E-commerce has accelerated in 2020 as many retailers found themselves forced to close their doors for a large portion of the year due to government stay at home orders related to the Covid-19 pandemic. What's more, the state of readiness to deal with this challenge varied between countries. For instance, Germany’s focus on investment in e-commerce infrastructure helped small businesses continue to serve customers throughout lockdowns whereas in France many were ill equipped and took time to catch up. A survey found that organizations estimate that e-commerce in 2020 will account for half of all sales, up from approximately one third a year ago. Thanks to the explosion of e-commerce over the past decade, retailers are having to provide new innovative services to differentiate their products in an increasingly democratized selling landscape. This phenomenon is both caused by, and a catalyst for, shifting consumer buying preferences, reflecting the increasingly connected and globally-oriented world we live in.
E-commerce channels have their fair share of benefits and drawbacks. Although retailers benefit from a reduction in costs associated with store space, cash registers, and all physical elements of an in-store experience, the downside is that more space is needed in warehouses or distribution centers to store inventory. Interestingly, a recent survey of 200 retailers across Europe and North America found that 52% felt that their e-commerce potential is limited by their logistical capabilities. This has prompted more collaborations with third-party logistics providers and warehouse pick-and-pack distributors, helping to increase capabilities at a lower cost. For customers, choosing brands relies less and less on in-store experience, with delivery experience taking its place. Retailers must offer increasingly short delivery timeframes in order to remain competitive; for example same-day delivery.
This larger focus on customer satisfaction in supply chain design has led to retailers implementing omnichannel operations. Customers now expect faster, cheaper and better service, and organizations must overcome the complex challenge of optimizing the balance between inventory, transportation and labour costs. At the same time, customers no longer perceive a difference between retail channels and expect to be able to interact with them all in the same way. Demand is growing for seamless shopping experiences regardless of which channel a customer chooses. For example a customer may want to research products on their mobile, purchase on their laptop, receive the goods at their home, then have the ability to return them at a physical store if required. The ability for retailers to provide a way for customers to easily interact between multiple channels is also a great asset in times of disruption.
This omnichannel approach can create significant supply chain complexity. Localized distribution centers containing a wide range of goods can speed up shipping times and reduce transportation costs. Alternatively, drop-ship relationships between retailers and suppliers are increasing, allowing retailers to have suppliers send goods directly to end-customers, without ever needing to hold the stock. Some retailers employ both of these strategies, increasing supply chain complexity further still. With so many parties potentially involved, robust collaborative systems, processes and operational visibility are critical for ensuring e-commerce supply chains cope with the strain of online purchase growth, especially during high pressure buying seasons such as Christmas, Black Friday/Cyber Monday and new events like ‘Singles Day’ in China.
Using real-time transportation visibility to optimize supply chain operations can benefit e-commerce channels in several ways. By optimizing the last-mile delivery component alone you can retain, on average, 60% more customers and transform 40% more into advocates. Automated delivery notifications to customers, real-time inventory tracking, streamlined transportation activities and optimized warehouse processes are all benefits of visibility solutions that have a material impact on customer satisfaction. Having more accurate predictions of arrivals and lead times allows for smaller inventory buffers, freeing up cash flow. Plus, the precise recording of delivery and waiting times thanks to geofencing and GPS location data, lets you accurately measure delivery performance and stay up to date with carrier network activity.
Wherever your business is on its supply chain visibility journey, the team at Shippeo can help you ensure you’re maximizing the value of your logistics operations, to help boost profitability, service levels and overall reputation. To learn more about the advantages of real-time visibility for e-commerce and omnichannel retail operations, get in touch with our team of experts today.
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