effectively with exceptions. Retailers can remove the risk of errors by using a system that can access real-time information from every channel and apply the rules and parameters you set for different products. Systems with these capabilities can handle purchasing, transfers and sales orders across all locations. They free up valuable time for managers, who can simply step in and handle any exceptions when needed.

4. Gaps in the system

As large online retailers provide next-day or even same-day deliveries to customers, traditional retailers are finding new ways to compete. Some are using their stores and warehouses as a distribution network to guarantee fast delivery to customers in different areas. For those that don’t have their own logistics services for home delivery, partnering with external services like Uber can be an effective way to deliver the goods quickly. This can be a great advantage to the business as long as everyone has a clear view of where products are located. But when the channels’ and partners’ systems are not properly integrated, gaps in communication lead to replenishment and distribution errors – and ultimately disappointed customers. It’s a surprisingly common problem as retailers struggle to make old, disparate systems work as part of a new, streamlined vision of an omni-channel business. But it can be avoided by using a fully integrated system that connects e-commerce, brick-and-mortar and logistics. That way, everyone has the visibility they need for optimized replenishment, delivery and service.   In the fast-paced world of electronics retail, competing with online retailers is a necessity. To find out more about how efficient replenishment can support a competitive business, read our latest whitepaper discussing the key features to look for in a replenishment system for your electronics chain.  

Don’t ignore the red flags of stock-outs and overstock
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