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The Explosive Growth of Dynamic Pricing

Guest Blog By Sudhir Holla

If you’ve ever bought an expensive umbrella from a street vendor on a rainy day, you’ve experienced dynamic pricing. The vendor sets his price by evaluating multiple factors – his inventory levels and pace of sales, the weather, the customer profile (tourist or local), competition levels, the day of the week (holiday or not), and traffic at the location. These days, dynamic pricing is becoming increasingly prevalent, as consumers experience it when buying everything from plane tickets and sporting event tickets to taxi services and even ski tickets.

It makes sense – there are many factors that go into pricing for all types of goods and services. Take skiing for example: weather and snow conditions can change consumers’ perceived value of a day on the slopes. Likewise, it matters to sports fans which opponent their team will face in any given game, and as a result, they’re willing to pay more for some games than for others.

Dynamic pricing has always existed. Whether it is changing prices based on store location or markdowns, retailers have always used price as a key lever to increase margins. What’s changing now is the availability of vast volumes of data related to the digital “footprints” that consumers leave behind as they interact with retailers, and the ability to analyze that data. This data can help retailers anticipate consumer behavior and determine what elements have the biggest impact on price elasticity.

The Impact of Product Images, Videos and Reviews on Consumer Price Perception

There is a strong correlation when it comes to the influence of reviews on product turnover and price elasticity. Even one or two reviews can have a dramatic effect on sales. For example, take Amazon’s top-selling bathroom cleaning product, the spray-before-you-go toilet spray Poo-Pourri . Once the first few positive reviews were posted (and perhaps the product became more socially accepted as a result), the product saw dramatic increases in conversion rates. In Ugam’s research, we’ve found that there is a .25 correlation between the number of reviews and price elasticity, indicating a strong logarithmic relationship (the first 10 reviews have the biggest impact and the next 100 have the same impact).

Images can have a strong impact on price elasticity as well. Some retailers find that by providing a richer consumer experience (with more images, higher-quality images, videos and more useful product descriptions), they reduce price elasticity and can charge higher prices. There is a strong correlation between images and conversion rates supporting this, though not quite as strong as the relationship between reviews and conversion rates.

Price Elasticity and Web Traffic Data

Most retailers capture price elasticity by looking at historic values. They draw a graph comparing how many units sold at different prices, and then come up with a relationship. But historical prices don’t take some things into consideration. If, for example, a sudden surge in demand and similar drop in price sensitivity for a particular dress occurs after a certain celebrity is seen in the dress, historic data can’t capture this information quickly enough, but real-time web analytics can. Retailers can look at the traffic pattern for individual products and use that data on any given day or on a given week to determine the best price to put on the product.

The Science and Art of Dynamic Pricing

Collecting this dynamic pricing data is no easy task. Just the raw product information necessary for product mapping can be enormous. Each variation, color, size, bundle, etc. of a particular product represents a single stock-keeping unit, and online vendors can easily have hundreds of thousands of them. Plus, there’s collecting competitor data and mapping it to align with products, which is not always easy, especially with store brands, differing packages and unit sizes, special offers, etc.

The key to smart dynamic pricing, though, is the analysis of the data and implementing optimum prices quickly – not just based on historic data, anecdotal information about demand or even gut-based decisions. Most electronically controlled pricing today is made primarily by rules engines (i.e., if competitor X has a price lower than mine, lower the price by X), and in many cases, they create a pricing war that no one can win. These simple pricing solutions fail to incorporate the Big Data demand signals.

Only by understanding the demand signals that consumers leave behind as digital footprints can retailers get a step up on their competitors. With the right mix of product intelligence and consumer demand data, retailers have an opportunity to compete that goes beyond just having the lowest prices. They can differentiate themselves by providing a richer consumer experience with less price elasticity, while optimizing prices that help them meet their objectives – from increasing sales to boosting margins and clearing inventory.

Sudhir is a senior vice president at Ugam.

Create Loyal Customers: How to Please Buyers at Your Retail Store

If you have been in the retail business for many years, you have discovered the simple key to survival: customer satisfaction. A happy customer will become loyal to a retail business for a lifetime and allow you to weather through slow sales periods. However, finding the right way to please your customers is difficult, as every one of your competitors is trying to draw those same customers to visit their stores. About 55 percent of business owners in the U.S. believe that customer service is the top way to differentiate a business from competitors in an effort to retain customers, according to the Sage’s Business Index.

Utilize the following strategies to make your customers happy when they shop at your retail store.

Create a Safe and Easy Shopping Environment

Customer happiness starts the moment they walk through your door or access your retail website. Institute a friendly and helpful atmosphere geared toward welcoming them to your store and assisting them in their buying needs. At your physical store location, have your staff greet customers with a smile, ask to help locate items, and be available for further assistance without crowding or being pushy. Retail websites should be easy to navigate and provide clear descriptions of offered products. Include several online payment options to appeal to the most customers.

Both your physical store and e-commerce site should offer secure payment options to customers. With the recent data breaches at large retailers, customers are becoming more wary of where they shop and what personal information they provide. Use encryption applications to secure data and build trust as first-time customers turn into loyal ones.

Perform Surveys to Find Out What Makes Them Happy

Customer surveys allow you to learn more about the people who shop at your store and what products they like to buy. You can also learn about their shopping experience as you address problems and fine-tune present operations. There are multiple ways to perform surveys such as through email, phone, regular mail, and online survey sites. Qualtrics and SurveyMonkey are two of the biggest online survey companies providing tools and resources for business.

In addition to using surveys to find out what works and what doesn’t, you can also ask your customers to leave reviews about their experiences. Reviews and testimonials can persuade new customers to purchase and try out your products, and they’re a great way to see a more human side of your business. Check out Lifelock’s reviews, as it does a particularly good job at conducting interviews and displaying testimonials on its website. Send follow-up emails and newsletters after a customer has made a purchase to invite them to leave a review.

Provide Rewards Programs

Customers love to get extras when shopping at their favorite stores. Offer loyalty programs for people who are repeat customers to show your appreciation, and to retain customers for the long haul. The type of rewards program that you offer will be based on the type of retail business you operate. A common program involves giving people points based on the amount of money they spend during each purchase. They can then apply those points towards free items or discounts on future purchases.

Address Customer Complaints Quickly

Just because a customer complains in a survey doesn’t mean that they will no longer shop at your retail business. Give special treatment to every customer complaint. Apologize to the customer for the bad experience and offer immediate action that follows standard store policies. You can impress even the most stubborn people to turn them into happy customers. Also, keep a record of all complaints to see if there are any growing trends that you need to fix.

How Merchants Can Overcome Online Shopping Myths

Guest Blog By Dan Leberman

Many of us prefer online shopping to in-store buying, yet most consumers still do not shop online.  According to a 2015 PWC report, only 27 percent of US consumers are regularly making online purchases. This begs the question: Why – in this age of constant Internet usage – do so many people hesitate to shop online? Below are three common myths about online shopping – but more importantly – ideas on how merchants can overcome these fallacies.

Myth 1: Online Shopping = Identity Theft. Some consumers think online shopping creates an increased risk of losing control of financial information, either because the exchange of information is insecure, or because the merchant will misappropriate their info. In fact, new online security measures and services are making eCommerce transactions even more secure than many offline-shopping experiences. To combat this myth, merchants should consider offering customers checkout options that do not require the direct exchange of financial information (think, digital wallets). Smaller merchants can further address customer concerns of online merchant legitimacy by enabling payment after delivery. This offering has helped overcome trust issues even in markets such as Russia where the perceived risk of merchant illegitimacy is extremely high. In some markets, payment service providers that enable pay-after-delivery will even “float” the transaction for the merchant during the period of delivery. In other words, consumers won’t have to pay for purchases right away, but merchants still get paid immediately. Win win.

Myth 2: Shopping in Stores is Easier. When shoppers want something, they want it right away. If online shopping doesn’t provide convenience or value beyond that of in-store shopping, many customers won’t start shopping online. However, a recent 2014 survey by Ipsos/PayPal found that 43 percent of consumers that shop online do so because it saves them time and money. There are a couple of ways merchants can increase the share of consumers that appreciate the value and convenience of buying online. Buy-online-pickup-in-store (aka BOPIS) is a feature that merchants can offer to make purchasing even easier than in-store, while also serving consumer appetite for immediate pick-up. Beyond BOPIS, free shipping can also fulfill consumer demand for convenience. According to a recent comScore report, free shipping is the most compelling factor for 81 percent of Americans in deciding to finalize online purchases. In addition to driving additional conversion, free shipping is proven to increase average order value, as 58 percent of surveyed consumers reported adding items to their cart in order to qualify for free shipping.  Merchants should look into both BOPIS and free shipping in order to capitalize.

Myth 3: Online Purchase Returns Can Ruin a Business. Some merchants express concern that driving online shopping – especially through free shipping – can lead to return rates which are uneconomical for the merchant, and create bad experiences for their customers. The facts would indicate otherwise. Merchants are actually driving growth by making returns of online purchase even easier. Research from Forrester found that free return-shipping drives increased sales, with 81 percent of consumers surveyed indicating a higher likelihood of shopping and being loyal to online retailers that offer an easy return policy.  In order to take advantage of the upside in customer conversion, some online payment providers and merchants are partnering to offer hassle-free returns at no charge.

Don’t let the myths stop your customers from buying your goods online!

Dan Leberman is Vice President, PayPal’s North American Online Small & Medium Business

Living Up to Customer Expectations at Every Channel

Guest blog by Oren Levy

In years past, traditional shoppers may have been loyal to a certain channel, but today’s consumer easily transitions from one shopping channel to another. Many shoppers choose to check prices online or via their smartphone and then pick up their purchase in a brick-and-mortar store. But the opposite is also true – shoppers may see something they like in a physical store but only complete the purchase online or via their mobile phone.

Furthermore, due to the blurring of boundaries between the online and offline channels, returns have become a key issue for both retailers and customers. Shoppers expect to be able to return goods at all of the retailers’ channels regardless of where the purchase was made.

What Motivates Today’s Omni-Channel Shoppers?

According to a 2014 study titled “BOPIS and BISBO Will Propel Retail into Orbit,” consumers are driven primarily by convenience, price and incentives. The study showed that 63% of shoppers buy online and pick up in-store at least a few times a year. Among the respondents, 82% stated that they would consider shopping this way if they received a $10 rebate on a $50 item or prepaid reward cards. Prepaid reward cards branded with the store’s name alongside a special offer actually drive double-digit spending in-store.

Improved digital experiences, particularly in mobile, have become a significant deciding factor for purchasing online. But many shoppers still enjoy visiting physical stores, which increasingly play the role of showrooms for web-only shoppers. Buyers can browse, check out a color or try something on.

Retailers Roll with the Punches

It wasn’t all that long ago that retailers were able to draw a clear line between online and offline operations; each sector was operated separately. But this type of separation no longer meets the requirements of today’s consumers, who demand immediate gratification. A recent study indicates that an overwhelming 70% of retailers said they have adopted an omni-channel strategy to link shoppers’ in-store experiences with e-commerce, mobile and social media platforms.

This kind of basic rethinking and the subsequent restructuring can be costly. But according to industry analyst firm eMarketer, by stepping up omni-channel efforts, retailers can ultimately reduce costs. Allowing shoppers to return online purchases in-store, and enabling them to use the store as a delivery hub for items purchased online can actually result in savings.

Macy’s recent announcement about the merging of its online and brick-and-mortar merchandising teams is a prime example of this kind of metamorphosis. Macy’s chairman and CEO Terry J. Lundgren stated, “Our business is rapidly evolving in response to changes in the way customers are shopping across stores, desktops, tablets and smartphones. We must continue to invest in our business to focus on where the customer is headed—to prepare for what’s next.”

Macy’s declared that it will create “one unified merchandising and marketing organization—a hybrid of store and online buying.” This new direction includes combining the retailer’s merchandising and marketing teams into single units, instead of having separate teams buying and marketing for the web and stores. As a result of the new visibility into companywide inventory in stores and distribution centers, Macy’s is also testing same-day delivery of online orders.

Other leading retailers whose consolidation centers have been traditionally separated by channel, including Home Depot, are also merging facilities. Target says that it is integrating two different channels to streamline operations, and it has reduced the cost of returns by leveraging return-to-store.

Managing Returns on Multiple Platforms

Returns are an inevitable component of the purchasing cycle. Rapid and seamless returns processing is no less important than a gratifying initial purchase transaction. Today’s market weighs in favor of the customer due to multiple available commerce options and social sharing. Many dissatisfied purchasers will go straight to Facebook or Twitter to express annoyance with a product. The very fact that a consumer chooses to return a purchased article signifies dissatisfaction. Therefore, the return process is often the last chance for a retailer to appease the buyer and recover customer loyalty.

Although returns often occur via a different channel than the original sale, today’s consumers expect retailers to have immediate access to every transaction, no matter where it took place. Due to the fact that many buyers do not bother to keep receipts, the retailer must also have the ability to locate the original transaction by searching for the customer’s name or other identifying data.

The rise of e-commerce has been accompanied by a surge in returns, forcing retailers to change the way they are handled. Returns have grown particularly in the areas of apparel, furniture and other items that people prefer to experience in person. It is not uncommon for customers to purchase several similar items with the intention of keeping only one of them. Many e-commerce retailers have started offering returns via parcel, and they often provide a return shipping label in the box. Return forms included in the supply package feature bar codes enabling rapid transaction call-ups.

Return Data Helps to Keep Customers Happy

Return data enables retailers to track returns by channel in order to identify problems. For example, if a certain item sold via ecommerce is returned more often than the same item when it is purchased in a brick-and-mortar store, the problem may lie with the way the product is being presented on the website.

Return data also helps retailers to flag “serial returners.” Return reports enable the discovery of customers that are abusing return policies so that future returns from them can be denied.

Multi-channel sales and returns are crucial elements in a constantly evolving retail experience. Customer loyalty depends increasingly on the retailer’s ability to seamlessly glide from one channel to another and back again without any hiccups. The bar is set pretty high, so the retail journey promises to be exciting, eventful and maybe even bumpy in the foreseeable future.

Oren Levy is CEO of Zooz

Social Media Strategies for Small Business Owners

Ad revenue from social networks in the U.S. is expected to climb from $7.32 billion 2014 to an astonishing $14.40 billion by 2017, eMarker projects. How is this possible? According to AddShoppers research, social network users spend 8.2 percent more than other online shoppers. So the trick to making more social sales is converting followers into buyers—something Internet Retailer Managing Editor Zak Stambor says is getting harder to do.

Businesses face the challenge of gaining visibility on popular platforms such as Facebook, as they navigate the ever-changing restrictions of social platforms. Stambor recommends buying more ads to solve this problem, but if there’s a cap on your advertising budget, there other creative, cost-efficient methods you can use to attract more followers and turn them into buyers. Here are just a few:

Make the Most of Analytics

Since 2012, New Orleans restaurant start-up Dinner Lab has leveraged analytics data collected from customers about their dining experience, to expand to 19 locations around the country, reports Entrepreneur’s Catherine Clifford. Success stories like this lead Forbes commentator Mark Sunday to identify big data analytics as today’s biggest enterprise accelerator. Retailers can put analytics to good use by collecting data such as how many customers enter the store at a given time, where they go, and what percentage of them make purchases. Stores can use this information to adjust their staffing schedule to meet peak demand times and to make shoppers customized offers on their smartphones, suggests New York Times business writer Eilene Zimmerman.

Use Graphics to Connect with Customers

Last spring, Socialbakers studied which posts get the most likes, comments, and shares on Facebook, and results showed that among the top 10 percent of the most engaging posts, 87 percent were photos. Photos performed even more powerfully on Pinterest, with the average shopper from that platform spending 77 percent more than their Facebook counterparts.

Nordstrom pioneered promotional applications of this phenomenon by featuring their most popular items on Pinterest and highlighting them with a special tag in stores. Nordstrom’s Pinterest success has led retailers such as Target to pursue Pinterest marketing, a strategy any small business can deploy.

Leverage the Power of Video

Last summer YouTube sought to attract more advertisers by acquiring Directr, an app designed to streamline small business marketing video production. Forrester sees video as the next big trend in online marketing, with spending projected to nearly double from $19.8 billion in 2014 to $37.6 billion in 2019 to account for 55 percent of all online display advertising revenue.

Shopify content consultant Dan Wang says one of the best ways small businesses can leverage video is by creating instructional videos that address common questions of your target market. For instance, he cites the example of Performance Bicycle, which offers cyclists practical tips such as how to dress for biking in cold weather. Stretch small budgets by improving the quality of your videos with greenscreen stock footage.

Test Your Results

Whichever social media marketing strategies you use, split-testing your results will help make sure you get the best return on your investment. Social Media Examiner writer Emeric Ernoult recommends testing your audience’s interests, gender, age range, and language, along with the effectiveness of your landing pages.

HR in Retail: Trends that are worth keeping up with

Guest Blog By Chris Wakely

With the retail industry poised for rapid growth over the next several years, HR teams need to accommodate and update policies in order to engage and retain both new and old employees. An added challenge is that millennials are inching their way to being the largest generation in the U.S. workforce, so many emerging trends are adapted to the needs and skills of these young workers. Let’s take a look at some HR trends in retail that are worth keeping up with.

The integration of mobile devices

As millennials begin to dominate the workforce, these young employees bring a comfort level with technology that isn’t always found in older generations. This provides plenty of opportunities for HR to adapt to the skill set of their employees. People are accustomed to being able to access information easily and instantly, so utilizing mobile is one way to make HR policies compatible with employees’ everyday lives.

Retail companies can take advantage of this by making benefits information available anytime and anywhere online or through specialized apps. These apps can range from reimbursement information, where they can claim back a variety of benefit expenses from an allowance, to checking how much vacation they have accrued and more. Employees can also use mobile during shifts to communicate without walking across the store through a messaging app.

Boosting incentive and rewards programs

Another growing trend in retail HR is the use of incentive and rewards programs to engage and motivate employees. Traditional programs, like commission structures and sales goals, can be used to motivate employees to succeed in sales and customer service. It is common practice to recognize employees with the highest sales numbers, but rewards can bring focus to other areas as well.  Take ‘Employee of the Month’ one step further and offer a reward to the employee that received the most positive feedback!

Benefits and rewards packages for retail employees are also becoming commonplace in the retail industry, given that the number of full-time retail employees continues to grow. Offering benefits and rewards programs can have a tremendous impact on how valued an employee feels. Increase in salary is an obvious benefit, but offering health insurance or paid time off can be equally as impactful. These types of benefits are taking precedence over pay raises to many employees, according to a study by Monster Insights.

Getting creative with HR activities

Taking a non-traditional approach to HR can boost engagement at both the store and company-wide level. Take training programs, for example. First impressions can dictate how a person thinks about someone permanently, and that applies to the first day at a new job. Consider using entertaining training tactics to maintain interest and excitement. Gamification is a great way for employees to practice real-world situations before they have to experience them with customers.  If your store has a confusing layout or elaborate stockroom, augmented reality can train employees to navigate the space. HR can also use gamification to evaluate an employee’s progress during the training period, with contests and puzzles testing their performance. Gamification engages employees by tapping into competitive nature, so it can motivate employees to continue improving.

A common thread: customization is key

What do all of these emerging trends have in common? They focus on customizing policies to fit the employees’ needs. Another opportunity to customize HR programs is by taking a “glocal” approach. In other words, retail companies should think globally but act locally by tailoring programs based on laws and regulations of each specific region. This “glocal” approach can be applied to company culture as well. It is important for retail employees to identify with the company as a whole, but individual store culture is arguably more important to employee happiness. This culture can be achieved through the previously mentioned rewards programs, or through games and team activities. Launching a team challenge within a store’s staff helps build positive team culture, and it creates a more enjoyable work environment overall.

As the retail industry grows rapidly, time and resources shouldn’t have to be dedicated to replacing high-turnover employees. Retailers can follow these HR trends to promote a happy and engaged workforce, resulting in higher employee retention and ultimately, a healthier business.

Chris Wakely is Senior Vice President at Thomsons Online Benefits

The Reality of Using Spreadsheets to Run Your Business

 Guest blog by Brandon Levey

Even as technology becomes more accessible and consumers demand faster service, many retailers are reluctant to adopt the solutions they need to grow successfully. Instead, they rely on manual spreadsheet tracking to maintain inventory, orders and other important information. But as a business grows to multiple sales channels, manual systems won’t be enough to support a scaling company.

Here are four reasons why spreadsheets are detrimental to a business:

Drains time

Ventana Research published a study in 2013 that uncovered some of the biggest challenges and dependencies businesses have with spreadsheets. Although it wasn’t surprising to see people reported how time consuming and tedious spreadsheets are for them, it was alarming to know that not many people have adapted new technologies.

In the study, it was stated that “users underestimate the impact of spreadsheet problems on their productivity because they tend to overlook the myriad little issues that constantly crop up.”

The research group also uncovered that people spend about 12 hours per month consolidating, modifying and correcting the spreadsheets. This makes it very difficult for retailers to gain momentum in an extremely saturated market. Everyone has intentions of building a successful retail business, but only the few that build the right foundation will gain the momentum to succeed.

Limited scalability

Spreadsheets have long been used because of their easy onboarding and setup. At first, looking at this as a solution makes sense; it’s customizable, doesn’t require heavy training, and is typically setup with your other basic office tools. However, as a business grows and hires more people accessing the same documents, it becomes clear that spreadsheets won’t cut it.

Manual inventory and order tracking is not scalable. As retail businesses expand business owners must put automated systems into place that will help provide more stability and streamlined operations. Without automated systems, staying ahead of customer demand and available inventory becomes a distant dream.

Prone to human errors

Human error is inevitable when using spreadsheets. With the amount of detailed formulas and multiple team members updating the documents, it’s not only difficult to manage, but if something goes wrong – it’s nearly impossible to find the error.

Solutions that have flexibility to integrate, centralize and simplify any part of your business need to be taken more seriously as staples for a growing retail business. Errors in inventory and order tracking lead to poor customer satisfaction and decreased repeat business. Sometimes business owners think being heads down every hour of the day, pumping in manual work is how you get to the next level. The problem is this leaves no opportunity to pop your head up and realize – there’s a better way!

Lack of real-time automation

One-time transactions used to be easy to track in a brick and mortar location, but as retailers are encouraged to expand online and offline channels, automating orders and shipping is a must.

The ability to track products such as quantities, location and more, is key in scaling a business. If a business’ foundational processes like inventory management are broken, it becomes very difficult to find new opportunities for growth. These pain points extend beyond tracking product location and amounts, affecting customer satisfaction, sales insight, and business growth. It’s a lot like maintaining personal health or a car. Cosmetics and flash are good to draw attention, but if the stability and strength of its core functions falter, those other things just don’t matter.

Other statistics we can use from the study:

  • Nearly 72% of participants said that their most important spreadsheets are the ones they share with others.
  • On average people spend about 12 hours per month consolidating, modifying and correcting the spreadsheets. (That’s about a day and a half per month – or about 5 to 10 percent of their time – just maintaining these spreadsheets.)
  • Those who spend all or most of their time working with spreadsheets spend 18.1 hours per month maintaining just one spreadsheet
  • Even casual users, those that spend less than one-fourth their time, must devote about one day (8.6 hours) per month on this spreadsheet.
  • More than half of users (56%) say that combining spreadsheets is a time-consuming chore.

Brandon Levey is the creator of Stitch Labs.

Five Simple Steps for Distinguishing the Deals from the Duds

Guest Blog By Phong Vu

Many consumers see a retailer’s marked down price versus the original selling price and believe they’re saving a lot, but it literally pays to know what the numbers behind the deals mean.

Some retailers have been accused of showing inflated retail prices to make their deals look better. More often than not, they are showing the actual manufacturer’s suggested retail price (MSRP), but no one actually sells that product at that number. These five simple steps can help you uncover the deals from the duds.

Step 1: Look at the retail price relative to the store price. If it’s below retail, than this is your first signal that it may actually be a good deal.

Step 2: Do a price comparison on the product. Sites like Google Shopping and PriceGrabber provide an easy way for you see what products are selling for at multiple retailers. More often than not, most retailers have pricing that is similar (even if they are all below retail).

Step 3: Check out Amazon (if you’re not already there) and check the price point on their site. They are almost always competitive.  When you see a product well below Amazon price, it’s usually a pretty good deal.

Step 4: Once you have a sense for what most retailers are selling the product for, look for coupons on sites like DealScience.com that can help you uncover additional ways to save. It’s quite common for stores like Kohl’s and Macy’s to issue coupon codes on specific categories of products. You may be able to snag another 20 percent off of something that is already marked down.

Step 5: Remember to compare the “out the door” price, which includes shipping and tax. This will help you determine how to get to the best available price for a particular item.

Phong Vu is CEO of DealScience.com

The New Standard for Supplier Responsibility

Guest Blog by Christian Lanng

Supply chains – often involving many vendors and complex relationships – have always been a logistical challenge. As business evolves in our modern, mobile world, and enterprises are doing more global transactions than ever before, it is also becoming a collaboration, communication and accountability challenge.

While the process of managing a supply chain is getting more complex, the environmental consequences, labor considerations and sustainability of supply chains is also under extreme scrutiny. These challenges can all be rolled into the concept of supplier responsibility; how responsible is an enterprise when choosing suppliers and how socially responsible are those suppliers when creating their products or services?

Supplier responsibility is especially important when scaling for large orders and quick ramp-up, such as is the case now for Apple as they start selling their new watch and updated laptops. In fact, while Apple’s approach to suppliers has been interesting with the Apple Watch – they are relying heavily on just two suppliers – Apple is a great example of how companies can excel when it comes to supplier responsibility.

To do business with Apple, every supplier must agree to meet the standards that the company has established in their Supplier Code of Conduct and their Supplier Responsibility Standards. These contain more than 100 pages of comprehensive requirements in 20 key areas, including labor and human rights, health and safety, environment, management systems, and ethics. Apple also regularly audits suppliers to ensure compliance to these standards. Apple believes in forming strong relationships with their suppliers, which they do by visiting their suppliers’ facilities regularly. In 2014 they performed 633 audits in 19 countries and trained 2.3 million workers on their rights.

Another company that is a good example of supplier responsibility is Chipotle, which suspended a supplier that was not in compliance with the company’s animal welfare standards. They were unable to find a new supplier that stood up to their standards, so they removed pork from their menu at a financial loss to the company.

Of course, supplier centric practices are not always about cutting costs but rather about building long-term partnerships, creating value, and delivering the best products to your customers.

As the world’s biggest enterprises set the bar for supplier responsibility, here are four things to consider to make sure that your company is keeping up:

  • Sustainability and Embracing the Circular Economy – The term Circular Economy refers to the concept of doing less with more and considering the impact of business on the environment. Make sure not only that your company uses sustainable materials and does its best to limit its emissions into the environment, but take the time to assess whether your suppliers hold themselves to the same standard.
  • Health, Safety and Human Rights – Ensure safe and healthy working conditions throughout your supply chain and invest in some training to make sure that you and your employees are steering clear of any labor and human rights violations. If you are working with global suppliers, take the time to learn the different labor regulations of each country and assess your suppliers accordingly.
  • Diversification – There are many benefits to supplier diversification. First of all, it helps protect your enterprise against supplier hurdles, such as port closures or material shortages. Also, spreading the work among a few different suppliers helps companies avoid putting too much pressure on any one supplier for quick ramp-up. It is usually during these high-stress periods of time that regulation and compliance are compromised, so take extra care to make sure that is not the case.
  • Digitalization – Conducting your business transactions digitally encourages responsible record keeping and accountability. When working with many suppliers, it’s a good idea to make sure that every transaction, contract and audit is in writing and saved digitally, preferably on the cloud, for future reference.

Companies that want to work with the best suppliers in order to make the best products need to consider supplier responsibility as part of their business strategy and take the first steps to ensure that they are aware of their supplier practices.

Christian Lanng is Tradeshift CEO

Why Retailers are Turning to In-store Trade-in

Guest Blog By Jeff Trachsel

With the prevalence of online shopping and increase in showrooming, one of the biggest challenges facing today’s brick-and-mortar retailers is how to drive in-store traffic and sales. With so many online and in-store options, sensible consumers have an abundance of options when it comes to purchasing the newest consumer electronics.

Five years ago, the average consumer knew little about trading in used electronics for cash or store gift cards. Today, awareness of trade-in is much higher and continuing to grow. Because of this opportunity, many big box and niche retailers are already leveraging in-store electronics trade-in programs. In fact, according to NPD Group, smartphone trade-in is “one of the most dynamic, leading tools that carriers and retailers use to drive new device sales.”

Providing valued customers with the convenience to sell used smartphones, tablets, laptops and video games for store value can result in a huge return for retailers – not only providing increased store traffic, but also an upsurge in customer loyalty and in-store spending.

Increased spending

Exchanging used consumer electronics for store credit is an effective way to boost in-store spending and increase margins. Device trade-in accelerates the consumer upgrade cycle by instantly allowing consumers to purchase devices more frequently and for less, thereby driving more new device sales. Retailers also benefit from the gift card multiple: Consumers buying with a gift card can spend up to five times the average purchase price, depending on the initial card value. And when consumers get paid for their unused items, spending tends to be directed toward higher margin “wants” versus “needs.”

Bolstered customer loyalty

According to the NPD Group’s Connected Intelligence report and its survey of smartphone consumers, nearly 62 percent of respondents are willing to switch retailers for a better trade-in offer. The following graphic depicts the data and customer willingness to switch, both for retailers and carriers.

Due to the widespread popularity of using smartphone trade-ins to fund upgrades, consumers are searching for the best deal they can get with the most convenient experience. Offering trade-in not only provides customers with a personalized, one-to-one exchange with a sales associate, but also gives customers the positive feeling of being paid back by their favored retailer.

Incremental in-store traffic

With the growing awareness of trade-in, consumers are now on the lookout for the right combination of convenience and value. With special trade-in offers and promotions, retailers can cut through the clutter and attract both loyal and new customers to brick-and-mortar locations. This is especially true around new device launches, when consumer awareness and interest is especially high. In addition, online channels can successfully drive foot traffic into brick-and-mortar stores, effectively reversing the showrooming trend. Highlighting retail-only trade-in offers and promotions through online channels such as social media and email marketing enhances in-store promotions and motivates shopping behavior.

Conclusion

In a time when the retail experience must innovate to remain relevant, in-store consumer electronics trade-in programs offer the boost retailers need. As a personalized experience that immediately pays the customer back for used products, trade-in can serve as a critical tool to drive foot traffic, increase sales and enhance customer loyalty.

Jeff Trachsel is CMO at NextWorth Solutions, Inc.