Back E-commerce - How to build a robust supply chain
In 2020, retail e-commerce sales worldwide amounted to 4.28 trillion US dollars. By 2024 those revenues are predicted to grow to 6.38 trillion US dollars (1 - Statista). The growth of e-commerce is already having a profound impact on both inbound and outbound supply chains. And while the growth of e-commerce is not a new phenomenon, the global pandemic has strongly accelerated the widespread adoption of e-commerce by consumers all over the world. This has radicalised supply chain management where companies need to pivot towards a “factory to consumer” mindset.
Customer expectations are far more demanding for ordering goods online compared to just a few years ago. Consumers are used to purchasing the product of their preference, from a choice of multiple shopping platforms, plus fast and free delivery to their doorstep or a collection point. In addition, they also expect a hassle-free return option.
It’s this service demand which has driven major changes in the requirements and designs of e-commerce supply chains.
Building supply chain resilience from “factory to consumer.”
The challenge for e-commerce as a sales channel is facilitating service and cost choice for consumers whilst delivering a flawless Customer eXperience (CX). Fulfilment needs to deliver on high performance standards, while being agile enough to pivot with evolving consumer behaviours. Having the right inventory in the right place to respond to these consumer demands but also the logistics framework in place to optimise the movement of goods means looking beyond the last mile. Companies need to adopt a “factory to consumer” approach throughout the supply chain.
This requires a high degree of end-to-end information visibility. Data must be timely and accurate. Throughout the supply chain, information systems and operational processes must be connected and harmonised to enable agile response to orders at a granular level. But they also need to offer a strategic overview for supply chain and e-commerce to identify opportunities for improving service and costs and react to rapidly evolving markets and long-term growth.
Demand planning is no longer simply predicting consumer patterns in terms of volume but also understanding where to position inventory to be closer to customers for final delivery. When a well-known sporting goods company quickly shifted focus to e-commerce at the beginning of the pandemic, they went through a process of clearing inventory by cancelling factory orders, offering discounts and shifting products destined for stores to fulfil orders online (2 - FM Magazine). Understandably, this type of transformation risks impacting the brand in the marketplace in terms of price and product availability. For Nike, it paid off, and they outperformed their main competitors by being able to respond faster, early on in the pandemic. They proved that creating a leaner e-commerce supply chain with a high-quality customer experience starts at origin, and the agility to redirect upstream inventory to the place to support this shift in sales channels.
The role of an e-commerce supply chain partner
End-to-end visibility is one key element in building an e-commerce supply chain that responds to consumer demand and creates positive purchase experiences. Working with a suitable supply chain partner for your business at the very least offers operational excellence, but forward-thinking partners generate the bandwidth to scale up without increasing headcount.
In the case of the sporting goods company, they recognised the risk that a fragmented supply chain is a less agile supply chain. They needed to respond to rapid changes in consumer behaviour and realigned the entire supply chain to do so. This requires a singular view on the end-to-end supply chain, and close collaboration with execution partners (suppliers, logistics services providers) to re-plan orders and flows on the fly, sometimes changing shipment modes and speeds to meet demand.
A reliable e-commerce supply chain partner with an established logistics network and expert team offers unique knowledge and experience. As well as facilitating the systems and processes that need to be in place, they drive the development of these systems to match your customers’ needs now and into the future.
For example, there is a better chance of balancing cost and service while offering flexibility in inventory or location by working with one single fulfilment partner and one freight partner with strong capabilities in managing “last mile” operators.
This collaborative style of supply chain leadership should be a core behaviour of any supply chain partner. E-commerce businesses come in all shapes and sizes, from new entrants to established experts and traditional companies expanding into the sector. Therefore, logistics partner expertise plays a crucial role in delivering a robust solution and enabling agility and growth at every step.
Customer-centric e-commerce approach
As e-commerce trends accelerates towards putting new customer needs firmly at the centre of the experience rather than the product, a solid physical supply chain is clearly the backbone for achieving this and creating customer loyalty. The implications are serious if they don’t: research has shown that 58% of consumers will stop doing business with a company because of poor customer experience (3 - Oberlo).
We see fashion retailers like Top Shop blending online and offline shopping with mobile-friendly functionality, engaging online content and interactive social media to connect with customers across multiple touchpoints. Customers now expect this. It is now more noticeable when a company does not offer a range of delivery options and costs plus real-time delivery tracking at their fingertips.
Planning for the future
The benefits of an agile inbound and outbound e-commerce fulfilment operation have become all too clear. Putting the customer experience in the centre of the business requires companies to build supply chains with an end-to-end approach with the right systems in place. Strategic partnerships with an experienced supply chain partner will be crucial to emerging as a winner in the continued growth of the e-commerce sector.
More in-depth information (source links)
- Statista: Worldwide retail e-commerce sales
- FM Magazine: Coronavirus supply chain disruptions
- Oberlo: E-commerce statistics