By Sunny Dhami
The retail supply chain is undergoing a revolution. From grocery stores automating their stock systems so your favourite items are always on the shelf, to Amazon releasing their Dash Button so you never have to think about ordering items like printer ink and toilet paper again. It looks like auto-replenishment is going to play a bit part in the future of retail.
Most retailers have a less than positive outlook on the year ahead, with consumers pivoting away from the High Street, is harnessing new technology really the best way to get consumers reaching for their wallets again?
To get the answers, we’ve asked a number of retail industry experts to divulge their opinions on the topic and reveal once and for all, whether auto-replenishment is going to live up to the hype.
The pros and cons of auto-replenishment for retailers and consumers
Auto-replenishment is a hot topic right now, with every big name in retail having a different insight into whether or not it is what customers actually want. Is it convenient new tech that makes everyone’s lives easier or is it simply a step too far?
Below, we dive straight into the debate, laying out the pros and cons of auto-replenishment.
Retail experts explore both the pros and cons to discover if automation really does need to be an essential part of the shopping experience.
Why auto-replenishment should be the future of retail
In the Voices of Retail ebook by RingCentral, Natalie Berg argues that we no longer go shopping – we ARE shopping.
Natalie predicts that in the not too distant future our shopping, especially for everyday items, will become automated. Our smart devices will be able to place an order for replacement coffee pods, well before they runs out. The customer won’t even need to touch their screens or tap a button – the physical and digital shopping experience will become intertwined.
Smart shopping might make customers feel a little uneasy. Do they really want their smartphone, grocery store and everyone in the supply chain to know the contents of your fridge? While might seem a little creepy at first, the majority of technological innovations are not embraced right off the bat and can take time for both consumers and businesses to get used to.
Natalie asks us to focus on the benefits and how they can outweigh worries consumers might have. Just think about the time saving benefits of a self-replenishing fridge; you’ll never have to run down to your corner shop in the freezing cold at 7am because you forgot to get milk for your morning coffee.
Managing Director at Prezzybox, Zak Edwards makes another point about the positive effects of auto-replenishment technology. In future and with the right implementation, it could provide the perfect in-store experience for consumers, just imagine a scenario like this:
“On your device you visit your favourite stores website. In real time, the retailer can check the stock levels of a given item using RFID (Radio-frequency identification) technology and tell you exactly how many they have left, alongside what colours, sizes and other variations, right at that very moment.”
Zak goes on to demonstrate how there are benefits for retailers too:
“This level of granularity has never been possible before. For example, if an item is popular, and running out of stock, then the stock order system can automatically create a purchase order, which can then be shipped straight to the store. All of this can happen with zero human interaction.”
Which brands are already benefiting from auto-replenishment?
We’ve been talking about the future of retail, but for some brands that future is already here as they have started to embrace and implement auto-replenishment technology in their supply chain.
According to Packaging Digest, in the U.S, Peet’s Coffee and Ziploc have seen exponential growth in sales since implementing auto replenishment through Amazon. An incredible 50% of their sales now come through Amazon’s Dash Button!
Cottonelle is another brand that have reported growth based around their Dash Button. They have now doubled their ‘share of the wallet’ in the bathroom tissue category. .
This might just be a few small examples, but it demonstrates how when you get auto-replenishment right, it can have big benefits for your business.
Is the customer always right?
Oracle’s Consumer Behavior Report was conducted in 2017 and surveyed 15,000 consumers. The data from the report show that 48% would like to be able to auto-replenish frequently bought items. 40% also thought it would be ‘awesome’ if supermarkets use the same technology to ‘suggest’ shopping lists.
These stats show that consumer are ready and eager to adopt automation across their shopping experience. The retailers that get there first and are ready to meet consumers demands will be the ones that finish on top at the end of 2019.
Natalie Berg explains that the responsibility is on the retailer to get the tech implemented:
“The most successful retailers will be those that think like their customers, connecting the dots to create a seamless retail experience.”
Why there has to be more than auto-replenishment in retail’s future
While there is a lot to be excited about when it comes to auto-replenishment in retail, the pendulum doesn’t only swing one way and there are some negatives that need to be addressed too.
Ashwin Ramasamy, Co-Founder of PipeCandy, told Forbes magazine:
“Nearly 40% of consumers who use subscription services cancel their subscriptions within a year of subscribing as the novelty wears out.
“Subscription companies that focus on replenishment (e.g., a monthly supply of detergent) and large retailers with their own subscription services will likely experience greater customer loyalty than upstart curation-themed subscription businesses.”
These figures may be an indication of why not all retailers are quick to embrace auto-replenishment tech, fearing that they may see great results in the beginning but they will quickly decline or taper off.
Some retailers may feel that the tech needs to be further tested and wait to see the long term potential, as well as the results that early adopters end up with a few months or years down the line.
Zak Edwards takes a differing view on the potential pitfalls of automation in retail.
“I think the full benefit of this is limited to a number of behemoths (like Amazon) and to a handful of Omni-channel retailers who have a full ‘self service’ infrastructure – including manufacture – over which they have complete control.
“There’s a LOT of moving parts – all of which are completely reliant on each other. Tech, supply chain and logistics are all vital – as is real time communication between the three elements. If one of these fails, then so does auto-replenishment – which then leads to a poorer customer experience.”
What about privacy?
As one of the biggest retailers in the U.S, Walmart has the luxury of being able to take a few risks an try out new tech. In 2017, they raised a few eyebrows when they disclosed they were testing a service which delivered groceries directly to the fridge in your kitchen.
The system would use a smart-lock system, allowing the the Walmart delivery person to enter the customers home and unpack the groceries they ordered into their fridge. A number of people had obvious concerns over privacy with many saying this was a step too far.
Natalie Berg suggest in the eBook, that this may not be as creepy as it originally seems and that auto-replenishment is actually the perfect answer to:
“Low-level, mundane re-ordering of household products, freeing up time to focus on more enjoyable tasks.
“Shoppers will no longer have to traipse down supermarket aisles when they run out of bleach or toilet paper. They will spend less of their valuable time buying the essentials.”
The Replenishment Economy
Doug Stephens, founder of Retail Prophet, has some thoughts on the retail revolution that may be coming as well.
“Retail is entering into what I call “the replenishment economy” where our cars, appliances, connected packaging and even products themselves will begin to re-order themselves and be purchased with our approval.”
While it does seem like a nice idea, many consumers might not think the convince outweighs the privacy that they would have to relinquish. The Oracle Consumer Behaviour supports this assumptions with over a third of those surveyed saying they would find this level of automation ‘creepy’ rather than convenient.
The future of automated retail in 2019
Q4 of 2018 was far from sunshine and rainbows for a lot of online and offline retailers. Many businesses did not get the sales figures they were expecting, making it more important than ever for brands to innovate to get consumers shopping again.
Sunny Dhami, Director of Product Marketing for RingCentral explains that change is happening and ultimately, it’s time for retailers to evolve, or risk getting left behind.
“The investment into technology seems to be on all retailers minds but it’s how that investment is made will determine how much of a difference it makes.
“Customer experience and technology investment are the key to growth. Retailers that build the right customer experience through the integration of technology will be ones standing tall.”
A lot of retailers are still undecided on auto-replenishment, there are arguments for both sides but what is clear is that retailers need to put their customers at the heart of what they are doing and implement technology that their consumers will embrace.
Sunny Dhami, Director of Product Marketing for RingCentral.co.uk managing the EMEA Product Marketing team and driving product marketing deliverables for RingCentral. Working collaboratively with RingCentral teams globally to deliver projects and develop product messaging and positioning. @sunnydhami1