by
David Kirkpatrick, Reporter
THE CUSTOMER
At a basic level, consumer marketing company Viscata has an elegantly simple business — it sells espadrilles shoes for men and women. The company has retained the centuries-old handmade aspect of the classic Spanish shoe and added one modern element: a rubber sole.
The product is eco-friendly, and each shoe comes with a coupon via a partnership with a company called Treecycler, where the purchaser can go to a website and designate where to plant a tree in an ongoing reforestation project happening around the globe.
Given the eco-friendly stance from Viscata, it has a customer base that includes what Thomas Morris, Co-founder, Viscata, described as the "vegan-type customer." He added that the company's product also appeals to early teens, the late 20s demographic and professionals from 35 to 50 looking for a quality product.
Morris said, "We see people come back after [buying] one [pair of shoes], and buy three or four more, which is nice. It's the type of product where you get one, and you want more colors because you can use them for mixing and matching.
"That's a strong point for us — why we're in business — to help people feel good," he explained.
CHALLENGE
In its earliest days,
Viscata ran out of Morris' garage in San Diego. That's where the initial inventory was stored. As the company grew, the inventory was shifted to third-party storage at the Amazon FBA (Fulfillment by Amazon).
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At the same time Viscata expanded its channels, it sold its product through Amazon, eBay and the company website.
Morris describes an issue that occurred with this growth, saying, "The problem we were having is we started growing quite fast [and] when one channel would sell out of product, another channel wouldn't know. So I would actually have to spend every day checking to see which inventory is at zero, and then setting that number across different sales channels."
He added it was embarrassing to have to cancel orders because someone placed an order on a sales channel that didn't "know" that the inventory had already been depleted by another sales channel.
"It's a bad customer experience," Morris said, "especially if it's a repeat customer. And it's time-consuming to write them and go through the refund."
Viscata solved this problem through automation and utilized the newly freed up time to improve customer service and become even more customer-centric in its product and sales funnel.
CAMPAIGN
This effort began out of necessity. The company was growing fast, and manually updating the inventory status across multiple sales channels became unmanageable for Morris.
"It [was] a big issue that we were having. And that issue goes to the next part where we couldn't scale. We couldn't keep scaling until we could fix that problem," he said.
In effort to find a solution to this challenge, Morris spent a year and a half trying to find a way to manage all of Viscata's sales channels online and eventually tried out several inventory management solutions before finding one that met the company's needs.
Step #1. Find the third-party solution to the immediate problem
Morris said he tried out more than one inventory management solution before settling on a system that worked for Viscata.
One of the solutions that didn't make the cut lasted only a month because it simply didn't perform as expected. Morris explained, "It kept either breaking or it kept getting issues where it wasn't actually updating different sales channels."
He said the winning solution works through a primary/replica system with the warehouse (Amazon in Viscata's case) serving as the "primary" and the sales channels serving as the "replicas."
When any sales channel — the website, Amazon or another channel — would make a sale, the primary would be informed and the inventory for that item would be reduced by one across all sales channels at the same time.
Morris said the solution's system includes all of Viscata's SKUs defined by shoe model, color and size.
In determining the winning inventory management solution, Morris said simplicity and price were the two main considerations. The solution had to work and also be easy to use, and even though he said he was willing to pay whatever it took to automate his inventory, controlling the price tag of the solution was a factor in finding the best option.
Morris added that a third benefit was the information the solution provided about top-selling SKUs and customers in a graphical format. He had previously been tracking this data manually in Excel. The dashboards provided by the new solution offered data such as:
- Top-selling shoe size
- Top-selling shoe color
- Top-selling sales channel
- Profit level of each sales channel
He stated this information was useful in marketing decisions such as what sizes and colors would be best to market to the different sales channels as well as simply keeping track of what inventory needs replenishing.
Step #2. Take advantage of automation to expand the business
Because the inventory management system took the place of a lot of manual work keeping track of multiple sales channels, Viscata was able to reach out to a global market.
Morris stated the model the company uses in the U.S. market is "essentially" duplicated across the world. Viscata currently markets in the U.S. and Europe and plans on entering the Japanese market in 2015.
"Without having this inventory management, it would have been impossible to [expand] easily without having to hire an intern or something to manage this every single day," said Morris.
He added it would be too difficult to have a different system in all of Viscata's markets, including Amazon in the U.S., U.K. and Europe; and websites in the U.S., U.K., Spain and Netherlands.
"It would have been too much, too many systems to have to work with, to have a different one for Spain, different one for the U.K., different one for the U.S.," Morris said. "By having it all in one place, it's great. [The solution] works in the background on inventory. You only have to log in when you want to check what's selling the most in what countries and channels."
Step #3. Integrate shipping into the automated inventory process
To further automate order fulfillment now that Viscata is serving international markets, Morris added a shipping plug-in to the inventory management system. The two technology pieces integrated via an API, and he described the process as "seamless, no issues [and] plug-and-play."
When a product is ordered through any of Viscata's sales channels, the plug-in handles the actual shipping of the products and informs the inventory management system where that product was shipped. Then the inventory management system sends that information back to the sales channels to manage the available inventory.
About this automated process at Viscata, Morris said, "It's quite a unique setup with very few people; [Viscata's] an international small company selling globally with very little overhead."
He added that because so much of the sales fulfillment process is now automated, Viscata is planning on entering the Australian and Chinese markets in 2016.
Morris explained, "It's just a question of cash flow to be able to expand product [and] buy inventory sufficiently across different geographies."
Step #4. Keep track of analytics
The sales process at Viscata is so automated Morris said that no one tracks the analytics on a daily basis, but Morris does stay on top of the data to watch for:
- What products are selling best
- Who are the best customers
- Best-selling products segmented into geographic segments
He did add that actually buying inventory is not very frequent at Viscata.
Morris described the process as, "I tend to purchase pallets that are on a boat, so we'll replenish inventory maybe three or four times a year depending on where they need to go."
He said another value in tracking the analytics was gaining insights about different markets. For example, women in the U.S. market tended to buy larger shoes than in the Spanish or Japanese marketplace. These insights impact the inventory ordered for each different market.
"In the U.S., you put more weight to the larger sizes," Morris said, "and more weight in Spain toward the smaller sizes. That's something that was interesting to see."
Step #5. Utilize automation to become more customer-centric
Up to this point, this case study has been heavy with the nuts-and-bolts of ecommerce — inventory management, order fulfillment and matching product offerings to specific markets. All are very important in terms of the business. Products have to be ordered, sold and successfully shipped to keep the doors open.
But, at a small operation like Viscata, these aspects of ecommerce can drain all the time and energy at the company at the expense of activities such as marketing and really taking the customer into account beyond reacting to what is, and isn't, selling.
Viscata was using its transactional data to make marketing decisions, such as shoe color and size for its different geographic marketplaces and sales channels, but automating so much of the inventory and fulfillment process allowed Morris to shift the focus back toward the customer.
He said a priority was "making sure the products we have are the products customers want."
Morris added, "We do spend extra care in customer service and extra time testing out the shoe. And if the shoe seems to get negative reviews for some reason, we understand why that is — what's happening — because the canvas is too rough or the heel too low or too high. And we make changes."
Morris said he works directly with the manufacturing team to integrate customer feedback into the final product.
"The inventory part is something you need to have done just to serve your customer. But it doesn't help you get the best product to market," he stated.
RESULTS
One very important result of Viscata automating its inventory and order fulfillment process is a combination of improved customer service (no more cancelled orders because a product was sold out, but the order made it through the sale process anyway) and freeing up time at a small company to allow Morris to focus on Viscata's customer's needs and desires instead of manually overseeing multiple sales channels in multiple geographic markets.
In more tangible results since implementing automation, Viscata has seen sales increase 10% as well as saving around a full day, which was previously spent manually managing the inventory process.
"[Not being able to manage inventory] is the one thing to keep you from scaling," Morris said. "Unless you don't care about your customers, if you don't mind sending out emails or contacting customers [to tell them] that you don't have inventory, then [automation] is not for [ecommerce retailers]."
He added, "If you want to scale by any means, if you want to do paid search or Google Ads and bring in more customers to your site, you have to have a way to make sure inventory is under control and you know what you have in stock at any given time … focus on the higher value stuff — understanding your customers and find out how you can grow other sales channels."
One final result of this effort is Viscata is also using the time saved through automation to continue planning on adding additional sales channels and geographic markets.
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Sources
ViscataStitch Labs — Viscata's inventory management vendor
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