In short, prices plummet, and sales margins of previous products drop, damaging retailers everywhere. US markets can be highly competitive and are notoriously sensitive to price changes. Consider the following case study.
The iPhone 7 is released. Retailers buy a specific amount of the phones based on the expected consumer demand. At first, this strategy works. But fast-forward one year: the iPhone 8 is about to be released. Any savvy retailer realizes that sales of the iPhone 7 were about to plummet. The retailers use the traditional approach to solving this issue, which is to offer promotions to move inventory or to sell to a liquidator for literally pennies on the dollar in hopes of minimizing the retailer’s losses.
The New Way Of Launching New Products
This was the old way of doing things. There’s a new solution for this problem. Now, third-party logistics and supply-chain management companies specialize in integrated services that are customized to their clients’ needs as well as the market conditions. Innovative companies such as goTRG are revolutionizing the way retailers are preserving margins on legacy inventory and evolving the supply-chain process to incorporate new solutions and pricing features.
Retailers are now able to explore markets overseas and find new outlets to sell their products at a much higher price point. To gain their strongest competitive advantage, retailers are turning to repricing tools and curated UPCs.
[pullquote]Lowering product margins increase sales volume – and consequently allows retailers to ultimately have larger profit margins in the end.[/pullquote] But how can retailers ascertain the best prices for their older products? Once again, new innovations in gathering complex data and providing analytics regarding supply-chain allow for the ultimate pricing optimization.
These analyses move at the market rate to constantly adjust prices to maximum advantage and margins. Retailers can now achieve a price balance that will move inventory at such a rate that the retailer won’t have to turn to liquidation.
Rather than neglecting overstock or returned products, retailers are now able to maximize their margins by utilizing vendor returns contract management, reverse and returns reporting, and software that analyzes and maximizes returns and refurbishment. The strongest reverse logic solutions are now backed by Artificial intelligence. These new technologies streamline workflows, improve accuracy, and reduce costs for the retailer.
Of course, third-party logistics and supply-chain providers do more than analyzing sales and increase profit margins. They also provide streamlined transportation and warehouse solutions. They use big-data analytics and knowledge of the specific retailer’s workload to determine the most efficient supply and return logistics.
There are also second-party logistics companies, but they are not integrated at the level third-party companies are. Third-party companies provide long-term relationships that are customized to the client’s needs, and they are always informed about the workload.
In the ever-evolving marketplace, retailers are turning to third-party repricing to execute their business vision. By outsourcing this work, the retailer no longer has to do all the grunt work of managing forward and reverse operations, facilitating omnichannel sales, fulfilling all orders, and supporting customers. This allows for retailers to focus on their business goals and the actual act of selling their products as they have dreamed.
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