Simplify the allocation of in-demand products
Customers eagerly await the launch of new products, especially technology products such as games consoles, smartphones and tablets. Retailers are keen to supply their customers with the products they want, and will promote pre-sales over a specific period before the product becomes available. Retailers however, face the problem of limited supplies to support the pre-sales promotion. Demand often exceeds supply. Furthermore, the limited supply of the hot product has to be shared among the stores. The retailer cannot know how many units each outlet will sell, therefore it becomes difficult to allocate the products effectively.
Ogloba developed an innovative method to allow retailers to sell “pre-sale” vouchers or gift cards that act as a deposit of, for example, 10% of the retail price. These cards “reserve” the product for the customer who then, at launch, pays the remaining balance. The card itself is like a gift card, in that it can be redeemed for the value it holds at the check-out.
How it works
Let us assume a retailer will be allowed to sell 5,000 of a particular product, and they have two stores. They could distribute 2,500 pre-sale cards to each store (A and B), on the assumption each store will sell the same number of units. However, store A may have 3,500 customers who want to buy one but, as there are only 2,500 cards (and therefore products) available, 1,000 potential sales are lost. Conversely, store B might only sell 1,000 during the promotion period, leaving 1,500 of its allocated cards unsold. In this scenario, the retailer only sells 3,500 units: 2,500 at store A + 1,000 at store B, while 1,500 units remain unsold.
Instead, 10,000 vouchers are made available and 5,000 are placed in each store. This way, there are enough cards available for every pre-sale unit. It does not matter if the retailer never reaches the maximum number of sales allowed, but retailers do not want to risk losing sales if one store runs out of pre-sale cards.
As the maximum is 5,000 units, pre-sales need to be monitored so no more than 5,000 occur. When the number reaches 4,950, stores are asked to keep only 50 cards on display. Once 5,000 pre-sale cards have been sold, the Ogloba platform automatically deactivates the remaining 5,000 cards. These cards must then be removed from displays straight away, but it is not possible to sell more than 5,000 pre-sale cards in total; even if a customer is about to pay for card number 5,001 at the checkout, the Ogloba system will block it.
Once all the cards are sold, the retailer knows how many product units to distribute to each outlet, making the logistics much more efficient.