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LOGISTICS RESEARCH
Omnichannel retail may have a new business motto: investing in warehouse automation and media efforts increases sales. According to the latest research findings published in the Journal of Retailing and Consumer Services, retail companies that automate their warehouses and make their automation efforts publicly available can gain a competitive advantage.
“When consumers are considering purchasing products online, retailers need to persuade potential customers of their delivery quality and to improve their short-term performance,” says Takumi Tagashira, author of the study and Associate Professor of Marketing at Hitotsubashi University in Japan.
In the study Information effects of warehouse automation on sales in omnichannel retailing, Tagashira analyzed corporate-level data published in newspapers and investor relations reports from nearly a hundred Japanese retailers for a period of seven years. The goal was to explore the link between warehouse automation and sales in omnichannel retail.
Retail companies that make their warehouse automation efforts publicly available can gain a competitive advantage
A retailer’s revenue is expected to improve when customers try a product, perceive its benefits and repurchase from the same company. But how can e-commerce businesses boost sales when consumers haven’t purchased anything yet and don’t know whether their experience will be positive? The answer lies in combining warehouse automation with media attention.
“Communicating news to the media about a company’s warehouse robotics systems and investment in technologies sends positive signals to consumers,” says Tagashira.
Why? Many online shoppers demand 24-hour deliveries. To cope with fast deliveries, e-commerce businesses need to equip their warehouses with technologies that speed up order processing. “The results imply that omnichannel retail requires efficient operational systems and that the omnichannel strategy becomes more effective when there is information published showing that retailers have invested in automated systems”, writes Tagashira.
When potential customers read news about companies investing in warehouse automation in the media, this type of information triggers positive associations. It shows the organization is equipped with technologies that will speed up order processing and deliveries. “Giant companies such as Amazon and Alibaba established their brands based on their investment in operations,” says Tagashira.
“Combining automation and omnichannel retail conveys a consistent message that the firm provides a more convenient and sophisticated omnichannel shopping environment for consumers”.
Warehouse automation and communications: a revenue-generating resource
The results of the study, says Tagashira, should be of interest to e-commerce retailers implementing warehouse technologies, managers of warehouse automation, technology suppliers and consultants: “Managers should understand that warehouse automation is an investment in both operational efficiency and increased sales. They should recognize that warehouse automation has potential as a revenue-boosting resource and regard this as an essential consideration in managerial decisions, from a return-on-investment perspective”.
Communicating news to the media about a company’s warehouse robotics systems sends positive signals to consumers
The study also reveals the crucial role of marketing communication for omnichannel retailers. “The results suggest that retailers should convey observable messages to consumers when they invest in automated systems. The findings also emphasize the importance of offering the combined messages of omnichannel retailing and automated systems. Thus, an information offering that conveys omnichannel values supported by advanced technologies can be an effective marketing communication strategy,” concludes Tagashira.