NETTING IT OUT

Hewlett Packard was one of the first manufacturers to avail itself of a new online service offering that addresses one of customers’ key moments of truth: Where is this product in stock? In mid-2002, HP’s Internet marketing team and consumer products marketing group began piloting and experimenting with the use of the Product Pinpointer capability provided by an emerging supplier of commerce data interchange services: Channel Intelligence.

This service lets HP show would-be buyers which online retailers and which bricks and mortar retailers have the particular products and models they are seeking currently in stock. This is a big win for customers! Being able to gain visibility into in-store inventory has long been a holy holy grail for the consumer products industry. It appears that we are close to finding this grail. HP is leading the search.

DELIVERING A SEAMLESS BLENDED CHANNEL EXPERIENCE

Hewlett Packard’s blended channel strategy is part of the company’s overall Total Customer Experience strategy. HP has this goal: Make it easy for customers to do business with us, using customers’ preferred channels for interacting and transacting. Since 1997, HP has been focused on letting its consumer customers purchase HP products where and when they prefer—through bricks and mortar stores, resellers, catalog suppliers, online e-tailers, or through HP direct via the Web.

Supporting Consumers Cross-Channel Shopping Behavior

Prospects and customers for HP’s consumer products—printers, PCs, digital cameras, and supplies—often do their research online and then either purchase online (from HP direct or from a preferred e-tailer) or go to the nearest store that has the product(s) they are considering in stock. Yet up until very recently, it has been impossible for HP (or just about any supplier of retail products) to be able to give prospective buyers accurate information about which stores actually had a particular model in stock. The best HP could do, as is the case with most suppliers, was to tell consumers which retailers carried these particular products and then to do its best to ensure that its supply chain operations were so good that the majority of the products that consumers were likely to want were, in fact, in stock in the stores or through the resellers that carried them. For HP, the success rate of this approach was patchy at best and difficult to monitor and measure. For customers who wanted to purchase HP products from third parties, the results were also suboptimal. Customers were directed to those resellers’ Web sites and/or bricks and mortar stores that carried the HP consumer products they were seeking. Then customers had to check with each reseller to determine if the product they wanted was actually in stock and what its price was.

When time-pressed shoppers are trying to locate products to purchase from bricks and mortar stores so they can take the product home to use immediately (rather than waiting for a product to arrive by mail), customers usually resort to the phone. They find the product they think they want. They use the Web site’s dealer locator to determine which nearby stores stock the product. They call the store(s) to find out if they have it in stock and hope that the person who provided that information over the phone actually knows what they’re talking about! Then they drive to the store, hoping to make a final buying decision and purchase. This process wastes customers’ time. They would prefer to know ahead of time which store(s) have the item in stock and how much it costs.

Difficulties in Providing Inventory Visibility to Buyers

You would think that, in this era of electronically-enabled supply chains and just-in-time inventory management, it would be relatively easy for suppliers, distributors, and retailers to know exactly where each product is at any point in time. Not so.

INVENTORY MOVES IN BATCHES. In consumer electronics, apparel, toys, and many other retail product categories, inventory is still tracked in batches as it moves from manufacturer to distribution to retail locations.

DIFFERENT RETAIL STORES IN THE SAME RETAIL CHAIN CARRY DIFFERENT PRODUCTS. Even if a large retail chain knows which products it ordered and which products it has in inventory, different stores typically carry different products or models. Retailers’ in-store inventory systems and point-of-sales (POS) systems are gradually becoming more integrated as retailers invest in more modern systems, but there is still imperfect information about precise in-store inventory availability in many retail operations....