Know When to Hold 'Em

Companies have to decide when to reserve inventory for customers-and when to risk disappointing them.

One of the key decisions to be made when linking a Web site to a real-time inventory system is at what point does a theoretical order become a real one? Shoppers often come to a Web site, place things in their shopping basket and then leave without either logging off or ordering. Given the high rates of shopping-cart abandonment, should an item be reserved in the warehouse every time someone tells a Web page he wants something?

Many companies don't think so, preferring to wait to reserve goods until after customers put their money down, says Lora Cecere, research director for enterprise and supply chain management at the GartnerGroup (US). Completing an order and checking out puts an item on hold in the inventory management database and prevents other people from ordering it. This may be good for the company, since it doesn't tie up ­inventory unnecessarily. But it is problematic for the customer who takes a little too long to complete an order and gets to the checkout only to find an item that was in stock is now out of stock.

To avoid disappointing customers, some companies hold inventory when the customer puts it in the shopping cart, and then cancel it if the customer leaves the Web site without paying. Different cancellation rules can be set up for different customers. Victoria's Secret's Web site saves registered shoppers' carts for at least two days; anonymous shoppers' carts are saved for varying lengths of time, depending on how much space is left in the database and how long the cart has been abandoned.

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