How on-shelf availability improves ecommerce profitability

In 2020, we saw a massive leap in online grocery. Within a few weeks, the industry reached numbers that were unexpected for at least four more years. In a snap, what seemed like a relatively insignificant channel became one that grocery retailers simply couldn’t ignore and, what’s more, is likely to remain a norm.

In-store picking has been and will continue to remain one of the primary methods of fulfilling online orders as it offers several advantages.

Retailers trying to stay ahead of the curve have already started experimenting with methods like building warehouses and installing robots to fulfill the growing demand, but in-store picking has been and will continue to remain one of the primary methods of fulfilling online orders as it offers several advantages. First, it allows the use of existing infrastructure – large retailers already have geographically well-located outlets in major cities, which enables shorter lead time to delivery. Secondly, it allows retailers to stay flexible and move swiftly between in-store and online order fulfilment. And finally, it fits perfectly with the omnichannel approach to allow customers to shop wherever and however they want – click and collect, curbside picking, or inside brick-and-mortar stores.

How improving on-shelf availability helps ecommerce profitability

Despite its many advantages, in-store picking is expensive and affects profitability in an already competitive space since the cost of picking is directly tied with hourly labor fees. Moreover, with labor being a major challenge to obtain and retain, every minute spent picking counts. However, there is an easy way to keep costs down – optimizing the picking process by ensuring product availability and reducing the need for substitution.

An average of 8% of products are not available on-shelf in stores at any given time. As a result, pickers waste much of their time hunting for products that simply aren’t on the shelf or are misplaced, or spend time looking for substitutes, further increasing the time and cost for picking. In fact, grocery pickers claim that out-of-stock (OOS) occurrences are the main reason that slows down the picking process. Without these factors, pick rates would be two times faster. Since picking accounts for 50% of the fulfilment cost, it has a substantial impact on the order’s bottom line and often makes the difference between a loss-making and a profitable basket.

Trax technology helps the bottom line

Trax offers solutions that can help retailers improve on-shelf availability (OSA). Trax Retail Watch uses computer vision (CV) and artificial intelligence to create a digital version of the physical store in real-time and informs out-of-stocks so that retailers always have full visibility of items that are running low and can replenish them quickly. In turn, pickers are more likely to find everything they need quickly without facing the problem of missing products or having to look for substitutes. Trax Retail Watch also allows store associates to quickly spot any issues arising on shelves without having to physically walk down each aisle. From misplaced products to low stock, having full visibility means that shelf managers make more informed decisions, so that pickers face fewer obstacles, are aware of the true inventory, and significantly improve their pick rates. Faster picking means lower costs and ultimately, higher margins for egrocery.

Another solution is Trax Dynamic Merchandising (DMX) powered by FlexForce, which combines CV with an on-demand workforce of skilled and highly flexible merchandisers within just hours of a request being received. The agility of the Trax FlexForce coupled with accurate and complete shelf data means that products are restocked quickly and precious picking time isn’t wasted on items that aren’t available.

With more ecommerce retailers crowding the online space, competition is tough. Want to know how frustrated ecommerce shoppers are about on-shelf availability? Trax uncovered this problem through an in-depth consumer study. Learn how to address shopper happiness while driving more profitable fulfilment and stay on the leaderboard with our whitepaper: Winning the online grocery race.