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August 7, 2015

Inform, Cajole, Coerce - Field tips for CPG distributor sales executives to sell their brands to Mom and Pop retail outlets in emerging markets

Abstract

 

A distributor or a CPG company sales executive is an important element in ensuring penetration of CPG brands in the traditional mom and pop stores retail channel, especially in emerging markets. With as many competing brands within each product category and the peculiarity of each mom and pop retailer, the sales executive's task is complicated.

 

We present a few field tips for the sales executive to improvise and sell to the traditional retailer. These tips along-with sales history, inventory forecast, recommended order quantity, brand sku prioritization and "what if " margin calculation enabled by mobile technology and product training will enable the sales executive to achieve targets in an efficient manner.

 

Overview
 In emerging markets, a mom and pop retailer purchases Consumer goods based on a host of factors such as perceived credibility of the sales executive, time, space, working capital, consumer demand, margin and credit period, attractiveness of competing brands, distrust in a new brand or brand extension etc..

While considering all these factors, the distributor or CPG company sales executive has to engage the traditional retailers in a sustainable and profitable relationship and juggle with the entire portfolio of brands keeping in mind the retailer preference, store size and location, consumer profile, retailer working capital, schemes, new products, competing brand offerings.

Here are some often heard challenges that sales executives face during their daily routine and some street-smart tips to overcome them

Sales executive woes and tips to overcome them

 "Competition is offering better margins to trade......." "Net profit on product is marginal due to price under-cutting by Retailers....." "Retailers always expect the same margin if not more for the same order quantity, even in the absence of schemes or special incentives..."

·         Attack the Flanks: Dominate in outlets where competitor presence is minimal.
·         Illustrate for impact: Illustrate the margins made by the Top 25 outlets on the sale of these brands at the same price.
·         Keep competitor intelligence handy: Know your competitor. Understand their trade schemes. Take photographs of shop displays or marketing collaterals. If the offers are genuinely better, concede. This will build trust. Inform your distributor.
·         Communicate risk: Recommend the right price to sell to consumers and the risk of price undercutting - margin loss and reduced perceived price of the product brand.
·         Negotiate Hard: Compare margins with other retailers supplied by you or competing brands and show the retailer that his deal is the best one can get. Convince him on his potential to sell. Negotiate hard and do not drop your guard.
·         Compensate with additional incentive on other brands: Cover the perceived margin shortfall by offering additional incentive or cashback on brands in other product categories.

"Retailers demand for extended credit period in next ordering cycle, as product movement has been slow..."

·         Analyze inventory movement: Extend credit period only if it is the last resort. Monitor stock movement on a regular basis. Analyze the reasons for slow movement such as: No consumer enquiries, product complaints, competitor offers, no display, retailer not promoting the brand etc.
·         Transfer stocks: If the movement is genuinely slow, transfer stocks to other outlets where the movement is relatively faster and move in other substitute brands.
·         Improve visibility: If the Retailer is not proactively selling the brand, explore display through fixtures or attractive presentation or bundle the stocks with other brands which are imperative.
·         Illustrate and provide confidence: Compare with a like product brand which has the same lifecycle but was successful eventually and thus build Retailer confidence and avoid extended credit.

"Unable to sell some of the price variants"..." Almost impossible to sell less popular brands or brands with Low Retailer preference...."Retailer is willing to stock but only as a pilot and on consignment basis...."

·         Additional not substitutes: Promote less preferred brands as necessary additional orders and not special orders. Do not promote them as substitute brands. Explain on paper, the additional margin that can be made from selling these brands.
·         Cross-sell with the Winner: Bundle orders of less preferred brands with the power packs. Position them as mandatory without budging.
·         Gradually step on the gas: Increase order quantity and off-take incrementally until the desired order quantity is met.
·         Be cautious about consignment stocks: Supply stocks on consignment only if you are confident about the Retailer's credibility and ability to sell.

 "Need to maximize orders to achieve targets....." "Pressure to push stocks is leading to multiple invoices and delayed payments..." "Appeal by Retailer to not push for payments as other payments with higher priority have to be made first..." "Order quantity is same on every purchase..."

·         Have your Hat in Hand: Maintain a cordial relationship with the Retailer. Step into his/her shoes. Empathize with his situation, provide recommendations to improve stock rotations and tips to display and sell.
·         Challenge the regular ordering norms: Stretch the order quantity through rational explanation. Explain the lost opportunity by not stocking sufficiently.
·         Stay within the retailer's radar and execute your promise: Watch out for the slightest opportunity to promote your brands within the outlet. Ensure prompt delivery of order, participate if possible in displaying stocks and in selling to customers.
·         Avoid salesman productivity paranoia: Before the cycle begins, get the Retailer buy-in for the planned orders. Don't push the stocks too early to achieve your targets. Monitor the sales and schedule the distribution as per weekly sales and coverage frequency to gain Retailer trust.
·         Personalize every order: Communicate only those promotions or schemes which will be relevant to the Retailer in the ordering cycle.
·         Optimize the orders: Forecast and logically communicate the right order quantity based on past history and current schemes.
·                     Keep an eye on Competition at large: Monitor Competing brands new product introduction, volume, trade schemes and pre-empt any move to reduce your volumes.

"Appeal by Retailer to not push for payments as other payments with higher priority have to be made first...."

·         Collect Partial payments: Split the collection of larger invoices into convenient sums to ease the pressure on the Retailer.
·         Extend Credit period only where required: Collect partially and extend the credit period if required, for the balance amount.
·         Distribute with exclusivity: Don't generalize and push all product brands everywhere. Provide exclusive schemes only to those Retailers who are willing to pay on time and those who will provide the volumes that you had planned.

"Focus is always on few key Retailers, hence less chances and time to play around with the trade budget or stock to develop other Retailers..."

·         Improve penetration: Expand the distribution network to remove dependency on a few retailers.
·         Create Clusters: Create clusters of outlets with common characteristics. Plan schemes for targeted clusters rather than one-fits-all schemes. Distribute incentive/promotion budget across clusters over time.
·         Develop Mascots: Develop a network of key retailers who can influence smaller retailers to join the network and/or purchase the brands, thus improving the overall order quantity.

 

Wear the ICC rule on your sleeve: "Inform, Cajole & Coerce" !

About the Authors 

 

Krishnakant Kasturi (KK) is a Principal Consultant Infosys Consulting.. He as 15 years of cross-industry and cross-functional experience spanning Retail Sales, Operations, Marketing and Business Consulting. He specializes in helping Retailers and Consumer Good Companies in business process improvements and building solutions in the areas of Sales Operations, Merchandising, Consumer Insights, Loyalty program management and Brand Management. He can be contacted at Krishnakant_k@infosys.com.
 
Sriram.R is a Senior Consultant in the Industry Solutions Group of Infosys. he has 10 years of hands-on experience of Sales and Distribution of leading CPG cos. in the Indian Market and 5 years in Business Process Consulting. He specializes in Sales and Distribution Strategy and Merchandising. He can be contacted at R_Sriram@infosys.com.
 
 

 

December 18, 2014

The case for Online Grocery

 

 

Online retail is a very important channel today, on which every retailer is trying to gain a foothold. Giants like Amazon, Ocado, and Flipkart etc have established their online business and are trying to tap into a larger market share across the globe. Be it the retail or consumer products for new or used products, everyone wants to be on the web and doing business.

 The next big thing in the online business is Online Grocery. Online business has its own advantage on cost, but is it cost efficient? Grocery retailers today are striving hard to become unique in form of the service they provide, the range they carry or the omni-channel presence allowing easy access to the customer. But there is a definite amount of cost involved in being unique, which is a major concern for any grocery retailer. The margins are very thin and tight control on operating costs is required to meet the top and bottom line. However the buzz around going online in grocery segment remains a major thrust area in 2015.

Customer's wants are never ending and companies too are trying to satisfy them with innovative methods like click and collect, drive through, home delivery and centralized lockers, to service the customers and retain them, apart from the online offering.  There are retailers who have a physical store and also provide home delivery, drive through - these services win customers but they also mean additional cost for the retailer to manage these services. That's why online retailers have  a minimum cap of purchase for customers to avail these services.

Going online sets the retailer free from the real estate cost which occupies a major chunk of the P/L statement of any brick and mortar retailer. And added to it are other costs like power, human resources, shrinkage etc.

The advantage in the online grocery business is the use of limited manpower who could be trained to handle sensitive categories and make sure the product stays intact till it reaches the customer. Also, when a customer sitting anywhere, places the order, gets to pick it from a location near to his/her work place or home or gets it delivered, it gives enormous customer satisfaction, which is most important today. The only thing online retailers need to do is to market their services, try to reach all types of customers and make their supply chain efficient. Once the supply chain for home delivery, drive through and click-n- collect is in place, the online retailer can enjoy the cost advantage and scale up.

In conclusion, in having only a physical presence, there is always a limitation in targeting only the customers available in the catchment area. In an online business, the retailer has a better reach and the retailer can provide other services too, which improves customer centricity, apart from  benefitting both parties monetarily.

 

 

 

December 16, 2014

2015: THE YEAR OF ONLINE GROCERY? (PART - 2)

With the U.S consumers' wallet share on ONLINE GROCERY growing rapidly, there is a subtle battle brewing between traditional retailers and e-tailers to capture their share of wallet. Given this is an industry typically characterized as highly price sensitive, hyper-competitive with razor thin margins and high purchase frequency - 'How to drive profitable revenues and build a sustainable, scalable (mass-market) online grocery business model?' is a key conundrum faced by U.S grocery retailers today.

Without a doubt, the U.S Online Grocery industry is experiencing a structural shift [see Figure 1] in the way consumers shop for groceries today. Few key trends defining this landscape, worthwhile to note are: price-to-value continues to remain an important driver for consumers who are seamlessly shopping for food and beverage across various store formats (no longer shopping at just one stop shop supermarkets), local and private labels are gaining popularity (better assortment mix), and last-mile delivery continues to be more challenging for retailers with diversifying consumer needs. So, what drives a consumer to shop online?[1] 

 

Grocery Image_3.jpgGrocery Image_4.jpg 

 

 

 


Turns out, Convenience still remains their primary motivation, though not the ONLY reason [see Figure 2] - according to a U.S Grocery Shopper Trends 2012 - Executive Summary published by Food Marketing Institute (FMI). Clearly, some of these reasons are easily replicable by the traditional retailers making it a level playing field for them. So, how can grocery players tap onto this opportunity today and make MONEY at the same time?
 
A Grocer's Perspective
 
De-constructing the P&L of a grocery business model [see Figure 3] shows that the overall economics of this business mainly depends on: the type of fulfillment model used (meaning productivity in number of units picked per hour), basket size, consumer demand, and population density.[2] 
 
Grocery Image_5.jpg
Clearly, a one size fit all approach where-in an e-tailer offering only a home-delivery or a traditional brick and mortar retailer offering only an in-store pick-up might not be viable and profitable. Instead, both e-tailers and traditional brick and mortar retailers, will have to strategically innovate to harness the given market opportunity. Consequently, rather than having a home delivery model across all geographies, brick and mortar retailers can play it by the consumer demand and population density to leverage a combination of fulfillment models e.g. in areas of low density and low consumer demand they can offer variations of click-and-collect models (in store, curbside pickups, delivering to your cars - Volvo seems to be innovating on this front), areas of high density with high consumer demand can leverage dark stores (dedicated warehouses) to offer home deliveries. E-tailers too, can leverage a similar strategy in offering variations of click-and-collect models (car deliveries, specific location pick-up) to drive up their revenues. Having looked at the "last-mile" logistics of the food delivery, now let's look at the consumer side of interactions - how can grocery players engage better with changing consumer needs?
 
A Consumer's Perspective
 
Offering a "differentiated digitally connected seamless" shopping experience today will entail: brick and mortar retailers looking at leveraging location based services to offer a more contextualized, and personalized in-store experience. E-tailers can explore the possibility of offering virtual grocery stores, and contextualized basket building features to match the in-store experiences offered by a brick-and-mortar retailer. In my opinion, some of the key capabilities [see Figure 4] emerging for grocery players today are:
 
Grocery Image_6.jpg

Given the relative economics of grocery business, offering a right combination of click-and-collect and home delivery models that "seamlessly" integrates with a "differentiated digitally connected shopping" experience will be the key to position the grocery retailers for success ahead. Grocery retailers to realize this first will continue to stay relevant to take it all.

As traditional retailers build upon their omni-channel capabilities to be more "online-like" and e-tailers continue to expand their offerings to be more "store-like", it will be interesting to see who wins in this unclaimed territory. Whom do you think will win? 
 

To know more about trends in online grocery and how you can leverage various innovative technologies to provide a seamless and truly engaging customer experience, meet our experts at Retail's Big Show 2015 (Jan 11-13, 2015). Schedule a meeting now. Visit www.infy.com/NRF15



[1] U.S Grocery Shopper Trends 2012 - Executive Summary by FMI: www.icn-net.com/docs/12086_FMIN_Trends2012_v5.pdf

[2] Online grocery winners emerging - A Report by Bank of America Merrill Lynch

December 15, 2014

The new Avtaar of Transactions

When I hear "Digital Wallet", the first thought that comes to my mind is that it is the Digital version of my physical wallet, carrying the same things as my physical wallet (Money (Cash, Credit cards, Debit cards, etc.) & Proof of identity (Driver's license for example)), but in Digital format.

While there's nothing wrong with the physical wallet, there is only ONE big issue with it, that of SECURITY. It is very easy to lose it, it is very susceptible to theft, and the consequences could be scary:

·         Card Frauds: Worldwide losses due to such frauds are estimated to be around $11.27 billion in 2012a

·         Identity Theft: In US alone, Direct and indirect identity theft losses was close to $24.7 billion in 2012b

Now think of a digital wallet, which has all of your monetary & Identity information safely & securely guarded by a service provider (SP). All that you will need, to use your "Digital Wallet", is a unique PIN provided by the SP.

Safety & Security aside, the biggest benefit I see from a Digital Wallet, when the world is ready for it, is CONVENIENT & HASSLE-FREE transaction experience! And here's how:

·         You go to a coffee shop / bakery, visit their app on your smartphone, place order & pay for it, 'Digitally', and leave.

·         You go to your favorite Grocery store / Supermarket and pick up your items. You will simply make a 'Digital' payment on the store's app for what you picked up, and leave.

·         You go to your favorite electronics / apparel store in the holiday season, but you no longer have to feel intimidated by the check-out queue. You will simply pay 'Digitally' on the store's app for what you picked up, and done!

Digital Wallet, in the presence of supporting infrastructure at the Retailers, will certainly reverse the impact of long queues on Sales & Customer Retention:

1.     Sales

·  Long queues have had detrimental effect on sales for the retailers.

                       i.    In the US, back-to-school retailers end up losing around $21 billion of  $55 billion due to long queues & slow check-outs c

                       ii.    British Retailers lose over £ 1 Billion every year due to long queues d

2.     Customer Retention

·  Long queues create a negative impression in Customer's mind, about the retailer.

                       i.    Poor customer service due to long queues cause UK businesses to lose 21 million customers a year e

                       ii.    Customers in the US leave the store without making a purchase after waiting for more than 8 minutes f

1.     77% of such customers would avoid visiting the store in the future g

                       iii.    The patience is lesser in UK customers, who will leave the store after 6 minutes of waiting time.

1.     56% of such customers would avoid visiting the store in the future h

What other things do YOU think digital wallet can impact & simplify?

To know more about Digital wallets and how you can leverage various innovative technologies to provide seamless and engaging customer experience, meet our experts at Retail's Big Show 2015. Schedule a meeting now. Visit www.infy.com/NRF15

 

References

a: http://www.businesswire.com/news/home/20130819005953/en/Global-Credit-Debit-Prepaid-Card-Fraud-Losses#.VIlsx9KUe_Q

b: http://www.bjs.gov/content/pub/pdf/vit12.pdf

c: http://www.shmula.com/back-to-school-revenue-loss-waiting-line-frustration/4752/

d: http://www.telegraph.co.uk/technology/news/10702831/Long-queues-cost-British-retailers-1bn-a-year.html

e; http://customerthink.com/21_million_customers_lost_due_to_long_queues/

f: http://www.fierceretail.com/story/report-after-8-minutes-line-shoppers-walk-out/2014-02-27

g: http://www.bizreport.com/2013/08/british-shoppers-patience-runs-out-after-six-minutes-of-queu.html

h: http://www.essentialretail.com/news/article/tech-evolution-reducing-queuing-patience

December 11, 2014

2015: THE YEAR OF ONLINE GROCERY? (PART - 1)

Ever imagined a scenario where we will be clicking online for our books, media and GROCERY together? Yes, you read it correctly. GROCERIES... ONLINE? Today, Online Grocery shopping is not only a reality, but also an industry that is accelerating, quickly enough, towards its tipping pointAmazon Fresh[1] and few other retailers like Walmart, Safeway, Instacart, Peapod, Relay Foods and FreshDirect have been transforming the online grocery space to carve out a market share from this unclaimed territory so far.

As a part of this two blog series, we will take a peek at how the U.S Online Grocery industry is positioned for 2015 and the opportunities ahead for the U.S Grocery Retailers.

When we think of Online Grocery as a business, the first thing that comes to mind is the implosion of Webvan in early 2000s. Thus as a concept, online grocery is not something new to consumers and retailers. Webvan's emblematic failure did leave a wary glance on grocery retailers for a long enough time though. Ever mindful of the quote "Change is the only constant in life" - two vital changes in this case are: 1. the growing evolution in the way today's digitally immersive consumer expects to shop seamlessly, both between physical and digital world anywhere, anytime, 2. more viable grocery business models attracting capital savvy investors.

In 2013, US online grocery spending reached $17 billion [see Figure 1], Grocery Image-1.jpgaccounting for only 3.3% of the total U.S grocery spending  - a $500 billion industry -    according to an article[2] by Bloomberg BusinessWeek citing a study run by online grocer and consumer analyst Brick Meets Click. Further, by 2023, it is expected to reach 11% of the total U.S grocery spending growing nearly 3 times at 13% CAGR annually. Looking forward, in my opinion, online grocery represents a significant and exciting growth opportunity that is here to stay.

So, market side of the equation is looking great. Online Grocery Industry is gaining popularity and exhibits great potential for the years ahead. But, what about the consumer side: the Grocery Shoppers? With time, not only has the grocery market and business models changed but digital consumers' purchasing preferences have too. Especially, the way today's tech savvy digital shoppers are increasingly blurring the line between the online and offline channels.

In 2013, roughly 18% of U.S. households went online in the past three months to buy food, beverages, or groceries. Of these, 75% purchased 5% or more online and 20% purchased at least half online - according to an article by Grocery Headquarters citing a study  Grocery Image 2.jpg  'The Online Grocery Shopper Report'[3] run by The Hartman Group's. Further, the article characterizes an online grocery shopper as a high-value customer, who is willing to spend and shop more every month than the offline (at-store only) grocery customers [see Figure 2]. 

The confluence of societal changes (busy urban lifestyles wanting more convenience and less time-intensive ways to shop), demographical changes (more working women, multi-person high-income households, ageing population), and technological advancements (digitally connected consumer increasingly using smartphones and tablets to complete purchases) have led me to believe that the U.S Online grocery market will soon evolve from a niche segment to become a mass-market mainstream appeal. 

 

Given the U.S Online Grocery's tremendous future market potential, the question however still remains: Who is poised to claim this unclaimed territory? Traditional retailers or the E-tailers? The race is already on. Whom do you think will win?

In the next blog, we will explore the opportunities ahead for the grocery retailers.

 

To know more about trends in online grocery and how you can leverage various innovative technologies to provide a seamless and truly engaging customer experience, meet our experts at Retail's Big Show 2015 (Jan 11-13, 2015). Schedule a meeting now. Visit www.infy.com/NRF15

 

 

 
 

May 12, 2014

Power of Crowdsourcing

Crowd sourcing is a fairly new phenomenon that has shaken the basics of various industries, business models and enterprise decisions. Right from getting inputs to product designs to utilizing pictures from Instagram for running marketing campaigns this practice of leveraging collective intelligence is now becoming  main-stream.

With the success of this practice manifesting in many walks of life, we can take a look at some of the examples to see how well this model has been adapted.

a) Quirky - Adopted Crowd sourcing into their Product Development process and called it Quirky Social Product Development. Individuals submit product ideas which is then curated by the community, reviewed by a product evaluation team before its designed, engineered and mass produced. A percentage of resulting sales from the product is then shared with the person who proposed the product idea. With projected revenue of 54 Million USD by 2014, Quirky is quietly becoming the Mass Market consumer product manufacturer.

b) Wal-Mart: In 2011-12, Wal-Mart started with the Get on the shelf initiative, where it invited public to submit great product ideas and then through a review process and thrown open for voting. Finalists were chosen based on the votes and rating and their products were available online and in stores. Human Kind in 2012 and Elvis Presley Home Bedding Collection in 2013 were chosen as winners (see https://getontheshelf.walmart.com)

c) InstaCart:  Grocery service provider that leverages the power of crowd sourcing to delivery grocery to homes within an hour of order getting placed. Company began operations in San Francisco but has rapidly scaled up to cover cities like Boston, Chicago, NYC and has also expanded partnership with retailers like Whole Foods, Shaw's, Market Basket, Harvest Coop and more. With revenues rising more than 2X times in the last few months, there is a great growth story for the company.

There are numerous other examples of L'oreal, Coach and other fashion retailers seizing this opportunity to put together marketing campaigns and/or product images that borrow on photos and amateur images from social media sites like Instagram and Pinterest.

Real benefits in Crowd Sourcing? Clearly the benefits are not very hard to see

  • For brands that weave in crowd sourced images for product display or marketing the benefit is plain and simple - imaginative, original and authentic
  • Crowd sourcing helps disrupt the existing business model and creates new opportunities for startups.  A classic example is that of Instacart that has successfully launched same hour Delivery for Grocery orders where larger players were struggling with same day deliveries.
  • For companies like Quirky, it is about accelerating innovation and cutting overheads and operating costs associated with typical New product Introductions.
  • For Walmart it's about finding the next Billion dollar of sales by identifying those high potential new products and getting it on the shelf
  • For players like Utest it is unlimited access to an expanded set of skills and sometimes hard to find skillsets.

Problem Areas: While we certainly want to focus on the benefits and the key drivers of this model, there are few problem areas that needs to be addressed as well

  • The first and foremost would be that of Intellectual Property. Who owns the IP in case the idea is transferred from the founder to companies like Quirky or Kickstarter. Can there be non-exclusive license transfer instead of completely transferring the IP rights?
  • How to sufficiently compensate the founders? Is it a onetime lump sum or gain sharing or a commission on sale?
  • How do we ensure quality of product or service? Take the case of Instacart - for some orders if items are not found in a store then those items might not be fulfilled leading to lower customer experience.
  • Lack of Confidentiality
  • Lack of Proper Communication

Key Considerations: Finally for retailers, service providers and manufacturers trying to leverage the power of Crowd Sourcing the following key points needs to be considered to ensure a very effective process and resultant output

  1. A rating mechanism for the participants in Crowd Sourcing to identify their significance of past and present contributions, social influence, originality of design or ideas. Ex: In case of Instacart rating parameters could include order fill rate and on time delivery by personal shopper. Higher the rating, the better the compensation or assignment for future orders.
  2. Search Mechanism (using an extensive algorithm) for systematically sifting through enormous amount of data, photos, videos, ideas and products and also considering the rating to identify those opportunities that aid future growth, address under served  customers or geographies. 
  3. A workflow driven technology platform that will help the collaborative nature of work right from submission of ideas to reviewing, evaluating, allowing public to register vote and eventually identifying the top picks.
  4. A palatable profit sharing mechanism to reward the Founders (of idea) based on the outcome - sales of the product or service.
  5. Re-defining the various roles in the Internal Organization - Product Incubation, Marketing or service teams to adapt to the new model and to deliver creative outputs (campaign, service, product) both from within and outside the organization. 
Clearly these are interesting times for the various participants in this model - be it the contributors/founders of ideas, new age companies that aid to translate these ideas to sellable products or the retailers that borrow upon the end products for final sale. With more funding and with proven case studies on sustainability and success this model will become a huge source of disruption to as-is business models in the coming years. As they say, the collective intelligence of community (local or global) can very easy surpass the intelligence of corporate giants.

September 30, 2012

"Mobile Apps For Faster Shopping Sprees"

 "Google Indoor Maps" has opened a whole new opportunity to retailers whereby they can enable their customers in getting easy and quick access to the products that they're looking for. In brief, "Google Indoor Maps" allows a person walking inside a store to navigate his travel within this indoor location just like what she(/he) would have done while driving a car using a GPS

Integrating these maps with Retailer's own mobile application (app) and tagging a store's aisles by "Product Categories" on these Google Indoor Maps for a large format store, going down to category of products available by Brands may be just the beginning of the thought as to how Retailers allow their patrons to directly reach out for the product that they are looking for rather than wandering through store departments or searching for a store associate which for some shoppers may be time consuming or even frustrating.

One of the best supporting feature on Google floor maps, is the ability to guide the user by individual floor's plans, whereby a large multi-level retail stores can also be covered easily and therefore we feel that some of the immediate exploits can be in the large scale Store or say Super Store

Let us try to understand how one such Retailer app may make the life a Retailer's clientele much simpler and the shopping experience much better. Assume the scenario that our loyal Customer "Louise" is entering such a Large Super Store for her weekly purchases which runs across several departments of the store like fresh produce, dry grocery, apparel, cleaning supplies, bath-ware, electronics, sports goods and the list goes on. Soon after she has parked at the store, Louise logs-in to the Retailer's own native Mobile app on her smart phone. The Retailer's app upon invocation on her smart phone, detects her geographical location and the store that she is visiting today via Location Based Services (LBS) wherein this specific store's latest tagged maps can be pulled and displayed on Louise's phone's screen

To make the whole shopping trip faster, Louise has keyed in the shopping-list beforehand in the app and a route map is prepared for her upon her check-in into the store via this app. This route map is based on the latest movement of shelves/racks in the store.  Such a guided walk cuts down the Louise's walk through the aisles a short, easy and a confortable one

Louise was looking for a shirt for her son, but the size small does not appear on the shelf today... does the store have it? No problem... the check would be a quick one by Louise quickly getting to know this via her mobile app. Moreover, if it is not available in store right now, the app prompts her with an easy and quick site to store order which she can pick up during her trip next week 

Another use for this app+google maps eco-system can be to integrate with the floor maps and publish current vacancies/next available time slots/expected wait times in Large Store's sub stores like ophthalmologist shops, saloons etc.

 

This Large Super Store's sub stores are very frequently publishing a status of a vacant customer spots/seat available or unavailability of the same on the floor map which when viewed by Louise, will give her an idea whether she needs to do the shopping first or go to the sub store for a quick visit to the hair salon

While these are just some of the initial thoughts, when pursued actively this specific technology can be utilized in umpteen ways to boost the store sales and to guarantee customer satisfaction. Overall, sky is the limit when one starts documenting the concept of such a solution/product. Customer purchase/return history and loyalty points can be utilized to highlight offers/deals when customer is approaching a specific aisle or when she has been looking for a specific product for some time

This article has been contributed by Ashutosh Kaushal - Senior Consultant (Sterling Commerce - Infosys Ltd). You can reach Ashutosh at Ashutosh_Kaushal@infosys.com.

 

Cashing in on "Order to Cash" through BPO shared services

 The Order to Cash process is at the heart of every business and I have often been tasked with asking clients and prospects to consider moving their Order to Cash processes into a Shared services delivery model with a third party service provider.  Over the years this attempt of mine has evinced myriad expressions from clients ranging from the "Have you lost it?" look to the "You just showed me business process nirvana" look. The industry where I experienced the most contrasting reactions was the CPG industry and I wanted to share some interesting learning from the experience of working with a few clients in walking the talk and sharing in their Order to Cash transformation journey over the years.

To provide some context, the concept of Business process outsourcing in the CPG industry is not a new one. This industry was one of the earliest adopters of outsourcing transactional and back office business processes such as Accounts Payables, Accounts Receivables, Payroll processing and Procurement. The primary driver for outsourcing across all these processes was labor cost arbitrage followed by process efficiencies from consolidation; harmonization and continuous improvement. These drivers have become the cornerstone of all business process outsourcing relationships and have for long settled into becoming the marketing tagline for the BPO industry.

With this legacy of perceived value from BPO relationships, when one has to go down the same journey with Order to Cash processes, the value equation does not necessary stack up. The most obvious reason for this skew in the case of O2C processes is Risk. To cite an instance provided by one of my clients - The entire annual cost savings delivered by a BPO relationship can potentially be eroded by one order from a large retailer being inadvertently dropped or shipped to the wrong address due to the contractual penalties involved. And one defect out of a million is acceptable even by "Six Sigma" standards!

So two questions come up, the "Why" and the "How"? The "Why" is easy. Given that the Order to Cash process impacts not just the G&A metric but also the Cost of Goods Sold, Working capital efficiency, Days Sales of Inventory and Gross Revenue metrics, a successful shared services strategy undertaken by engaging the right partner could catalyze business transformation impacting the highest levels of the organization.

The tough question however is the "How"? I often relate that to converting an "Art" into a "Science". The "Art" here refers to the finesse and proficiency that Customer service representatives have honed on their jobs for a number of years. The "Science" here refers to replicating that same level of service or sometimes even improving it but with a completely new team that's located thousands of miles away in a global delivery model.  Sounds like mission impossible right? Not really. It's been done before and involves the following best practices:

·         Create the right operating model: The tried and tested Front Office-Back Office model is a great starting point. It allows for a risk mitigated approach to the end state sourcing mix given the need to balance risk and value in a customer centric setup for the CPG industry.

·         Create the right performance measurement methodology: The days of adopting operational metrics such as cycle time, average handling time, Abandonment rate, First Contact Resolution etc to govern outsourcing relationships are a thing of the past. These metrics are now considered Business As Usual (BAU). Consider including business metrics and supply chain performance metrics such as cost per order/invoice, Case Fill Rates (CFRs), On Time Delivery (OTD), Truckload capacity utilization, Days Sales Outstanding (DSO) into the performance measurement framework

·         Create a segmented service framework: Most CPG businesses operate in the 80:20 model where 20% of customers account for 80% of revenues. Given this mix, a one size fits all shared services model will fail to deliver differentiated service experience to top tier customers. Consider a three tier service framework involving Transactional shared services, Business support services and Enterprise support services layers

·         Choose the right global delivery model: Most top tier BPO providers today have global presence with established Centers of Excellence. Adopt a hub and spoke global delivery model preferably aligned to customer tiers as well as the segmented service framework

·         Adopt a phased transition approach: A prudent transition plan is the foundation to successful Order to Cash shared services adoption. Consider creating a phased transition plan where phasing is based on customer tiers, markets, process complexity or a combination of these parameters

While there are several other design considerations, the above five are what I could call the essential ingredients of Order to Cash BPO solutions for the CPG industry. With these best practices implemented, companies can start to cash in on their Order to Cash processes through BPO shared services led transformation.

This article has been authored by Sushanth Ananth (Manager, Client Services - Retail, CPG, Logistics and Life Sciences, Infosys Ltd). You can reach Sushanth at Sushanth_ananth@infosys.com.

 

 

 

December 18, 2009

Enhance Customer Loyalty at the Final moment of truth

In this age of discerning and value chasing shoppers, Customer Loyalties can change in a single moment and gaining or retaining loyalty is a marketing warfare. Store is the final frontier where products are given equal opportunities to see, evaluate and choose the brand. Brands can be made or broken in these last few minutes of life span a shopper will give to your brand. It is then highly imperative for the brands to make best use of these last few minutes and ensure that the customers stay loyal. Here are 3 basic strategies, Retailers and CPG companies can look at to enhance customer loyalty.

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