Netherlands' largest online retailer, Wehkamp, has selected IBM’s cloud-based merchandising analytics tool to manage price cuts to better meet customer demand and improve profitability.
Headquartered in Zwolle, Netherlands, Wehkamp served more than 122 million visitors in 2012 and sold over 15.6 million products. According to the retailer, more than half of its customer base comprises people aged 35 or younger.
The IT team relies on big data and analytics to provide their young customers with a personalised and tailored online shopping experience.
But as an online retailer selling fashion merchandise, at the end of every season, Wehkamp is faced with the challenge of planning its clearance pricing and markdowns to sell the remaining inventory and make room for next season’s merchandise.
The online retailer already uses digital analytics, cross-channel marketing and customer experience management tools from IBM. With the addition of the new cloud-based services, Wehkamp will add capabilities from IBM’s Price, Promotion and Product Mix services. The tools will help it maximise profitability and improve inventory productivity for items in the “clearance” section.
With the help of IBM's Smarter Commerce initiative – which includes software and services for an enterprise’s commercial activities such as selling and buying – Wehkamp will be able to make informed decisions on the depth and timing of its markdowns, ensuring it meets inventory, profit and revenue objectives, said Wehkamp’s marketing director, Alexander van Slooten.
For example, online fashion retail typically involves a high percentage of returns due to customers ordering multiple sizes or colors. This affects remaining inventory and needs to be factored into the markdown process to make better decisions.
“As an online retailer, we realise the importance of taking a holistic approach to our marketing campaigns and providing our customers with the right products, at the right price, through the right online experience.” van Slooten said.
With the cloud-based platform, it can put its customers at the centre of its planning strategies, whether it’s managing markdown prices, delivering email campaigns or improving the online experience, he added.
“Through the use of big data and predictive analytics, wehkamp.nl has streamlined the marketing and merchandising processes, proving that customisation and informed planning are the best way to meet customer needs,” said Craig Hayman, general manager, IBM Industry Solutions.
Using cloud-based services for digital analytics, customer experience management, and email campaigning, Wehkamp has improved its yield from marketing activities. It has seen a 271% higher sales-per-send ratio for marketing emails, including a 68% higher click-through rate. With the addition of the markdown optimisation tool, the retailer aims to achieve similar benefits in its merchandising function.