Retail technology service providers bring sales into focus

by | Dec 19, 2017 | Retailers

There’s a great story about advertising giant David Ogilvy writing a monograph about how to make car commercials. He sent a copy of the book to every car manufacturer in the United Sates. His staff thought he was crazy, because he just shared their big secrets. But instead of making their own commercials, the car companies realized “we’re car makers, not commercial makers,” and hired Ogilvy to make all their commercials instead.

Being in the business world, you’ve no doubt heard similar stories about companies that forgot their core competencies because they were sidetracked by other operations or priorities. It’s a common problem for small businesses, when their non-production or non-sales staff grows as large or larger than the people actually making or selling their products.

Doing everything in-house

There are many services out there aimed at entrepreneurs and other businesses to take care of the tasks that would be a “department” in a larger business. Accounting, web design, payroll processing and marketing to name just a few. Subscribing to such services, instead of hiring the staff and buying the equipment to accomplish those tasks in-house, enables businesses to focus on what they do best and the flexibility they need to grow.

For instance, if you’re a brick-and-mortar retailer in the e-commerce space (and by now – what retailer isn’t?), there’s no doubt you focus a lot of time and energy on information technology and infrastructure, because there’s a lot of it involved in the modern digital retail landscape. There’s the programming and design that goes with making your e-commerce site, there’s the software and processes involved in placing and conveying online order, and more software and processes to handle payments, fulfill orders, manage shipping and so on. If you have an omnichannel strategy (and you should), there’s apps, social media, online marketplaces and more.

Let’s not forget the software and infrastructure that exists to manage all the products that ultimately get sent to customers. There’s ERPs and EDI to manage your inventory, purchase order processing, shipping/receiving information, sending and receiving invoices, making sure everyone gets their money and your shelves are well-stocked. Somewhere in all that information technology is the core of your retail business: selling stuff to people.

Many brick-and-mortar retailers have to be retail technology experts as much as they are retail sales experts. But not all business have the time, staff and other resources to keep on top of retail technology evolution that’s needed to keep up with the speed of retail.

Strengths and weaknesses

Real issues can arise when technology has gaps or breaks. Gaps can mean a patchwork of solutions to accomplish what’s needed, such as manual data entry of invoices and purchase orders (inviting the potential for costly human errors). Expenses to fix breakdowns in an IT system are two-fold: There’s the cost of the repair itself and the revenue lost as a result of the disruption.

Some retailers have embraced technology as part of their brand. They want to do it all themselves. With enough money and the right staff, they can manage pretty well – look at Amazon and Walmart. Even Starbucks and Dominos have been on the forefront of digital retail technology.

Not all retailers want to take it all on, though. Many can’t because they lack the resources to do so until they grow bigger. But it’s hard to grow bigger when your business can’t keep up technologically to satisfy today’s digital, near-instant gratification seeking, attention-span-deficient consumer. This is where outsourcing some technology needs to specialized services providers can help to boost a retail business.

Electronic data interchange (EDI) is a prime example. Large retailers and vendors require EDI because they recognize the value of instantly, electronically exchanging business documents in standardized formats. Smaller retailers should be able to have the same advantage, but creating an in-house EDI department is a huge cost barrier. Subscribing to outsourced EDI provides small businesses with the services they need to be competitive, at a fraction of the price and without having to become EDI experts themselves.

On a related note, EDI makes another valuable “outsourcing” opportunity available for retailers: drop shipping. With drop shipping, retailers receive the order from the customer, but the information is transmitted to the vendor who actually carries out the fulfillment and the shipping. Drop shipping can help retailers with limited warehouse space or fulfillment capabilities to accommodate more orders without having to stock more inventory.

Of course, there are always probably going to be some processes that you may want to retain in-house. You could already have a successful in-house digital marketing program that you’ve developed to know your customers and explain your product better than anyone else outside your company ever could. This naturally a core differentiator you’d want to keep close.

For other tasks, however, this is where outsourcing processes that aren’t your specialty can be so beneficial. Choose a good service provider, and it’s like adding a whole team of experts to your operation at a fraction of the price actually hiring them yourself would cost. Just like you’re a retailer who wants to focus on retail, your service provider wants to concentrate on what they do well. For example, SPS Commerce is an EDI provider – it’s the core of our business for which we’ve developed multiple EDI solutions, proven processes and complimentary products.

With our help, retailers have been able to reduce their staffing requirements, turning their order processing departments into a few staffers overseeing an otherwise-automated process. We make it possible for buyers to find new vendors and onboard them in days or weeks, not months. Our products help the buyers identify problems before they get out of hand, and identify new trends before it’s too late to take advantage of them. And we can even help retailers find drop ship capable suppliers who can manage outsourced e-commerce fulfillment.

In today’s retail world, part of selling successfully is differentiating from others. For example, great product pages are a differentiator. For the most part, though, maintaining your own technology infrastructure isn’t a differentiator, especially if your competition doesn’t have to worry about it because they outsource it. Tech providers like SPS Commerce can take the mundane tasks off your plate. In the time, space and resources that open up as a results, you can focus on the business of merchandising and making customers happy.

Outsourcing retail technology services can be beneficial for businesses large and small. They can help retailers to scale and grow, with expert providers. They can also help retailers focus on the business of making more retail sales.

Brandon Pierre