Evaluating last year’s retailer performance for a better new year

by | Jan 12, 2017

Now that the holiday shopping season is over, and the return season nearly so, retailers should be looking at how they performed last year. Not just during the holidays, but throughout the entire year. Evaluating retailer performance will give companies an idea of what they did right, which processes or products to continue and how retailers can improve in this year.

Did you hit your KPIs?

January is always a time of reflecting on the previous year and planning for the next one, and retailers should evaluate their own systems and processes. Is your ERP up to snuff? How well did your 3PLs work? How did your carrier and delivery process work? Did your team and processes support and allow for the intended impact of these systems and solutions? How did your vendor performance rate vs. expectations? How about your inventory stock outs, on time shipping, shipping completions – did they meet your goals? Which regions and stores are performing better? And how about your returns and the reasons for them?

These are a few of the common ways retailers are looking at their business, and those best positioned for action are looking at data instead of just relying on past relationships and anecdotes from people in the field. The experience of relationship and individuals in the field is helpful, but can also be biased by that same experience because of what has worked or not worked in the past. Numbers and data don’t lie and used in conjunction with experience can drive an impactful 1-2 punch to running your entire operation successfully.

Did vendor partners make the grade?

It’s also important to look at your distribution channels, especially if you’re relying on suppliers or outsourced distribution centers to handle a lot of your e-commerce orders. How was their overall performance? In the world of drop shipping, this should be close to 100 percent. If it wasn’t, how can you solve that? What does the drop shipper need from you, or what do you need from them?

Was the vendor inventory correct, or did they run out of your best-selling products? Did they communicate to you that the items were on backorder? How do you keep up with the demand? Create plans to secure committed inventory levels last year, so you can be sure it’s in your inventory, rather than being in a larger pool that everyone draws from.

Did you and your partners deliver?

Look at delivery methods as well. If customers asked for next day delivery, did it happen? If they didn’t, how long did delivery actually take? Did the carrier or drop shipper provide a data feed to tell you when and where those deliveries were happening? You can rate the carriers on those metrics.

For those retailers that have products that can be installed, you may want to consider offering those installation services as well. This year has been about getting more vendor-managed products, but some retailers are already talking about how 2017 should be more about “white glove services,” such as installations.

For example, some people are willing to pay $20 or $30 to have a new widescreen TV delivered, unpackaged, installed, and set up, plus have the packaging taken away. So why not offer that service to them during their online ordering?

What to do next?

Once you’ve asked the right questions and dug down deep into the answers, you’ll probably have some decisions to make. Perhaps your ERP is holding you back. Possibly your 3PL can’t handle the flow of orders for you anymore, or you can find a better rate elsewhere. Maybe you ranked how well your vendors are stacking up and a shuffling of tiers or priority is in order. You may want to seek out a more robust fulfillment option to meet consumer expectations. Without a thorough retailer performance post-mortem, it’ll be hard to see where the cost savings, efficiencies and customer experiences can be improved.

January is a great time to look back at what went right, what went wrong and what you’d like to change to do better in the new year. Take a close look at your data, then make a plan for how to move forward. You still have plenty of time before the busy season starts again to get all of your plans in place.

SPS Commerce can help retailers of all sizes make better use of their existing systems, as well as help to find new vendors, 3PLs, and other trading partners to help make the new year even more successful. We also offer solutions for improving EDI, inventory management, product information, and point-of-sales analysis. For more information, please visit our website and contact an SPS Commerce representative today.

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Brandon Pierre

Senior Director for Customer Success - Community & Analytics at SPS Commerce at SPS Commerce
As a Senior Director for Customer Success at SPS, Brandon Pierre’s team works alongside many retailers and suppliers to develop strategies that involve technology along with the people and process around it to address their merchandising and supply chain business objectives. With more than 15 years in the buying organizations including large and small, he has experienced first-hand the opportunities of the digital era and how technology can transform the consumer experience through improved retailer and supplier connections.
Brandon Pierre