Four Keys to Loss Prevention in a Unified Commerce World
Customers are the heartbeat of retail. They must be at the center of every retailer’s business. In fact, Forrester’s 2018 retail predictions reveal that the key to successful retailing in 2018 is obsessing about the customer experience. Forrester identifies the greatest hindrance for retailers to execute on this vision is not a lack of will. Rather, it’s their siloed organization structure that makes it almost impossible to get a holistic customer view or to create the right products and services.
Today, all customers want is for retailers to have their products available no matter when, where or how they chose to shop. But this upsurge of multiple shopper scenarios presents a significant challenge for retail operations. Brands depend upon a seamless integration between online and in-store point-of-sale (POS) systems. Brands also contend with a paradigm shift of selling merchandise from a database rather than a physical store.
Commerce-Anywhere Retail World Presents LP Challenges
Retailers cannot effectively tie together unified commerce execution and the customer experience without a foundation of accurate inventory. However these same systems, which provide so many benefits for retailers, also contribute to potential loss events through cancelled orders, in-store returns of online purchases and merchandise bought online and picked up in-store. While unified commerce could answer many retailers’ woes, it also creates numerous opportunities for shrink to occur, whether by human error, internal and external theft, or fraud. The major challenge of managing loss prevention in a commerce-anywhere world is that most retailers traditionally operate with too many separate business silos.
Better Visibility with Integrated Systems
Unified commerce retailing requires an integration between systems (both new and old), departments and operations. Loss prevention, operations and IT departments can no longer operate in a vacuum responsible for their own separate KPIs. Instead, they must take a unified approach to combat loss as a group. The same is true of siloed technology applications. Individual systems that don’t communicate with each other provide very limited, and even no visibility from other channels.
Unified commerce fulfillment is more complex than ever, as it happens from different stores and manufacturers, leaving data disorganized, duplicated and often inaccessible. To compound the issue, retailers struggle with fragmented policies and processes that have proven particularly detrimental to merchandise returns. This situation forces price adjustments, accommodations and overrides – assuming POS systems can validate order information and document entry in the first place.
Four Areas to Break Down Silos
Executing an effective loss prevention program requires excellent planning, departmental cooperation, and seamless IT integration to mitigate risk. The following are four key opportunities to break down the silos and help minimize loss opportunities in unified commerce retail environment:
- Online and in-store POS systems should be identical. Or at least they should operate as such. Leveraging RFID technology as the lynchpin to inventory visibility, seamless integration between these systems is critical as they can determine how to flag cancelled orders for exception reporting and analysis; prevent customers from returning items in-store that were incorrectly shipped or allegedly not received; and ensure sales associate and POS system accuracy when closing out merchandise pickups in-store.
- Without accurate, analytical data your unified commerce is ripe for shrink. Having an integrated system that links information from physical stores, online and fulfillment or return centers for each transaction can provide a critical audit trail of potential loss incidents. Each system should have access to the proper shipping and billing information, authorization of system overrides and associate ID for each part of the process, along with information for customer service, including customer complaints of missing items. Physical stores need the ability to pull data and identify flags, such as what sales associate rung the most returns and exchanges or most price adjustments against the online store. Other warning signs include an invoice used multiple times, customer service accommodations matching a name/address, generic SKUs being used for sales or returns and a mismatch of address or payment method. For fulfillment and return centers, the most important tasks include identifying multiple system overrides, multiple returns by one associate and weight discrepancies for packages and return items.
- Visibility into the returns process is not a myth. Every unified commerce retailer needs visibility into data to support online purchases returned to the store. RFID technology can play a significant role by giving each item an individual “fingerprint.” The ability to uniquely identify each piece of merchandise helps decrease operator error, while also offering better insight and item and price validation for the return process. To help prevent loss, a retailer’s process should include documenting online order details through POS and dealing with the additional fees and labor costs required to process returns of online purchases.
- E-receipt procedures are most vulnerable. Outlining when and where electronic receipts can be issued via POS or mobile device is paramount. Loss is all but guaranteed without proper controls for preventing multiple distributions. For example, retailers should implement exceptions to stop multiple receipts going to the same email address and designate electronic attributes to identify when an e-receipt is issued.
As the unified commerce market continues to evolve, loss prevention strategies must advance in tandem. Retailers need to consider how to integrate both traditional systems, such as POS, order management and innovative technology solutions like RFID-enabled inventory, across all shopping channels to make the new retail paradigm successful. This strategy is the only way to ensure retailers are able to deliver accurate data across the enterprise and collectively analyze key operational areas, such as multi-channel merchandise returns, consistency in pricing and promotions and fraud control. Providing a unified customer experience will require retailers to break down their operational silos, ultimately minimizing loss opportunities and improving overall operations to drive better business outcomes.