GASE STUDY $15\mathrm{.}2$ INVENTORY MANAGEMENT IN THE AGE OF THE ONLINE SHOPPER

Online shoppers have high expectations. Shoppers expect more from online shopping than easy$-$to$-$use websites. Successtul online retailers are creating onine shopping experiences that encourage repeat customers and reward shopper byalty

In $2013,$ UPS $($United Parcel Service, Inc., Sandy Springs, GA$)$ conducted a series of studies to gain insight about the shopping behavior of customers. The studies found that customers want to be able to shop anywhere at any time, and they want other services such as the flexibility to choose delivery dates and locations. There are several trends that affect shoppers' delivery expectations:

Omnichannel fulfillment. Shoppers want an integrated buying experience across a firm's multiple buying channels $($its stores, website, and third$-$party retallers$).$ According to the UPS study, $44\%$ of online shoppers want the option to buy online and pick up the items at their local store. Another $62\%$ said they wanted the ability to make purchases online and make in$-$store returns. The study also found that of the shoppers who use the ship$-$to$-$store option, $38\%$ of them purchased other items while in the store.

Delivery timeframes. Slow or delayed deliveries practices is one of the main reasons consumers do not shop online. Nearly half of online shoppers abandon their online carts before checking out when they find that the procucts they selected have long shipping times. Furthermore, very few potential customers are willing to pay higher prices for sameday delivery. On the other hand, when customers know how long it will take for their products to arnve, they are surprisingly patient with the retaler for free shipping, they are willing to wait as long as $7$ days for delivery.

Customized delivery. Ninety$-$seven percent of shoppers want order tracking services available so they can instantly determine the status of their order. Whether through e$-$mall alerts or by accessing the

retailer's website, customers demand updated information on the shipping and delivery dates for their orders.

Easy return policies. The number of people returning or ecteny, orders has grown nearly every year since online shopping becane commonplace. Customers expect that returning orders wil be "painless" and easily accommodated by online retailers. it also peast in terms of future sales, with $67\%$ of consumers saying they wit step more often with a retailer if they offer a hassle$-$free returns bolicy

Many of the expectations that online shoppers bring to the retal expeces have implications for inventory management, suggesting that firms whth$.$ integrated information and inventory control systems will be better prepact to compete for the growing ranks on online shoppers. Between the stapst integrating upstream imentory, avoiding stock$-$outs, dealing with the ece: tations of immediate delivery, and ease of use, today's online sptens $z$ : critical sources of inventory management. Indeed, the organizations trat as best at fully integrating with inventory systems will be best able to corpett effectively for online shoppers' business?

Questions:

Think of some aspects of inventory management discussed atris chapter $($for example, inventory costs or cycle$-$stock patterns$)$ Hos does online shopping affect them?

How is omnichannel shopping changing the way inventory is managed? How will modern imventory management systers nole omnichannel selling easier?

Suppose you are working for a local drugstore developing an online shopping site. Think of some products you routinely set art apply the ABC classification system to them. How would the RCC classification help you in planning for online sales?