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    Leveraging Social Media to Optimize Sourcing-to-Shelf Processes


    More than half the world’s population is connected to the internet on smartphones and nearly 20 per cent of the world’s population is on Facebook. As Facebook, Twitter and other social tools go mainstream, retailers find a huge opportunity to tap these rich consumer engagement platforms to make strategic sourcing, buying, stocking and selling decisions

    Consumers, on the other hand, seek instant gratification. Towards this end, they are more open to sharing and receiving information that ultimately results in the personalization of their retail experience. Moreover, these consumers expect retailers to leverage all ‘available’ information about them. Instead, they prefer doing business with companies that are transparent and allow them to actively participate in the entire retail value chain from sourcing to shelf. Product value and quality are not achieved by detailed planning and product development in silos.

    Traditional Challenges in ‘Source to Shelf’ Lifecycle

    Before we analyze how social media can be leveraged by a retailer, we need to understand how the “source to-shelf” process has historically worked for retailers and where the gaps lie between consumer expectations and retail operations.

    Retailers have typically had to work around long lead times, seasonal fluctuations, and inability to react to consumer demand within the selling season. From a sourcing perspective, following the creation of a buying plan, buyers generate initial orders and wait for products to reach distribution centers and ultimately stores, hoping that their instincts map with the buying behavior of shoppers. The store selling personnel are closer to the consumer. However, their ability to change what they have to offer the consumer is rather limited.

    Essentially this amounts to two inherent challenges. First, the buying decision (what to buy and how many to buy) is made based on historical and future forecasts. The retailer commits in advance to what to sell, pushes it to the consumer, and then waits for the consumer’s reaction before sending some more their way. When the initial feedback is not positive, the items are instantly marked down, leading to a reactionary cycle of events.

    Second, retailers miss a potential opportunity to continuously engage with consumers: Ongoing dialogue is an opportunity lost for those retailers that continue to function in the isolated manner of yesteryears.

    Leveraging Social Media

    Considering the challenges with the traditional approach of “make, buy, move and sell”, the opportunities offered by social media can provide a handsome payoff. A possible approach to make social media work for retail is as follows:

    Getting Started with Social Media
    The most difficult decision is determining the right time and method to begin leveraging social media and setting proper expectations with the consumers on how ongoing conversations will be translated into an improved shopping experience. Here’s a basic checklist:

    Engage in continuous social conversations: Engage consumers all year round in the entire value chain unlike the traditional means that are typically sequenced and pre-planned.

    Maintain continuity of physical and virtual experiences: It is important for in-store experiences to flow freely into social conversations and the online experience. For this, retailers should leverage existing social media channels such as Shopkick, Facebook, Foursquare, and Pinterest.

    Show your customers how you are using their inputs: Retailers must transparently solicit inputs from consumers and incorporate them into their internal processes. Enabling consumers to track the value created from their inputs further motivates them to engage with the brand over the long term. Threadless.com opened its entire product design and development (PDD) process to crowdsourcing online. Its website ensures consumers can score/submit designs, participate in design challenges, and win rewards.

    Ensure scalability: With the increasing number of consumers participating in processes, the customer engagement process should remain consistent and scalable. embarked on creating store-specific Facebook pages in order to better engage consumers and track the company’s huge fan following that ensures its Facebook engagement being scalable beyond its current reach and effect.

    Build Actionable Social Data

    Typically, retailers that have been successful in disseminating social data take the following actions:

    Define specific business objectives: Without identifying specific business objectives, retailers may find themselves chasing a host of “potential” good solutions from various customers that do individually appear to have value, but on a higher level, result in a waste of time and resources.

    Search across several social platforms to extract relevant data: Utilizing sophisticated text analytics tools and creating targeted search streams across various social platforms, retailers can eliminate irrelevant noise and drill down to the sentiment that corresponds to their goal of deriving value from social media. BestBuy, Krogers, Chico’s, Kia and have invested in social data analysis. The findings are integrated into the retail process, which ensures that consumer sentiments are accounted for in their product offerings.

    Build a Social Enterprise

    Involving consumers socially in business functions such as PDD and retail promotions inherently demands that the enterprise be socially affable. This involves the following:

    Provide for social collaboration in regular business operations: Data is actioned only when relevant retail processes are reengineered to continuously allow for customer inputs in order to generate an experience that is relevant to them. Retailers need to reverse-engineer their working terms to enable them to incorporate social feedback in order to be more flexible and collaborative across the supply chain. A case in point is Walmart’s “Get-on-the-Shelf” contest, where consumers selected the products they wanted in their neighborhood Walmart.

    Empower employees to act: Retailers need to change their internal operations, workflows and approval mechanisms within the business in order to empower employees to immediately act on information flows. Retailers moving into social constructs are now creating new roles such as sentiment analysts, social corporate responsibility personnel, and crowdsourcing teams. BestBuy has a dedicated team of more than 2,500 employees who act on problems that consumers tweet about. They resolve customer issues using Twitter as a conversation medium.

    Looking Ahead
    Social media has the potential to radically improve impact across the entire retail value chain. This tacitly implies a change in the retail way of life.

    Organizations that have successfully leveraged social media have identified areas within their spectrum that would benefit most from this exercise and culled out pilot programs that experimented with integrating social media inputs. They put in place processes to measure and analyze the impact on sales, margin, and customer-connect, and benchmark these against past results.

    Results from these early pilots that were compelling from improved use of social media in their sourcing-to-shelf processes were identified and enhanced to become an integral part of their current retail operations.

    These newly constructed processes are designed to accept change as a norm. At the core of their social success is the flexibility to adopt and the fluidity to change. Clearly, retail is back to being a ‘social’ activity.