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Addressing Supply Chain Challenges

How the Global Inventory Shortage Impacts Retail Marketers
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How the Global Inventory Shortage Impacts Retail Marketers

As retailers prepare for another holiday season against the backdrop of Covid-19, the best laid plans of consumer brands could be hampered by supply chain challenges that may not normalize until well into 2022. Yet consumers are less patient than ever, unwilling to concede that global logistics are still under the strain of an inherently broken system. 

In the middle of the disconnect between reality and expectation are marketers, whose responsibility is to continue delivering quality customer experiences no matter how messy inventory issues may get throughout peak season. This article is a guide to how brands can offer critical, personalized communications that satisfy consumer demands over a prolonged holiday marketing timeline.

The Modern Supply Chain Challenge

For years, the definition of a world-class supply chain was one that worked on a “just in time” business model that left little room for resilience against disruption. Then came along a two year disruption that left governments and businesses alike struggling to keep people safe while also maintaining a healthy economy. Now, labor shortages, regional and international shutdowns, and even natural disasters have coalesced to delay production of raw materials and delivery of finished goods. 

From slowed magnesium mining in Northern China–which is necessary to produce electric vehicles–to container ships forced to wait weeks to dock in California ports, holiday shortages for popular items are almost guaranteed across all retail sectors. This is all compounded by economic recovery in major nations such as the United States, where spending and demand are both increasing right in time for retailers’ biggest quarter of the year.

How Do Supply Chains Affect Marketers?

Whatever is happening behind the scenes, marketers are still responsible for creating convenient digital experiences, which are crucial for driving loyalty and competing in a volatile market. This year will require some adjustment around product availability and evaluation. Integrating personalization and inventory APIs into holiday emails can help steer customers to products that they’re interested in and which are also in stock.

But that’s not the only way brands can provide clarity and options for their customers while supply chains remain erratic. Informing buyers about pertinent product details, allowing a convenient range of fulfillment choices, and offering a number of payment options can deliver real value while meeting customer expectations. 

More than anything, marketers will need to remain agile as the retail landscape shifts quickly from week to week. Martech solutions that allow email and mobile marketers to automate processes, connect messages across channels, and break the silos around vital customer data will help brands stay ahead of any last minute changes. 

Most importantly, brands will need to do whatever they can to increase revenue and create or sustain loyalty, no matter what disruptions are thrown their way. 

Adjusting to a Lower Amount of Deals

The first challenge that’s bound to confuse many consumers is the lack of discounts and deals compared to years past. Retailers have little incentive to discount products due to supply chain inconsistencies. Instead, promotions will likely be more strategic in 2021, focusing on items that are overstocked or need to move. It’s unlikely that these products will be top of mind for many people. 

Cost-consciousness is still very important to many consumers, and brands will need to offer alternatives to traditional promotions that still allow customers more leeway when purchasing full-price items this holiday season. The popularity of Buy Now Pay Later (BNPL) has skyrocketed over the past two years and retailers welcomed this integrated new way to pay for items, especially given the consumer shift toward apprehension in opening credit cards. BNPL is just one way that we can show consumers we “respect” their financial constraints by making it possible for them to shop the brand even when there isn’t a sale.

That doesn’t mean credit cards are losing value any time soon, especially for brands that have store-brand or co-branded card options. Personalizing rewards and applicable savings based on existing credit card data can incentivize new purchases. The holiday season is also a time to create campaigns for non-card holders, which is a win-win for consumers as well as retailers. Customers receive timely deals while engaging in one of the leading indicators of increased customer lifetime value. 

Peak season is also a time for marketers to increase focus on their loyalty program. Similar to credit cards, loyalty programs provide something for both consumer and brand. New members get access to exclusive savings, events, and content while brands receive more access to data that can be transformed into dynamic personalization. 

Managing Return Logistics

Because eCommerce will be integral to peak season shopping, returns are inevitable. For every $1 billion in retail sales, $106 million worth is returned. More than a 10% rate translates to lower margins for retailers, more inconvenienced shoppers, and bigger logistical headaches for stores. There’s also fraud to consider. For every $100 in returned merchandise, retailers lose $5.90 to return fraud. 

Personalization can play an outsized role in reducing the number of returns this holiday season. When customers receive recommendations based on their search history along with zero- and first-party data, they are only seeing products that are right for them. Marketers can automate product recommendations through an API, which reduces reliance on batch and blast tactics. A consumer is far more likely to be happy about a product recommendation via an algorithm, vs. one that they discover on their own and that was simply pushed to them as a merchandising strategy versus a pull personalization strategy.

eCommerce makes it difficult for customers to try on clothing and jewelry or see how a new couch looks in their living room, which precipitates increased returns. Augmented reality (AR) can help lower that rate by allowing customers to visualize the products and reduce any surprises that may come up. AR provides a 360 degree look at products, allowing shoppers to really engage with an item before purchase. That experience leads to higher satisfaction and happiness with a purchase.

Ratings and reviews can also help customers find the right product for them by engendering confidence in the quality of a product. Marketers can curate specific reviews that provide more information than a typical product page, and hearing from real people creates a more secure feeling before purchase.

Preparing for Lower Consumer Patience

We’ve all been in the same boat for almost two years, and everyone is antsy for the day when the pandemic is behind us and life once again returns to normal. Patience and forgiveness are wearing thin, especially for consumers that expect brands to have fully adjusted to the new reality. And while these outsized expectations may not align with reality, it’s up to marketers to manage the headaches that unattended cash registers, out of stock items, and other bad experiences may invoke. 

To make as many customers as happy as possible, marketers will first need to clearly communicate all available fulfillment options along with timeframes that allow for on-time delivery. Many brands have invested heavily in expanding BOPIS, two hour pickup windows, delivery, and curbside pickup options. It’s up to marketers to communicate the availability of this optimized shopping experience, ensure timely receipt of goods, and engender customer loyalty.

Of course, even the best strategies can go awry, especially given the unpredictable nature of current supply chain woes. When issues arise that affect in-store shopping status, inventory, or order timing, marketers will need a way to communicate these facts quickly. Movable Ink clients have access to the Critical Messaging App, a content block that is easily edited and turned on or off to send urgent messages without needing to rework an entire email campaign. This allows marketers to quickly add new developments to emails for any timeframe needed.

Avoiding Customer Frustrations

The 2021 holiday season is bound to create more chaos, even though consumers are less patient than they were at the outset of the pandemic. Marketers have a huge responsibility to clearly communicate any inventory problems or delivery issues. While supply chains will cause plenty of turmoil, retailers should take steps today that can mitigate the foreseeable challenges by implementing sophisticated personalization into their peak season campaigns, leveraging customer data so people see the products best suited to their needs, and creating communications that manage expectations when logistics break down.

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