Monthly Archives: April 2014

B2B eCommerce ROI Model

B2B eCommerce Today

ecommerce-roi-calc

I was researching the business case for eCommerce in the B2B environment when I ran across this great blog post by Sam Bayer.

The article has a focus on SAP/Hybris, however, the general discussion applies to all platforms. Also contains link to Hybris study describing a systematic approach to building the ROI model.

From the Hybris whitepaper:

“Calculate the Total Cost of Ownership (TCO) of the new
B2B e-commerce platform by including:

  • Total one-time, purchase price of the platform
  • Cost of implementing the platform
  • Ongoing operating and maintenance costs
  • Potential upgrade costs

Determine the business benefits (savings and improved
revenues or margins).

Map the TCO against the sum of the business benefits to
determine the ROI. Then, examine the five-year ROI, and
evaluate the results at various levels of growth and
success.”

It’s about ten pages, so enjoy.

RFID: Fundamental Key to Tracking Inventory for Omnichannel Success

Oganizations are moving quickly to add eCommerce platforms to create the Omnichannel experience.  eCommerce platforms are like the shell of the house. Without proper planning for electrical and plumbing, it’s not going to work as planned.  Consider accurate data and real-time inventory measurement the foundation to Omnichannel.

Growing customer expectations of instant gratification in all shopping experiences is giving rise to supply chain challenges—and opportunities. Same-day delivery and free shipping are no longer unique; they are expected.
Almost two thirds (62%) of consumers want to be able to buy items online and complete returns in a store, while 44% want the option of buying items online and picking them up in a store, according to a UPS survey. These factors drive consumers’ likelihood to shop with a specific retailer across channels.

Inventory management and delivery processes have to align with new demands.
Overall satisfaction rates for retailers’ current processes are somewhat low, the UPS survey asserted. Respondents gave a 55% satisfaction rating when asked to share retailers’ ability to offer pick-up at a nearby location. Shoppers also gave low satisfaction ratings when asked about flexibility of delivery date (49%) and time (44%).

Most companies need to improve customer satisfaction with real time inventory visibility across channels.

One of the most long-lived issues in retail is being able to count inventory quickly and seamlessly. Typically, retailers did this twice a year, but for true Omnichannel strategies you need to do cycle counting, multiple times and in real time. With RFID, employees can count items multiple times a day with up to 99% accuracy.

Through a comparison of retail “winners” and “laggards,” RSR (Retail Systems Research)  uncovered that enterprise-wide inventory visibility is a key differentiator in Omnichannel execution. Approximately 63% of “winners” said they have access to inventory across the entire enterprise, while only 25% of “laggards” are in the same position, according to the study. Poor visibility “prevents ‘laggards’ from fulfilling non-store customer orders from store inventory,” the report revealed, “a key capability to a successful Omnichannel offering.”

The RFID market is on the rise and is expected to reach $18.7 billion by 2017. the cost has decreased to $0.05 per RFID tag and is likely to further go down in the near future. The dwindling prices will help boost widespread adoption of item-level tagging.
Recent success stories from American Apparel, Macy’s and Walmart also have helped accelerate the RFID market. These retailers noted several benefits, such as improved inventory visibility and accuracy, task completion and loss prevention, which is motivating other retailers to test and implement the technology.

Distortion becomes a huge problem when a customer wants to know with a high degree of certainty if an item they are looking for is available. If distortion rates can get as high as 25% to 30%, it becomes very difficult to use that information to make any meaningful customer facing promises.

RFID technology empowers in-store employees to better track and update inventory, which helps team members have a constant pulse on which specific products, sizes, colors and styles are available in-store. If a product is not available in a store, for example, using RFID employees will have access to real-time information across the enterprise so they can either order the product from another store or via the e-Commerce site.  Stores also become distribution centers.

To move the needle on RFID, retailers are trying to push RFID closer to the source — the supply chain partners and manufacturers — which is helping organizations realize the vision of Omnichannel retailing. Retailers are discussing with partners the value to all parties and why it’s needed, as well as the overall cost and where tags should be applied and when.