Rebuilding Seller-Centric E-Commerce Trust

Situation

A leading home improvement retailer faced challenges managing inventory across 30 million store-SKU combinations. Flawed demand planning and an outdated inventory system led to:

• Rising lost sales due to stockouts.
• Escalating holding costs from excess inventory.
• Legacy systems based on unsuitable assumptions compounded inefficiencies, especially for slow-moving items tailored to diverse customer needs.

Challenge

Key inefficiencies emerged from the retailer’s complex demand patterns:

• Seasonality Variations: Product categories showed significant demand shifts by season.
• Customer Segments: Distinct behaviors between regular shoppers and bulk-buying contractors influenced demand.
• Supplier Variability: Erratic lead times disrupted stock consistency.
• Temporal Demand Changes: Weekday and weekend shopping patterns further complicated planning.

Approach

Mu Sigma developed a three-pronged strategy to enhance the seller experience:

1. Defining Bad Selling Experiences (BSE)
   • Analyzed historical buyer-seller interactions to construct a global BSE metric applicable across diverse markets.
   • Monitored the metric weekly to evaluate the impact of platform-wide initiatives.
2. Proactive Abusive Buyer Mitigation
   • Designed a heuristic-based rule engine to detect and automatically suspend abusive buyers, ensuring a safe environment.
3. Seller Trust Score & Refund Campaign
   • Introduced a trust score metric, leveraging sellers’ transaction history.
   • Rolled out a refund campaign for high-trust sellers, reducing friction and enhancing loyalty.

Impact

• $2M increase in revenue for small businesses, boosting seller success.
• 2,000 abusive buyers automatically suspended, fostering a safer platform.
• 10% reduction in seller detractors, improving seller satisfaction.