Addressing Contemporary Inventory and Sustainability Dilemmas through the Synergy of Marketing and AI

The current environmental challenges we face encompass the aftermath generated by the “fast fashion” industry. Every year, consumers purchase and discard millions of clothing items, leaving behind a trail of water pollution and carbon emissions. Additionally, a surprising volume of garments are produced only to be disposed of prior to even reaching the market.

Alongside the repercussions of fast fashion, retailers grapple with intricate inventory management predicaments, which have been exacerbated by recent trends. Notably, disruptions in the supply chain due to the pandemic led to excessive ordering of merchandise by retailers. Now, with ships and containers having unloaded their contents, retailers confront an excess of products, often on the brink of becoming obsolete or “perishable.” This situation arises as the economy heads towards a recession and consumers hesitate in their purchases.

Returns are being declined by numerous retailers, and customers have come to anticipate substantial markdowns as store shelves and warehouses need clearing. The industry is ill-equipped to handle the escalating costs and environmental ramifications linked with the increased demands on warehousing and transportation for surplus inventory.

As a consequence, well before the arrival of Black Friday and Cyber Monday, consumers find themselves encountering exceptional deals. Many stumble upon unadvertised specials, which underscore retailers’ readiness to offer discounts at a substantial loss just to clear out existing stock.

This asymmetrical balance between supply and demand necessitates rectification. Merchants must uncover methods to not only address existing challenges but also to enhance the management of future retail cycles. Many are turning to enhanced inventory management practices and artificial intelligence (AI), in addition to exploring previously overlooked avenues such as leveraging marketing technology to bolster sustainability outcomes.

The Intersection of Supply Chain Woes and Sustainability

A significant convergence exists between supply chain problems, including the current stockpile surplus, and sustainability concerns. Sustainability extends beyond the waste linked to manufacturing and extends to the environmental impact of shipping, warehousing, and logistics.

Unsold products languish in warehouses, occupying space while awaiting disposal. Energy and resources are squandered as this inventory necessitates tracking, packaging, loading, boxing, and sometimes even shuffling around to accommodate other items. Upon eventual liquidation, transporting these goods exacts a considerable carbon toll, and substantial volumes of paper and plastic waste are generated in the form of packaging materials. Despite public outcry and emerging legislation, many brands still resort to incineration or other disposal methods for unsold inventory. Every stage in the process of liquidating unsold products carries notable environmental consequences and financial implications.

Transforming Challenges into Prospects

Nonetheless, opportunities emerge at the junction of supply chain difficulties and sustainability. Brands and retailers must devise strategies to be more responsive to consumer preferences in order to facilitate product movement and prevent such predicaments from arising.

Historically, marketing was seldom considered a crucial contributor to improving sustainability outcomes within an organization. However, marketing has the potential to enact substantial change in inventory optimization and sustainability by enhancing the visibility of products in a manner that resonates with customers. Often, the marketing production cycle spans an extensive duration, making it unrealistic to modify products featured in editorial campaigns due to production timelines. Marketers usually finalize campaigns for a retail season well in advance, sometimes even years ahead.

The resource-intensive creative process for crafting a straightforward ad campaign renders it impossible for marketing to provide in-depth attention to every single product. Consequently, marketers must prioritize certain products for comprehensive treatment, inadvertently leading to a self-fulfilling prophecy where products that receive extensive marketing attention sell better, leaving the remainder of the inventory lagging.

Regrettably, most retailers and brands lack the capacity to create compelling marketing assets for every individual product, let alone dynamically update marketing materials based on supply conditions. This includes removing or replacing products that have gone out of stock and highlighting those in need of greater visibility. Often, products requiring a boost are the first to be discounted and put on sale, making marketing an ineffective tool for stimulating sales.

These products might not necessarily be inferior; the adage “a dog is a dog” holds true only about 15% of the time. In most instances, enhancing a product’s visibility and offering curated inspiration through marketing materials can enhance its sell-through long before resorting to discounts or liquidation. Consequently, marketing technology that enables rapid, inventory-aware updates without protracted production cycles is pivotal to bolstering sustainability outcomes through marketing.

Technology can also be harnessed in the realm of inventory management to enhance sales while diminishing the environmental impact of fulfillment. Typically, editorial content production occurs long before products are available for purchase, making it impossible to predict which warehouse each product will be stored in. If a brand or retailer manages to encourage a multi-item purchase, the marketing campaign might inadvertently increase the probability of a “split shipment,” where products purchased simultaneously are dispatched from distinct warehouses, in separate boxes, and transported by separate carbon-emitting vehicles.

Real-time adaptable marketing content enables the showcasing of products from the same location in high-value editorial campaigns, and these materials can be dynamically updated as stock levels fluctuate. Similarly, this agile marketing approach, informed by inventory awareness, empowers brands to capitalize on localized purchasing trends, which may entail higher demand in one region compared to another.

Harnessing Technology

Marketing technology tied to inventory can also facilitate more informed decisions regarding initial product offerings. When campaign assets are dynamically composable, the technology inherently possesses knowledge about the contents of warehouses at any given time. This insight enables robust analytics that guide merchants and buyers on which products are performing well.

Moreover, this approach allows for diverse campaigns, aiding brands in understanding customer preferences even before introducing new products. Although attaining a perfect alignment between all manufactured products and market demand might be unfeasible, technology, including insights into supply chain data, enables merchants to achieve a closer alignment more frequently. This, in turn, results in increased sales and a higher likelihood of optimizing inventory levels.

In an ideal scenario, technology collaborates with marketing to foster inventory optimization and environmentally conscious stock management. To achieve this, brands should continue focusing on creative vision through human-powered creative teams, while entrusting automated technology solutions with the large-scale production of marketing materials, facilitating real-time adaptable content to drive sales.

In this framework, merchandising teams leverage marketing materials as a lever, rather than resorting to immediate discounts or accumulating inappropriate stockpiles. This is where the synergy of marketing and AI can have a substantial impact, benefiting not only retailers and brands but also the environment.

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