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How retailers can leverage SMS for inventory management

Research shows that after 60 days, an item at a retail location has about a 15 percent chance of being sold. After 90 days this number drops to just 5 percent, and that is why retailers are relying on private sales to keep inventory moving.

“Sale racks have always been a source of consternation for both retailers and consumers,” said Tim Miller, president of Sumotext, Little Rock, AR. “What is a pair of designer denim really worth – the $265 retail price or the $145 sale tag?

“Since inventory management demands the use of systematic markdown procedures, Text-2-Join gives those sale racks a much needed context,” he said. “Retailers can now look their customers in the eye, and ask for something in return – loyalty.”

Sumotext is a a short code application provider that specializes in the private sale concept for retailers using Text-2-Join.

There is a high cost of carrying too much inventory in today’s competitive retail market. 

New merchandise not sold within 90 days has a very small chance of being sold without a markdown.

Therefore, it is very important that retail businesses keep their inventories as fresh as possible to maximize sales. What better way to sell old inventory than to give loyal consumers an exclusive chance to save.

Retailers can transform the sales rack into a platform for building a database of consumers interested in getting deals and offers.

“We’re asked all the time about newer technologies like bar codes, MMS and location-based services,” Mr. Miller said.

“Sadly, it sometimes seems as though retailers are still waiting on the nirvana that could exist if every consumer would download the same app or thin client to the same phone, with the same OS, on the same carrier network, not to mention the need for the same POS,” he said.

“But the reality is that carriers, device manufacturers, ad networks and large content providers fiercely compete against each other and continue to form siloed alliances that move us farther away from that dream.”

Sending text messages remains the mainstay activity for mobile phone users.  According to a Pew study, mobile phone users are more than twice as likely to send a text on an average day as do anything else.

Usage of text messaging, a favorite among the tech-savvy demographic of today, has gone up 40 percent since 2007, according to the Pew study.

A recent study from Vlingo, creator of vocal text messaging, shows that the text message fad is now bridging the gap between young and old, as almost 60 percent of mobile phone users are texting.

Moving an average of almost 1.3 billion messages per day in the fourth quarter of 2009, Syniverse Technologies claims it continues to see significant growth of the company’s application-to-person (A2P) and peer-to-peer (P2P) message delivery across its network.

Syniverse hit a new record when the company delivered 1.9 billion SMS messages on Christmas Day 2009, up 52 percent from 1.2 billion just the year before.

And on Halloween, Syniverse achieved a new MMS record with the delivery of 21.2 million messages, up 173 percent from 2008.

Improved, rich and intuitive user interfaces on mobile devices, as well as the wide introduction of bundled message plans, have paved the way for SMS growth.

Additionally, growing public visibility of SMS also helps to encourage use, whether that is via participation television, donating to charities or responding to a common short code.

“No matter what new protocols or on-deck services emerge, SMS will remain the easiest and most popular protocol to kick-start a relationship with a consumer,” Mr. Miller said. “Since you can’t rent or buy a database of opt-ins, retailers need to get started with what’s here and now.”
When it comes to perishable inventory such as flowers, food, shows and events, travel tickets and other time-sensitive inventory, SMS can be used to sell these items at a discount rate so that they are not a complete loss.

Retailers are already doing it.

Sonic, American Eagle Outfitters and REI are using location-based SMS alerts to engage opted-in consumers with time-sensitive deals and to push new inventory (see story).

Additionally, The Gap and Banana Republic both had private sales over the holiday for customers that used their branded affinity credit cards. 

SMS is an ideal vehicle to provide unique offers to opted-in mobile club members.

There is a huge opportunity to move perishable inventory to those who desire it but will only be pushed to purchase if they can get a deal, according to Jeff Hasen, chief marketing officer of HipCricket, Kirkland, WA. 

“As a mobile subscriber you might ask your favorite fish market to send you an offer of 33 percent off salmon,” Mr. Hasen said. “There will be times when that makes great sense for the retailer given the perishable nature of fresh fish.

“In my case, I can become a hero in my house – and save money – if a florist I frequent were to send me offers I can redeem during my drive home,” he said.

With SMS, all communication must be permission-based. It is the law.

Marketers that do not abide are in violation of the Telephone Consumer Protection Act.

The TCPA generally prohibits the use of an automatic telephone dialing system to place calls to a mobile number without the prior express consent of the recipient.

The Federal Communications Commission believes SMS to be equivalent to a call, at least when it comes to marketing communications.

Permission-based marketing may seem like a hurdle, but in reality it only arms the marketer with a better list of consumers that are interested in hearing from the brand.

“The value of a permission-based database shouldn’t be overlooked,” Mr. Hasen said. “And the opportunity is there for brands.

A recent HipCricket survey found that 37 percent of respondents said they would be open to mobile loyalty clubs and 83 percent of those have yet to be marketed to by brands they trust.

Either a brand can step up to this opportunity or it can sit by and watch a competitor move product and loyalty his or her way.

“Savvy brands don’t rest on their laurels,” Mr. Hasen said. “They continue to ask their loyalty club members if they are best serving them.

“Macy’s, an ongoing Hipcricket client, recently did that and saw an impressive response to a quick survey run through just one text message,” he said. “Increasing relevancy in future offers and product information is a win for Macy’s and a win for the Macy’s club member.”