How to Talk With Your CFO About the ROI of Omni-Channel
1.
2. How to Talk With Your
CFO About the ROI of
Omni-Channel
Allied to Win Tour 2014
3. The Shift Towards Omni-Channel is
Happening Now
50%By 2017, 50% of all U.S. retail
sales will be omni-channel.
Source: Forrester Research, Inc.
4. Omni-Channel Programs Provide a Net
Sales Benefit to Retailers
Almost a quarter of all online
purchases are returned
Offering in-store returns gives
retailers an opportunity to save
or lift online sales
Offering in-store pickup and returns
gives retailers an opportunity to
cross-sell additional items
Source: Kurt Salmon US Inc.
5. But There Are Disconnects Between
Retailer Values and Realities
Source: RSR Research, December 2013
6. But There Are Disconnects Between
Retailer Values and Realities
Disconnects:
49% of retailers are enabling ship-
from-store.
Vs.
37% report that they are in the
process of getting online visibility to
in-store inventory.
50% of retailers think ship-from-store
is valuable.
Vs.
74% who believe in-store pickup is
valuable.
49% are rolling out ship-from-store
programs
Vs.
36% are rolling out in-store pickup.
Source: RSR Research, December 2013
7. Retail Winners Are Focusing on ROI
Priorities for Retail Winners:
#1 Prioritize fulfillment based on the most
profitable location.
#2 Rethink how sales and costs of sales are
allocated in cross-channel fulfillment.
Source: RSR Research
2X Retail winners are twice as likely to
prioritize attribution as retail laggards.
Retail Winners: Retailers that achieved higher than average YoY sales growth.
Retail Laggards: Retailers that achieved lower than average YoY sales growth.
8. Retailers Want the CFO’s Involvement
in Driving Omni-Channel Initiatives
Who is currently driving
omni-channel adoption?
➤ VP Supply Chain
➤ Store Operations
➤ CIO
➤ VP Marketing
Who should be driving
omni-channel adoption?
➤ VP Supply Chain
➤ Store Operations
➤ CIO
➤ CFO
Retailers have:
Don Draper
Retailers want:
Warren Buffet
Source: Retail Systems Research
9. How to Convince Your CFO to
Embrace Omni-Channel Fulfillment
Leverage
intelligent order
routing logic
Optimize your
return policies and
procedures
Prioritize financial
sales attribution
$
10. “And we’ll also double our shipping
costs, resulting in a net loss!”
“With distributed order management
software, we’ll be able to roll out a ship-from-
store program, which will double our inventory
turn.”
CFO
VP Omni-Channel
Leverage Order Routing Logic to
Convince Your CFO of Omni-Channel ROI
11. Leverage Order Routing Logic to
Convince Your CFO of Omni-Channel ROI
“Fantastic!”
“With distributed order management software, we’ll be
able to implement logic that factors in the location of the
inventory that’s selling the slowest and route orders to
that location for fulfillment. The money we save from
reduced mark-downs will offset any additional shipping
costs resulting in higher-margin sales across the board.”
CFO
VP Omni-Channel
12. Is your eCommerce return period longer than your
in-store period to account for shipping?
Or are all of your return policies consistent?
Changes to Return Policies May
Impact Revenue Recognition
*
Consider the fact that CFOs look at historical return
data to estimate sales returns. If this cannot be
reasonably estimated, the sale might not be recognized
until after the return period ends.
13. The Rise of Omni-Channel Poses
Challenges Related to Attribution $$
Attribution is challenging in an omni-channel environment:
➤ How do retailers credit an omni-channel sale?
➤ How do retailers decide which channels to invest in?
➤ How do retailers track web-influenced sales?
Order management software helps retailers:
➤ Identify the source of a sale
➤ Credit the store that originated the search instead of the store
that supplied the inventory
But there are other factors to consider:
➤ Volume goals of each store
➤ Incentive programs and compensation
14. ROI Case Study
Retailer with $50 million online sales.
Ship-from-Store:
➤ Assumes 10% of online orders shipped from store (based on average
retailer data); previously shipped from warehouse
➤ First year return: $300,000 savings in inventory carrying costs
➤ Client achieved a 30% boost in top line sales by using store-based
inventories to avoid stock-outs
In-Store Pickup:
➤ Assumes 3% conversion lift (from having ISPU), plus 25% of pickups
resulting in incremental purchases ($100 ticket with $30 incremental in-store
sale)
➤ First year return: ~$2.4 million in new sales