Real-Time Inventory Can Be A Tempting Real-Time Lie
Written by Evan SchumanReports were plentiful this weekend that Best Buy was having self-inflicted inventory issues concerning the iPad2, with some suggestions that the chain was deliberately lying to customers to hold units for an upcoming promotion. These rumors can happen easily, with individual stores (or groups of stores) sending local memos that are phrased ambiguously.
By the way, Best Buy issued a statement trying to kill this rumor, but the statement actually did more to confirm the rumor than refute it. “As we’ve said previously, we are fulfilling customer reservations first. Our stores have been asked to temporarily hold non-reserved iPad 2 inventory for an upcoming promotion. This is a customary practice for us when there are supply constraints,” the statement said.
In short, it’s confirming that Best Buy stores have iPad 2 stock that the chain is withholding from walk-in customers—which was the essence of the rumor—and it goes out of its way to not deny the most important part of the rumor, namely that memos instructed store associates to lie to customers about their stock levels and why. As has been observed elsewhere, it’s a lot easier for an associate to tell a customer, “We don’t have any in stock. Sorry” than to say, “We have a bunch in the back, but I’m not allowed to sell one to you. We’re holding them for an upcoming promotion. And the two you just saw me sell to that couple who just left? Oh, they were reserved.”
The first reaction I had was, “This is one problem that will go away when real-time inventory is universal and available on mobile devices.” Then the cynical side of me took over (that’s the side with an historically much better batting average). If a chain’s management decides that it wants to fool customers about inventory levels—for a wide range of nefarious reasons—wouldn’t real-time inventory be the most marvelous and efficient way to do it?
Associates could be removed from their roles almost entirely, trained to simply say, “You can check inventory on our mobile site.” This Best Buy situation—if true—is unusual in that the sought item is extremely popular and from a vendor that is, well, aggressive about almost everything. But a chain could easily create false shortages of less high-profile items and attribute it to the site.
If caught, the company could casually blame it on a programming error and laugh it off. That’s a lot better than having named associates quoting and repeating the lie.
It’s a lovely dark thought to consider about real-time inventory or, for that matter, any of the other supply-chain transparency efforts being discussed for mobile. The ease of automating access to accurate information will also provide a seductively easy way to automate access to lies.
And the beauty of this Machiavellian approach? Consumers are much more likely to accept without question an inventory status that is displayed on a Web site or on their phone, as opposed to what a store associate says. Store associates are seen as commission-seeking temporary workers, whereas computer displays are seen as credible—despite the fact that those displays are programmed by humans, who quite often work for commission- (or bonus-) seeking permanent workers.
-Marc
April 14th, 2011 at 11:18 am
This can be handled in both situations (employees or real-time inventory) by changing the terms. The employees can say “We don’t have any iPads AVAILABLE”–because they are reserved. And the inventory system probably has a “committed” or “allocated” status–typically used for product which is assigned to an order but not yet physically “picked” from inventory–which could be used for product reserved for any reason, which would cause the “real-time” inventory to show as zero.
April 19th, 2011 at 3:23 am
This practice of holding inventory is nothing new. It has been part of many retailers’ SOP for years! When an apparel retailer ships a new season’s worth of merchandise, some items may sit in the stockroom for over a week as the rest of the assortment arrives for the night of the new floor set. If an electronics retailer is going to do a doorbuster sale on the morning of Black Friday, do you think all of that promotional inventory arrived on Thanksgiving Day? Nope. It probably arrived several days early although customers were not able to purchase some of it. The key difference with publicly available real-time inventory is the TRANSPARENCY that now exists for the consumer where it once did not exist.
April 19th, 2011 at 10:03 am
That was exactly the point of the piece, namely that what was intended as transparency could also be trickery. In other words, the ability to show consumers what the inventory looks like also means the ability to trick them into believing that the inventory looks different than it really does.