November 29, 2016

Otto delivers faster to your home screen shot (photo: Lebensmittel Zeitung)
Help from big data: Otto delivers more products to online customers in two days (photo: Lebensmittel Zeitung)
Thanks to technology, retail distribution is getting faster and faster. Ecommerce retailer Otto Group provides a good example. The Hamburg-based company is now using Blue Yonder software to deliver brand products to customers faster than ever before.

This means that even items not stocked in large quantities at corporate warehouses can still reach the customer within two days.

Otto is expanding the implementation of Blue Yonder's predictive applications to an increasing number of business processes. The retailer has already employed artificial intelligence by Blue Yonder for a number of years for the optimization of purchasing and stock storage processes as well for 'dynamic pricing'.

But now Otto is using Blue Yonder as an intelligent order solution for products with high stock turns where the multichannel retailer would normally only contact the manufacturer after customers have purchased online.

What Michael Sinn, Director of Category Support, calls "automated pre-ordering" allows the company to speed up delivery.

Precise prognoses improve warehouse availability

Like many other retailers, offers online customers considerably more products — especially fashion brands — than its warehouses can hold. Not carrying every item obviously reduces storage costs, but means that customers place their orders before the manufacturer has sent them to an Otto distribution centre.

Blue Yonder's big data system now predicts which lines customers are likely to order from Otto's web shop and in which sizes, colours and quantities. The order is then sent automatically to the manufacturer. This has enabled Otto to reduce delivery times from five or seven days to two days.

Online shoppers can now see the new delivery times on their screens. This has increased both the conversion rate and profits, Sinn says. There are also fewer returns on these faster delivery items.

Michael Sinn is very happy with the accuracy of Blue Yonder's automated predictions. Stock availability and delivery capabilities have noticeably improved. As a result, Otto wants to expand the new programme to further product ranges.

Read in German: "Otto liefert schneller" by IT & logistics desk manager Jörg Rode on page 46 of
Lebensmittel Zeitung, no. 44, 04.11.2016

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