We inherently know that a stockout (aka an out-of-stock or OOS) is a frustrating experience for all involved in eCommerce. What isn’t always appreciated is how just one stockout event with a single customer can have a ripple effect across a retailer’s eCommerce revenue and reputation.
Short-Term: Losing the Sale(s)
Meet Christine, who is in the market for a new set of cleats for the upcoming softball season. Christine finds WickedAwesomeSoftballGear.com via online search (all that marketing investment on the seller’s part is paying off!). While on the site, she adds the cleats plus new socks, batting gloves, and a new bat to her cart. She submits her credit card info, makes the purchase, and excitedly receives her confirmation email from the site. But…two days later she gets another email saying that the bat is actually out-of-stock.
In their paper on Measuring and Mitigating the Costs of Stockouts, researchers from Northwestern, Duke and MIT observed that a stockout on an individual item impacts the customer’s likelihood to purchase additional items as part of the same transaction.
“A stockout on one item increases the probability of customers cancelling other items in that order, representing 33% of the total short-run opportunity cost.”
Christine decides to cancel her entire order and is back on the hunt for cleats to buy online.
Long-Term: 1 Customer Lost Today, Profitability Tomorrow
Not only is Christine cancelling the purchase of her entire basket due to the stockout on just one item, she is less likely to do anything with WickedAwesomeSoftballGear.com going forward.
“Customers who experience a stockout were less likely to place a subsequent order, ordered fewer items, spent less (revenue), and had a lower subsequent conversion rate”.
Now that one stockout has cost the retailer one basket’s worth of revenue. And even if Christine returns to the site in the future, her basket size will likely be smaller.
Consider the inverse possibility – according to Bain & Co, “a 5% increase in customer retention can increase a company’s profitability by 75%”.
So Christine’s cancellation of the order hurts today and her unlikely future return hurts tomorrow. For the retailer, the time spent processing the cancelled order, coupled with the upfront marketing investments to bring Christine to the site in the first place, all add up to seller expenses that drove no recognized revenue.
It is not just a lost sale – it is a hit to the site’s profitability.
Big Picture: Your Ability to Work with Future Christines
If Christine had found WickedAwesomeSoftballGear.com’s offerings through a marketplace like ChannelAdvisor or Amazon, that softball cleat order cancellation can now create selling problems for the site’s other customers and transactions. Refunding orders is not enough – cancellations can negatively impact a site’s seller performance rating.
“You get ‘dinged’ as a vendor when you cancel orders. If you cancel several per month, Amazon will end your account. Once your account is banned, no one with your SS# or IP address can open another.” – Amazon Top Reviewers Forum
Maintaining accurate inventory counts on your online storefront and marketplaces is paramount to avoid cancellations (or worse). Stockouts are a problem for retailers of all sizes – small and midsize retailers may think of it as unique to them, but larger enterprise and brick-and-mortar retailers face the same challenges. For retailers with multiple fulfillment vendors (dropshippers, 3PLs, etc.), maintaining inventory accuracy becomes a more challenging task when handled manually. Automating your inventory management – with an Order Lifecycle Management platform like HubLogix or another technology – can significantly reduce your time spent managing your site’s inventory levels and take your error rates to nearly zero.
So you can get back to selling more softball gear to more Christines.
Download HubLogix’s full “Hidden Costs of Order Processing” Infographic
Today marks an exciting and important day in our commitment to driving efficiency and insight in the worldwide supply chain through automation. We are officially changing our corporate name from eCommHub to HubLogix to reflect the larger vision, values, and direction that our company delivers today and in the future.
Why the change to HubLogix?
HubLogix (formerly eCommHub) has cut fulfillment costs and created competitive advantages for thousands of thriving online retailers, distribution partners and technology providers since 2010. It’s important that our brand identity reflect the larger vision, values, and direction that our company delivers today and in the future.
We’re driven by the desire to ensure that each of our clients scale effectively while maximizing profits through back-end efficiency – by automating their processes today to cut costs and providing insight to intelligently scale their back-end for tomorrow. Amidst the rapid disintermediation of the worldwide supply chain, our clients should have the necessary tools and solutions needed to thrive. Today’s successful eCommerce retailers are selling across multiple channels and using multiple distribution partners to fulfill their orders. As HubLogix, we will continue to provide innovative automated solutions for eCommerce back-end processes in addition to serving as a powerful insight engine for online retailers.
What Does This Mean for Customers & Partners?
We will continue to provide technology solutions – including our order lifecycle management platform – to connect online retailers, storefronts, marketplaces, distributors, drop-shippers, warehouses, companies and related technologies to lower fulfillment costs and improve margins. In addition to the name change, we are also expanding our Atlanta headquarters to house our growing technology development, integration, and account management teams. Functionally speaking, our customers do not need to do anything as part of this transition outside of visiting HubLogix.com to access their account going forward. All of your data – your orders, SKUs, storefronts, vendors, etc. – will continue uninterrupted throughout the rebranding.
All of today’s announcements reflect our continued and focused commitment to helping our clients and partners realize measurable, scalable bottom line results through operational efficiency. In the coming months, we will release a variety of innovative features that make it even easier for online retailers to unlock the capability to efficiently scale their growth – to make adding new storefronts, distribution partners, and technologies to your ecosystem fast, flexible and affordable – in addition to providing unprecedented visibility into your multi-channel, multi-partner back-end ecosystem. If you have any questions, please contact your HubLogix Account Manager (same as your eCommHub Account Manager) or info@HubLogix.com
– Kevin McCarthy, CEO, HubLogix
eCommerce automation is the next big revolution in ecommerce.
Over the past several years, ecommerce has grown exponentially. It’s been democratized – by players such as Shopify, Bigcommerce, Magento, etc. – that have made it easier and cheaper than ever to start an online store (Shopify alone has exploded from 20,000 customers to 140,000 in the past couple years!)
Back when I started my first ecommerce business, it was still the wild west (see Kurt Heinrich’s answer to What are some potential low-cost businesses that can be started and operated by a teenager?) Simply having an online retail presence in a niche market was your competitive advantage (okay…maybe it wasn’t quite that easy…but it’s somewhat true.). The barrier to entry was higher because it wasn’t so easy to start up an online store. The solutions at the time were either open source PHP carts, writing your own from scratch, or Yahoo Stores — all of which you probably needed a degree in computer science to use.
So with all this tremendous innovation on the front end of ecommerce (shopping carts, mobile, two-day shipping, same day shipping!), there’s been an area of ecommerce that’s been neglected. That is: what happens to an order after it’s been placed?
Well, we call this the Order Lifecycle – a dark, messy place that no one likes to talk about. It’s everything that takes place between when the checkout button is pressed on the website and when you ultimately get your package 2-days later on your doorstep. For online retailers, it’s manual. It’s painful. We colloquially called it “the muddled middle”. For online retailers it can involve anything from spreadsheets, to phones, faxes, manual order entry, or hope-to-god-not-ugly EDI. You’d be surprised, but most ecommerce retailers today either handle this manually (people literally copying and pasting) or by trying to wire together their own custom scripts to automate things. It’s not a pretty sight, and worse, it’s inefficient.
So what is eCommerce Automation? It’s automation of the Order Lifecycle, from the point of checkout to the point of delivery.
To end with an analogy, the shopping carts have done to ecommerce what Salesforce did to the CRM world. It’s a new era for ecommerce and there’s a need for automation on top of the shopping carts, similar to the way companies like Pardot, Hubspot, Marketo automate on top of Salesforce. That’s called Marketing Automation, but mark my words in a couple years there will be a new category in the software industry: eCommerce Automation.
How iPods, Technology, and Atlanta have influenced the Company Thus Far
This week, eCommHub Founder and Chief Platform Officer Kurt Heinrich appeared on NBC’s Atlanta Tech Edge to talk about how his experience as a school-aged entrepreneur and online retailer led to the creation of the company. “The part of e-commerce that has been neglected is what happens when the order is placed,” shared Heinrich. “As I developed technology to automate my stores, I started to think ‘if I am having these manual problems with my order order lifecycle, other retailers must be as well'”.
See the full interview with Kurt Heinrich on Atlanta Tech Edge
About Atlanta Tech Edge
Atlanta Tech Edge highlights the latest technology advancements and reveals a behind the scenes look at the people and businesses that make it happen.With Atlanta quickly becoming the Silicon Valley of the South, it’s fitting that this burgeoning industry have it’s own locally produced television program. Atlanta Tech Edge, hosted by Wes Moss, airs Sundays at 1:30am & 11:30am. All the segments can also be seen on the website: www.AtlantaTechEdge.com.
We are pleased to announce that Amazon Webstore users can now get started with HubLogix through the Amazon Webstore App Store. While Amazon users have been able to integrate their stores with HubLogix for some time, being an official solution provider makes it easier than ever for growing sites to start automating their operations.
With HubLogix, Amazon users have the ability to manage their site’s inventory, route orders, and track shipments automatically. Once we connect your storefronts and suppliers (drop shippers, fulfillment vendors, etc.) through our online platform, HubLogix will put your Amazon Webstore on autopilot, letting you spend more time growing your business and less time managing it.
Learn more about our integration with Amazon here and sign up for your 15-day free trial – including assisted implementation – by contacting us here.
HubLogix empowers efficient e-commerce for online retailers and their suppliers. Our SaaS-based platform allows effortless integration of supply chain vendors, storefront and marketplace platforms, and back office systems so that mission-critical communications and operations can be easily automated and updated in real time. We enable our customers to put their web stores on autopilot and spend more time growing their business and less time managing it.
It seems to me that the word “entrepreneur” has a strong connotation towards software-entrepreneurship. That’s not a bad thing, but I think it’s worth paying homage to its beginnings.
But long before the buzz of social apps/tools/networks/analytics/doo-dads, entrepreneurs sold things. The mindset wasn’t “build something and they will come” but rather, “take a product to the market and sell it.” The lessons learned from these commerce-entrepreneurs have impacted software-entrepreneurship community in ways we might even realize.
The oft requested integration with Amazon Marketplace is finally here!
All kinds of ecommerce retailers – from those who use 3rd party fulfillment to those who dropship – sell their products on their shopping carts (such as Magento, Shopify, BigCommerce, 3dCart) and on the Amazon marketplace. Managing inventory for even a single storefront is a lot of work, but when you’re selling multichannel, it becomes significantly more complex.
Lets say that you’ve just received an order on Amazon for items A,B,C and D. You need to now go into your shopping cart (Magento, for example) and individually deduct the quantities of items A, B, C and D. Keeping inventory levels the same on both storefronts can be torturous. You can say goodbye to your sleep.
With HubLogix’s new Amazon integration – this is no longer going to be difficult. Here’s what you need to know:
Below are true ecommerce horror stories of what happened when e-retailers had the bad luck to become embroiled in the perfect storm of order processing problems, aggressive customers and bad timing.
The Masked Marauder
When a customer on Vivomasks.com ordered an out-of-stock mask, the owner, Jackson, informed the customer “The mask should be in by a month or I can offer you a full refund if you’d like.”
Happy day after Halloween!
I hope that you’re having a good day, recovering from the inevitable crash off the sugar high from too much Halloween candy. I admit it, I am too.
With Halloween out of the way, most of us here in the states are in preparation for the major holiday season ahead. And while that hustle and bustle began for some months ago (the people who plan ahead), most of us are about to delve into the busiest season of the year.
For those of you who use HubLogix or those who are thinking about it, I wanted to give you a heads up that now, more than ever, is the best time to get things setup and put on autopilot, all before the holiday madness begins.
Within just the past year, HubLogix has gone from an idea to a prototype to a full-fledged piece of software serving startups and household names alike, all who are looking to automate their virtual fulfillment (drop-ship) process to spend more time on what really counts, growing their businesses. We’re beyond thrilled to have each and every one of our customers, so to those of you who receive this, Thank You.
What continues to motivate us day by day is looking ahead to the future and expanding the vision, continuing to add features, releasing the software onto new shopping carts and in new marketplaces and bringing on the vendors to better serve the ecosystem and both sides of the hub. It’s a very exciting time.
I’ll apologize in advance as you’ll be hearing a lot from us in the coming months about what’s new and exciting here and how we’re working to change the world (of virtual fulfillment) <— we realize that’s a big goal, so for now we’ll continue to push on and work on it one online order at a time.
Sometimes our customers ask us “What’s the difference between a SKU, MPN, and UPC?”. Here’s a brief overview of each, I tried to keep it as simple as possible:
UPC (Universal Product Code) is the standard for general products and is used by almost all barcode systems. Although, for books ISBN is more often used in addition. Amazon also its own system called ASIN (Amazon Standard Identification Number), although it’s not prevalent outside of Amazon.
SKU (Stock-keeping Unit) is another identifier that is often used, however, it is generally not universal for a particular product. For instance, each vendor for a particular product may assign its own SKU to that product. On the other hand, a product may have a MPN (Manufacturer Part Number, or a model number) that is assigned by the manufacture. While this number is unique, it is not very universal because each manufacturer uses it’s own numbering conventions.
So in summary, I’d say UPC is the most universal system. If you’re wondering how UPC numbers are unique, here is how it works:
UPCs originate with a company called the Uniform Code Council (UCC). A manufacturer applies to the UCC for permission to enter the UPC system. The manufacturer pays an annual fee for the privilege. In return, the UCC issues the manufacturer a six-digit manufacturer identification number and provides guidelines on how to use it. You can see the manufacturer identification number in any standard 12-digit UPC code.
For more info:http://en.wikipedia.org/wiki/Uni… http://electronics.howstuffworks… http://en.wikipedia.org/wiki/Ama…
See the original question on Quora.