Ghostbusters unite: How to combat the ghost economy

We know that the ghost economy leads businesses to lose an average 11.7% of sales every year, totaling a huge global cost of $1.75 trillion annually. Then there’s the detrimental impact that issues like stockouts have on customer loyalty and profitability.

The question is: How can you avoid it? The first step is understanding the key drivers of the ghost economy before solving problems of scale with the right tools.

The ghost economy is costing you $1.75 trillion!

For more on the cost of the ghost economy to your eCommerce business, download our free eBook

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What’s driving the ghost economy?

Tangible culprits of the ghost economy – such as defective merchandise, spoilage, theft, and so on – are easy to spot for most businesses, and as such, are likely to be considered the biggest problems that need to be solved to combat lost sales and profitability.

However, it’s largely forces that you don’t see, or the tools you lack, that are responsible for much of what the ghost economy is swiping from you. In fact, poor business management practices alone are responsible for $728 billion in global losses every year:

  • $220 billion lost due to poor forecasting
  • $223 billion lost due to data disconnects
  • $285 billion lost due to “bad processes”

What’s causing the prevalence of bad business management? Simply put, businesses aren’t investing in the tools needed to accurately manage inventory and their supply chain. Let’s look at the numbers:

  • 38% of businesses lack order, inventory management, POS, and 3PL software
  • 34% of businesses lack necessary software integrations
  • 28% of businesses lack inventory visibility across stores, warehouses, and vendors

The result? Ineffective processes led by guesswork and prone to human error, leading to all the hallmarks and negative impacts of the ghost economy.ebook25-blog_8

How to transform your business and combat the ghost economy

Avoiding stockouts, overstocks, and preventable returns is a good starting point to combat the effects of the ghost economy, but it doesn’t always address the root cause of the problem.

To future-proof your business against the ghost economy and transform at scale , you must first solve problems of scale. Do an audit of your business practices and ask the following questions:

  • Do I have visibility over my entire supply chain across multiple sales channels and locations?
  • Can I manage my key business data from a single location in real time?
  • Do I have a reliable system in place for forecasting demand?
  • Are my business decisions based on data rather than guesswork?
  • Do I automate key processes to reduce manual labor?
  • Are my business processes scalable?

If you answer ‘no’ to the questions above, your business is lacking the critical framework needed to avoid the effects of the ghost economy and grow sustainably.

The importance of mastering inventory management in solving problems of scale can’t be understated. Utilizing smart inventory control tools enables full visibility over inventory data – including real-time quantity and location data – so you can make informed decisions about reordering and stock management to avoid overstocks and stockouts (some of the biggest contributors to the ghost economy).

Intelligent reporting and forecasting capabilities also empower you to make smarter decisions about order routing and fulfillment, and to more accurately plan for the future. What’s more, enabling supply chain automation with the right software reduces or eliminates manual work and frees you to focus on what matters: growing your business.

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