Retail

How Retailers Can Avoid Reinventing The Wheel In 2017

The retail game has evolved so much over the last half decade that, in some ways, it might be unrecognizable to a traveler who somehow found herself on the wrong side of a time warp and now entering 2018. In a state of constant change, how does an online retailer ensure it is keeping up with the best customer experience, security, payments solution or fulfillment process? How does a merchant ensure it is doing the most it possibly can when the goal posts keep moving? The answer, surprisingly, might be by doing less.

“Merchants have seen eCommerce reinvent itself twice in the last five years. From 2012 onward was the first wave, and then again from 2015 — or Christmas Eve 2014 — it was a whole new ball game in terms of scale, size, accuracy and the speed at which merchants had to operate,” Signifyd’s director of merchant advocacy, Sourabh Kothari, told PYMNTS in a recent conversation with Stitch Labs’ vice president of product, Jodi Alperstein.

In the past, retailers had been focused on each individual role within their organization and the nuts and bolts of each part of their operation — elements like inventory management across whole networks, domestic and international shipping or payments security, to name a few. It was only a few years ago that retailers started looking externally for strategic answers to how they were managing inventory or how they were keeping fraud at bay. Today, those questions have become more urgent.

“Our fraud prevention colleagues at merchants don’t talk as much about what their specific role is for fraud prevention,” Kothari explained. “That used to be their key focus: What they actually did to prevent fraud and how they optimized each step in the best process they could design. Now, they’re more focused on overall results. It is not how they do it, but that it gets done extremely well.”

Signifyd is narrowly focused — security is its sole interest — and making sure good transactions are always accepted while bad ones are bounced back is of central importance.

Stitch Labs, on the other hand, takes a much broader view of the market, as it is in the business of running inventory for merchants and making sure eCommerce management, point-of-sale (POS) tie-ins for brick-and-mortar retailers, shipping, warehouse management and fraud prevention systems are “stitched” together properly to work as a single unit.

However, Alperstein’s observations are similar to Kothari’s in this regard.

“The merchant’s focus is on the products and brands they’ve created,” she said. “Merchants are not experts in inventory management. They’re not experts in fraud, and probably don’t want to be. But, they want the best-in-class solution working for them. They are looking for trusted partners who can put those solutions together so they don’t have to think about it.”

The Omnichannel Age

The age of the consumer is upon us, Alperstein noted, and all roads lead to Omnichannel. Retailers aren’t just looking for an online commerce fix or a POS solution — they need something that ties it all together so their customers’ experience is seamless, no matter where they engage the brand.

“That adds lots of complexity to an inventory management process that was already somewhat difficult,” Alperstein explained. “But it isn’t optional. In 2017, the merchant needs to understand where the consumer is, what they want, and how to make any type of offering available to them. At Stitch Labs, we know where the inventory is and how to get it to the right location at the right time. This is a level of complexity merchants don’t have to worry about because it’s our job to make that happen for them.”

Stitch Labs’ unique insight on what retailers need comes from the company’s roots. It was founded by a retail CEO who was looking to solve inventory management problems when a comprehensive solution simply didn’t exist. So, Stitch Labs built that solution — and focused on it — in all its multifaceted forms.

For Signifyd, the challenge is different. While its focus is solely on security, the benefit is delivered in a refreshingly different offering. Every merchants’ fraud problem — identifying which orders are legit and which are fraudulent — is no longer a problem the merchant needs to solve alone. In fact, it may no longer even be responsible for fraud at all.

“Our big game changer is that we take the risk of fraud off their hands with our guarantee, a 100 percent financial guarantee against fraud and chargebacks,” Kothari said. “That has grown our customer base dramatically and changed a lot of the industry’s perspective on fraud prevention because the entire fraud liability now sits with Signifyd. They pay us a fixed fee, so they always know what their total cost for fraud prevention is going to be, and from there, the liability is ours. If we let a bad transaction through, we’re on the hook for it.

“As soon as they are no longer liable for the fraud, merchants start accepting a lot more orders since they have nothing to lose,” he continued. “They can now accept orders from anywhere, enter new markets and grow rapidly without worrying about fraud.”

Making Growth a Possibility

The reality for a growing retailer, Kothari said, is that it is not typically in its wheelhouse to become fraud or inventory management experts. The demands of the markets are too great, and the time pressures of the modern retail environment make it impossible.

“As a growing business, you can’t get the people or information, or create the huge economies of scale, that companies like Stitch Labs and Signifyd offer,”  he said. “So, our job is to add efficiency, accuracy, speed and best-in-class solutions — and to do all [of] this at a much lower cost than it would cost merchants to build it themselves.”

But, working with a third-party expert has a wholly separate benefit, on top of lower costs and better technology: It frees up growing companies from trying to reinvent the wheel over and over again.

As a company grows, it inherits a growing set of expectations from customers who have already seen the best version of each capability — with another merchant or with Amazon, for example. For merchants on a growth path, accelerating their in-house learnings, trials and errors or starts and stops isn’t just costly. It can be disastrous.

Instead, focusing on the key aspects of its brand and customer experience that sets it apart, while working with trusted third-party partners buys the merchant time to evaluate where to make its next key investment. It can make strategic progress instead of spreading itself thin while constantly playing catch up with its customers.

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