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Retail Auto-Replenishment: the Pros and Cons

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5 minute read

Automation is a powerful and strategic tool for brands looking to scale their retail offering, from large supermarkets working to automate their stock replenishment process, to consumers themselves installing Amazon Dash Buttons within their homes, is auto-replenishment really the future of retail?

2019 is set to be a challenging year for retailers in all sectors, but just how will these brands innovate their offering to keep themselves at the front of consumers’ minds? 

The pros and cons surrounding auto-replenishment

This question has sparked debate and analysis from retail experts around the globe, arguing as to whether auto-replenishment is actuallyhow consumers want to shop, with some influencers saying that automation is just a step too far, too soon. 

Below are some of the pros and cons surrounding auto-replenishment to better understand how retailers are planning to introduce this into their systems. 

Why auto-replenishment should be integrated into retail 

Natalie Berg in the Voices of Retail ebook argues that people no longer GO shopping – people ARE shopping. 

Berg predicts that smart devices will begin to shop for consumers automatically, without ever needing to visit a store or tap on a screen to make those purchases. She explains that this is a complete convergence of the physical and digital worlds. 

To some, a self-ordering fridge might be an unsettling prospect or an invasion of privacy. Berg asks readers to imagine the time-saving benefits of this type of automation; imagine never having to remember buy milk or bread, ever again! 

Zak Edwards, MD at Prezzybox.com explains that auto-replenishment technology really could work to provide a faultless in-store experience for consumers. 

 “On your device you visit your favorite store’s 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.”

Edwards goes on to describe how this innovation would not only benefit the consumer, but the retailer 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 automaticallycreate a purchase order, which can then be shipped straight to the store. All of this can happen with zero human interaction.”

The brands already benefiting from auto-replenishment

In the US, there are clear signs that auto-replenishment is working well for some brands. The Packaging Digest reports that consumable brands such as Peet’s Coffee and Ziploc have already seen an astonishing 50% of their ecommerce sales made via Amazon’s Dash Buttons. 

Tissue brand Cottonelle also reported that their Dash Button integration contributed to them doubling their ‘share of wallet’ in the bathroom tissue category in 2018. 

Is the customer always right?

A Consumer Behavior Report revealed that 48% of consumers place high importance on auto-replenishment as part of their shopping experience, with 40% stating that they would be impressed if their supermarket used data to suggest a shopping list to them automatically. 

The above certainly indicates that consumers have a thirst for automation across everyday tasks and chores, but how can retailer tap into this new, technology savvy customer?  

Berg suggests that the responsibility is on the retailer to get this right. 

“The most successful retailers will be those that think like their customers, connecting the dots to create a seamless retail experience.”

Why auto-replenishment is just part of the process

In Forbes magazine, Ashwin Ramasamy, Co-Founder of PipeCandy dissects the tech based predictions for retail in 2019 with interesting results:

“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.”

Figures such as these could go some way explain why we’re not seeing as many retailers exploring the realms of auto-replenishment technology as we may have expected.  

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.”

Is auto-replenishment convenient or a complete invasion of privacy?

In 2017, Walmart raised a few eyebrows with the news that they were testing a service which delivered groceries directly to the fridge in customer kitchens. Using a smart-lock system, the delivery person was able to enter, unpack and put the groceries away. 

Berg touches on this, suggesting that auto-replenishment is the perfect answer to low level and mundane household 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 predicts that the retail industry is actually on the cusp of an online shopping revolution:

“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.” 

Doug Stephans, Retail Prophet

Conversely, the Consumer Behavior report reveals that over a third of shoppers would find this level of automation ‘creepy’ rather than convenient in their daily lives and as such, retailers have a long journey ahead of them to challenge and change consumer behaviour.  

The future of automated retail in 2019

With Q4 of 2018 being tricky for the majority of online and offline retailers, it’s even more important for the teams behind the brands to show innovation and consumer-centered thinking in their plans for auto-replenishment. 

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.

With a lot of retailers 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
Sunny Dhamihttps://www.ringcentral.co.uk
Sunny is an experienced Director of Product Marketing with a passion to create differentiation. He's successfully led product launches globally across EMEA and APAC and has worked within communications, SaaS & technology industries.
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