/U/Technology

Research has shown that online retail can help drive in-store traffic, and many retailers can attest to this. Lisa Besseling, the owner of Stoney Lake Furniture, told us that having an ecommerce site helps drive interest for her offline store.

“Even if people don’t pull the trigger and make the purchase on your site, your online presence still generates interest,” says Besseling. “I’ve had people call me and say, ‘I saw this product on the website. I’m not ordering it right now, but I’d like to learn more.’ So customers are asking more questions — and I think whether or not the sale happens online, it still helps generate sales overall.”

If you really think about it, ecommerce can be a boon for your brick-and-mortar stores. That’s why if you’re not selling online yet, you could be missing out on revenue possibilities.

Beyond sales, you’re also missing out on learning opportunities. That fact is, brick-and-mortar stores can learn a thing — or eight — from ecommerce.

In this post, we’ll look at some of the top lessons you can pick up from online retailers. Check them out and see how you can apply them to your business.

Use data analytics and make more profitable decisions

For years, web analytics has been something that only e-tailers could take advantage of. They’d track shoppers on their site and get intel on traffic, timing, bounce rates, etc. Merchants could then use that data to enhance the user experience, test out layouts and calls to action, and more.

Fast forward to the present. These analytics tools are no longer reserved for ecommerce sites. Today, brick-and-mortar retailers can get their hands on data that can help improve their stores.

In the same way that e-tailers can track sales and user behavior to figure out the best ways to convert customers, you too can now gather insights into valuable shopper habits.

In-store analytics tools such as people counters, sensors, and mobile foot traffic solutions enable you to get data on the number of people in your location, your store’s conversion rate, dwell time, as well as the most and least visited parts of your shop.

Not too keen on using fancy in-store tools? Turn to your point-of-sale system instead. Most POS and retail management solutions have data and reporting capabilities that can monitor sales, inventory, and more. Use those reports to get the insights you need.

What exactly should you track? One important metric is your conversion rate. As Alexander Reichmann, CEO of iTestCash.com says, “one of the most valuable lessons that offline stores can take from ecommerce websites is to fine-tune your conversion rates.”

“Which products are people buying? Does moving your store items around increases sales? Is there any inventory your store could do better off without? These are important questions that most brick and mortar stores can potentially look into.”

He continues, “as an online store owner, I constantly track visitors to my business site and fine tune as needed to help our conversions.”

Your cost-per-acquisition (CPA) is another important number. Many ecommerce and subscription-based businesses can tell you their CPA at the drop of a hat, but many brick-and-mortar retailers don’t track this — which is a big mistake. Knowing your CPA can help you maximize your sales and marketing efforts so you can be more profitable.

“There is always a cost per acquisition for customers, whether it is advertising costs or time costs in optimizing a website. Brick and mortar stores have similar customer acquisition costs — flyers, newspaper ads, radio/television ads, the cost of signage or even the cost of a premium store location,” says Dave Hermansen CEO at StoreCoach.com.

“We want to maximize our profit per sale to get the most for our acquisition buck. In ecommerce, we do that by bundling products with accessories or by reminding customers of accessories that go with the products they have added to their online shopping cart,” he adds.

“Retail stores can do the same thing, putting together packages of products (e.g. a television, HDMI cable and soundbar package deal).”

Personalize the customer experience to connect better with shoppers

Aside from giving you the intel to improve your store, data tools can also help you personalize each shopper’s experience.

Our online friends have been doing it for years. E-tailers know when someone is a returning visitor or a new customer. They’re aware of what products they purchased in the past, as well as which items would interest them. E-tailers could then use all that information to serve up customized recommendations and offers.

Fortunately, offline retailers can do this as well. Use a robust customer management software that lets you collect customer information, track purchase histories, and reward loyal shoppers.

One other way to personalize in-store experiences is through beacons. These nifty devices can “talk” to your customers’ smartphones so you can send tailored messages based on their previous behavior and location in your shop.

For instance, if someone is a returning customer, your store’s beacons could greet them with a “Welcome back!” message. Or, when they’re browsing a particular department, you can send them tailored notifications on the offers you have for relevant products.

Case in point: Tarrytown Pharmacy. This small pharmacy in Austin, TX partnered up with iBeacon solutions provider Shelfbucks to test out the technology in its store. Users can download the Shelfbucks app, opt-in for the service, and they’ll receive tailored offers depending on what aisle they’re in. That way, if the shopper is browsing, say, the vitamins aisle, they might receive a special offer for multivitamins or supplements.

Find clever ways to upsell and cross-sell to boost your profits

Many ecommerce stores have mastered the art of upselling and cross-selling.

As an example, Josh Brown over at Fieldboom, mentions Amazon.com. “When looking at a particular product, they will recommend other products that complement what a customer is looking at.”

Josh says brick-and-mortar stores can implement a similar strategy.

“One method is to get a potential customer talking to a sales person on the floor. However, instead of having an employee go up to a potential customer and seeing if they need help (which can be annoying), it’s important to find a way to get the customer to willingly go to an employee.”

“A way to implement this would be utilizing a cloud-based POS system to allow employees to process a sale anywhere in the store.”

According to Josh, this not only improves the shopper experiences but it’s also “a potential opportunity for an employee to engage with the customer and offer a personalized upsell and/or cross-sell.”

Display ratings and reviews to leverage social proof

Ratings and reviews are a staple on ecommerce sites. They’re proven to drive sales, build credibility, and eliminate doubt that shoppers may have. Most important, they help customers make more informed decisions. This is likely why 61% of people rely on user reviews for product information or research.

The great news is, brick-and-mortar stores can also take advantage of ratings and reviews by incorporating them into their offline marketing collateral. Retail TouchPoints provides some excellent examples of offline retailers putting this into action. According to the site, Sephora “displays in-store digital signage with ratings and pullout quotes from online discussions about beauty products.”

Another great example comes from Amazon, which incorporates ratings and reviews in its physical location. The retailer has a “Highly Rated” section in-store where it showcases top-rated books alongside real reviews from Amazon users.

Be proactive about collecting reviews from offline shoppers

Online stores do a great job at getting people to review their products. Many ecommerce sites send out automated emails to encourage users to leave reviews. Why not do the same at your offline retail stores?

Take a cue from gemstone retailer Moriarty’s Gem Art.

“The biggest thing we do now that has greatly improved the foot traffic of our company is using reviews and social visibility, says Jeff Moriarty, the business’ marketing manager.

“Whenever someone purchases an item in store from us, we get their email address as well, and about 7 days later we email them asking them to review their experience on sites such as Google, Yelp, Facebook, and others. We also give them all our social information.”

“This has lead to a ton more reviews and more of our jewelry being shared online in our town and over the entire country. It’s so easy to do now that it is automated. It’s a no-brainer for retail stores.”

Learn the art of following up and get people to come back

Do you proactively reach out and follow-up with your customers? If not, you could be missing out on traffic and sales.

“I believe that brick-and-mortar stores can learn the art of follow-up from online retailers. Online stores must focus on not just getting customers in the door but getting those eyeballs back,” says Deborah Sweeney, CEO of MyCorporation.com

“Online stores work hard to retain those eyes with retargeting, follow-up marketing, cookie crumbs, etc. They want to keep in front of those customers with ads and messaging so that when they are ready to purchase, the consumer remembers the online retailer.”

So how can you apply the art of following up with your offline customers? Deborah offers some practical tactics:

“Talk with customers, get them to fill out a sign-in book to win a prize, engage with customers beyond just a quick hello — learn what they are looking for, how you can be of service and if you can follow up with them in the future for offers. If they’ve made the effort to enter your store, make an effort to get to know them and learn about them so you can better service them now and in the future. Please feel free to reach out with any questions.”

Invest in SEO and content marketing to increase online and offline visibility

Think online marketing is only for online businesses? Think again. As Patrick Chukwura, co-founder at Kuia, puts it, “just because you aren’t online doesn’t mean you can’t use online marketing to get people in the door.”

He continues, “local SEO will get you discovered by search engines on Google and Bing maps, and get you into specialty directories where a specific audience is actually looking for your kind of store and products.”

Patrick adds that brick-and-mortar stores should also consider content marketing.

“ Which shoe store would you rather go to — the one that you found online that has a 5-star review in Google, which also has an article teaching you how to pick a quality running shoe for your running style? Or would you choose the shoe store that just has a website with a phone number?

The answer should be obvious — the first one.

Use email marketing to increase store traffic and repeat purchases

“One thing that brick and mortar retailers can learn from ecommerce is using email marketing to keep in touch with customers,” shares Karim Pearson, a digital marketing strategist at CoderMarketer.com.

“Email marketing comes much more naturally to online retailers as they already operate in the digital realm, but there’s no excuse for brick and mortar stores to have no email follow up with customers. That leaves them reliant on customers to just show up when they feel like it, instead of using email to proactively reach out to customers and let them know when they have an upcoming sale, a new selection of products, an in-store event, etc.”

Elizabeth Gibson, chief content officer at ezLandlordForms.com, echoes this saying, “I wish I had a dollar for every brick and mortar store that took my email address, then never bothered to send me anything interesting. Email lists are gold in eCommerce.”

“We know that email marketing brings far better ROI than just about any other outbound marketing effort. I don’t think brick and mortar stores have truly capitalized on the value of having what is, essentially, an invitation from the customer to regularly interact with them.”

Need some inspiration on how to do this? Check out this message from apparel retailer New York & Co.

NY&C sent out an email inviting customers to its in-store event in which attendees will enjoy free refreshments, styling, raffles, and even 50% off their purchase.

Bottom line

These are just some of the things brick and mortar stores can learn from ecommerce merchants. There’s certainly more where that came from, so be sure to keep studying your online counterparts to see how you can apply their strategies to enhance your store.

And if you have other ecommerce lessons to share with the brick-and-mortar community, leave a comment below and let us know!

Netflix being sued

In late 2016, Netflix introduced a new feature allowing users to download content from its servers onto a user’s device allowing them to watch content offline later. It took a mere two months for Netflix to get sued for patent infringement over its new feature. The plaintiff, a company called Blackbird Technologies claims they own a patent titled “method and system for supplying products from pre-stored digital data in response to demands transmitted via computer network”. The patent was filed in 2000. In simpler terms, it is a system used to process online orders for the delivery by mail of digital content burnt onto a CD or DVD.

The irony here is that Blackbird’s patent seems to describe Netflix’s initial business model; DVD rental by mail, which it started in 1997 and continues today. Not only does that cast doubt on the validity of the patent, it is difficult to see how Netflix’s current activities would fall within the scope of that patent.

Patent trolls on the prowl

Patent trolls however, do not let themselves get bogged down with such minor details. Whether their case for patent infringement is strong or not is irrelevant. Patent troll is a pejorative term given to individuals or companies whose primary activity is to assert or threaten to assert patent rights in court against other companies. This is often through hard ball tactics. These companies rarely exploit the patent themselves, and are also often called Non-Practising Entities. The sole reason for the operation of these companies is to make a living by negotiating settlements and licensing deals.

Cloud computing

Over the past few years, cloud computing has become a fertile hunting ground for patent trolls. They are going after both service providers and users. Cloud computing is currently a booming industry and this why patent trolls are becoming rampant. Cloud computing also relies a lot on open source software, as is illustrated by the case against Netflix. The patents for business methods or software can be very wide in scope; the inconsistency in the United States Patents Office’s approach to patent eligibility for business methods and software and that of the US courts has also created uncertainty and caused questionable patents to be granted over the years.

Kiwi innovators exposed to patent trolls

A client of James & Wells, who offers cloud-based software services in the US was recently sued for patent infringement. The plaintiff was a notorious patent troll. Our client was one of several software companies that were being sued simultaneously. The plaintiff also had initiated around a dozen similar law suits against other software companies in recent years.

After a preliminary assessment, we were confident that there was no infringement. However, when we requested assistance from one of our associate firms in the US to represent our client, they gave it straight to us and our client:

Preparing and filing a substantive response to the infringement claim alone would cost around US$50,000,

Patent proceedings in the United States cost an average of US$2.5 million to defend,

You cannot recover legal costs from the plaintiff if you are eventually successful, and

They expected a realistic settlement to mean a payment of about US$75,000 to the plaintiff.

To our US associates, this was nothing new or surprising and in fact was something they treated as business as usual.

Our client was lucky and thanks to great work from our US associates, the case was settled for US$15,000. Legal costs are likely to have cost at least the same amount too.

With the above in mind, it is easy to see how patent trolling has been described as extortion and the best evidence that pure evil does exist in the world.

Fortunately, in New Zealand, our legal system makes it is financially unviable for patent trolls to operate. For businesses in the US however, patent trolls have become part of the cost of doing business. An example of this is that Microsoft recently started offering an indemnity against patent trolls, to users of its cloud computing platform Azure. They see this protection as a selling point.

Risks can be reduced by seeking competent professional advice proactively. By conducting Freedom-To-Operate searches, relevant patents, including those only remotely relevant but owned by notorious patent trolls, can be identified. This puts kiwi innovators in a much safer position when they are informed of such risks before entering the US Market.

My advice is prepare for the worst, hope for the best.

Sébastien Aymeric is an Associate in the Auckland Office of James & Wells, a national intellectual property firm. If you are interested in finding out more about protecting your intellectual property, contact Sébastien.

What are barriers business face?

Simply put, trade barriers are measures that governments or public authorities introduce to make imported goods or services less competitive than locally produced goods and services. Tariffs, quotas and subsidies are perhaps the most common trade barriers, but many types of government regulations can be characterized as trade barriers. For example, a restriction where grocery stores in Ontario, Canada can only sell Ontario Vintners Quality Alliance wines can be a trade barrier, notwithstanding the fact that foreign winemakers could technically get certified.

Trade barriers are not always purely economic – for example, the United States Government restricts exports of sensitive equipment, software and technology to certain countries in order to protect its national security and foreign policy interests.

How can trade policy affect business?

Trade policy can have nuanced effects, but the main way that changes can affect your business is by simplifying or complicating the process to trade with suppliers and customers abroad. Some types of trade barriers can also change trade dynamics by making imports more expensive, or by making exported products less competitive in overseas markets.

Tariffs

Tariffs are a legitimate barrier to trade under the global trading regime set up under the World Trade Organization. A tariff is essentially a tax on imported goods. If your business competes against importers to supply the domestic market, then tariffs may make your business’ products more competitive. On the other hand, if you’re an importer, or if you export to a country that levies tariffs, the products you supply will be less competitive.

Subsidies

Governments in some countries pursue a policy of subsidizing certain critical industries, whether for political or economic reasons. A subsidy is a payment made to producers of certain products (agricultural subsidies are quite common, for example). The impact of subsidies on your business will, of course, depend on whether your business is receiving the payment or competing against a business that is.

Market access requirements

Some countries restrict imports, either by way of a limited quota or by imposing import standards. Import standards can often be difficult to meet and can often change with limited notice. This raises major concerns if your business’ supply chain relies on imported materials, or if your business primarily sells to the export market.

Managing the impact of trade barriers on inventory

It can be difficult to predict changes to trade policy – trade talks tend to occur behind closed doors and media reports are often limited. In that context, the best way to mitigate trade risk may be by building contingency into the supply chain, ensuring that no one overseas supplier is a critical point of failure. Inventory management software usually has the ability to keep track of inputs, providing some visibility over changing import prices.

But once you realise you need software to help you, how do you go about finding the right solution? Here are my top 7 tips to help you make the right choice.

1. What do you want to achieve with business software?

We progress and achieve great things by facilitating and embracing change. However, change for change’s sake is counterproductive. So exactly what is it you hope to accomplish by changing your software? Increased efficiency? Lower costs? Paperless office? There are many reasons why you should review your technology, however without a good understanding of the desired outcome, you may not find the right solution.

2. Build your business processes

Before you even start thinking about the tasks and workflows you need your software to help you with, you need to ensure that you have the right processes for your business. Automating or building upon the wrong workflow will not help your business to run efficiently. Don’t be precious…just because you’ve always done something a certain way doesn’t mean it’s the best way of doing it!

3. What are your “must have” and “nice to have” features?

It’s very easy to get carried away when thinking about all the things technology must be able to do. Think about what is so fundamental to the smooth running of your organisation that you cannot do without it and separate these requirements from the features that would be beneficial, but that you could cope with out.

For example, when buying a car 0 to 60 mph in under 5 seconds and a convertible roof may be nice to have, however space for 2 children’s car seats and plenty of room in the boot for a pushchair may be essential.

4. Review your existing technology and software

Review if and how your existing applications help your workflow. Every organisation is different, however there is almost certainly one application or function that is more important than the others. This could be managing customers, sales and marketing (CRM), maintaining financial records (bookkeeping/accountancy applications) or reporting on key metrics or cash flows, like Float.

5. Make a shortlist of business software you want

You will now have a very good understanding of what your ideal process is, what functionality is already served and what is missing from your software stack. It’s time to start plugging these gaps! Let’s assume your accounting software is the one thing you do not need to change. You need to have better control of your sales process and need to improve your cash flow. To remain lean and efficient your software packages need to be able to talk to each other, using APIs. Start by looking at your accounting software’s website for existing integrations – there will almost certainly be many. Review the features these “partner” apps have and short list the ones that meet your essential features. If there are none which do, a wider internet search, asking questions in your network or an independent business software company can help.

6. Demos and trials

Many software vendors will offer free trials or will arrange a demo with one of their team. Use these opportunities to see how the application could work for your organisation. Ask lots of questions and ensure you have a great understanding of how the software will work for you and understand what the cost will be, including any setup or implementation fees.

7. Implement your business software stack!

Once you have selected the right applications you now need to get it up and running. For cloud based software there may not be any installations required, however it is likely you will need to set and configure it, especially if you plan to link with other programs. This can be time consuming and costly if you get it wrong. The software vendor may offer support with this, or charge for implementation for more complex solutions.

Summary

With many hundreds of business software applications and integrations between them, finding the right flow for your business can be time consuming and daunting. It may take several days per application to get it right, however following the steps above will help you get the right solution. Or of course, you could contact the business software experts at Octopus Blue!

Andy Bailey will be speaking in more detail on this subject at Accountex at 10:15 on 11 May.

How perpetual inventory works

The widespread use of automated and computerized systems makes this type of inventory tracking very achievable and beneficial to companies. Businesses are able to easily keep track of inventory as it sells. The perpetual inventory system uses tools such as barcodes, radio frequency identification (RFID) scanners, and point-of-sale (POS) systems to assist this type of inventory tracking as they rapidly record inventory information. When a customer purchases an item, the item is instantly scanned and therefore tracked.

This type of inventory system requires a complex infrastructure in order to facilitate the tracking mechanisms. Perpetual inventory is often used in large businesses whereas simpler systems like periodic inventory are generally seen in smaller businesses. Perpetual inventory systems are also used when a company has more than one location or when a business carries expensive goods such as an electronics company or jewelry store.

It is important to note that errors in inventory are often due to loss, breakage, theft, incorrect inventory tracking or scanning problems. These errors are disadvantages but need to be weighed against the many positives of a perpetual inventory system.

With a real-time system updating constantly, there are many advantages to the business owner. It is a proactive way to prevent stock from running out as when stock is low it can be instantly identified and stock can be reordered. It also gives business owners a better understanding of customer buying patterns and their purchasing behavior. A more accurate understanding of customer preferences can guide which items a business stocks and when they place them on the sales floor. If a company has several locations, a perpetual inventory system centralizes this management. It amalgamates all information and places it in one consolidated and accessible place. Overall, this automated system is more accurate and accurate information can be very valuable to a business owner. It can assess if customers were responsive to discounts, their purchasing habits, and if they returned any items. Unlike periodic inventory systems, the perpetual module reduces the need for frequent, physical inventory counts.

In order for perpetual inventory systems to work as accurately as possible, the quality of both the system and data needs to be high. Cloud-based inventory management software can be a powerful tool in executing a high quality inventory system. In order to best utilize the real-time data of a perpetual inventory system, an automated and advanced system will yield the most consistent results, reducing the risk for errors. If a business is small and anticipates growth, it is worth looking into switching to from a periodic system to a perpetual system.

With this real-time data it allows for companies to be more competitive. A perpetual inventory system can bring many advantages that allow for an in-depth understanding of consumer purchasing behavior. This kind of information has the power to shape the way a company operates, encouraging performance at their optimum level.

Thanks to technology and its increasing uses and reliability, managers of every type of business, large or small, now have a greater ability to make better business decisions, backed by more accurate information and data.

In this regard, inventory management is no exception. The ability for managers to make decisions based on real-time analytics, to view and adjust stock levels from any location in the world, or to access accurate sales data without delay, is invaluable.

While the end decisions are still very much the domain of the human and not the machine, it is certainly true that technology is providing us with an increasing amount of opportunities to not only improve production and processes, but to make more meaningful and informed decisions.

Inventory management, then and now

For some of us in the inventory management field, it doesn’t seem that long ago that many businesses were still managing their stock manually, largely through the use of spreadsheets like Excel. When computerized inventory management systems first became available, there was certainly a fair amount of excitement about its potential, including the possible reduction in manual processes.

Fast forward to now, and we find ourselves in a business climate where technology dominates to a degree that was perhaps previously underestimated. Even the most basic of today’s inventory management software has advanced to a point where automation is not just able to handle the mundane and automatic, but also the highly complex.

We have, at our fingertips, the ability to control, analyze and adjust inventory with incredible accuracy. We can manage and automate the ins and outs of complex supply chains, as well as multiple warehouses, many of which utilize both barcode and mobile technologies.

Inventory management software as a platform for better business decisions

Many of today’s business or inventory managers may indeed have higher volumes and quicker cycle-times to navigate than they would’ve years ago. However, with the use of modern inventory management software platforms, they have a multitude of advantages over their predecessors.

What software provides, among many other things, is a stable platform from which solid and informed decisions can be made. Managers, like every employee in a business, prefer to make the right decisions, to do their job well and to not make mistakes. While perfection is a goal no one will ever reach, the utilization of the right software helps a business get as close as humanly possible.

Accurate data and reliable systems equal accurate decisions

Better decisions are made when the information is accurate, and the systems and processes of a business can be relied upon to function at a high level, both before and after necessary changes have been made.

Good inventory management software ensures this to a degree that is simply not possible otherwise. Using the best software, data can be accessed in real-time, often from anywhere and from any device, and necessary changes can be made which will usually cause little to no hold-ups in productivity.

Being able to see further ahead than the rest

Forecasting, one of the ‘holy grails’ of both sales and management, can be greatly improved with the right software platform. As already mentioned, with access to real-time and meaningful sales data and analytics, forecasting can be given a much-needed boost.

From the perspective of a manager, having the ability to foresee a problem before it happens is both highly sought after and highly valued. There are of course many factors to this, including the individual manager’s experience, temperament and skillset, but in today’s climate, software plays an increasingly large role.

With all the various pieces of a business that must run together for it to succeed, software is the essential unifying system that, while taking care of the basic operations, provides managers with the time and data to look further ahead than just the here and now. This becomes supremely valuable when developing new innovations or systems, or when it comes to foreseeing future problems. If a manager spends all their time on the daily ins and outs, or on fixing small problems as they arise, they won’t get the opportunity to stand back and see the big picture. In this sense, inventory management software provides the room to see the big picture – and it’s the big picture that shows the road to success.