After Cyber Monday and Black Friday witnessed record-breaking online sales, the supply chain is bracing itself to welcome 2021 on a high note. Let’s read the complete story.
The global pandemic has caused a paradigm shift in retail shopping, with most in-person experiences being replaced by online shopping options in 2020. As Cyber Monday and Black Friday witnessed record-breaking online sales, the supply chain is bracing itself for the upcoming holidays. As the pandemic has opened up Pandora’s box for this new-aged retail economy, supply chain management tools play a significant role in satisfying customers and driving sustainable sales success.
Supply Chain Challenges for the Holiday Season
Enterprises and businesses have spent months preparing for the changing ecommerce world. As the pandemic forced the consumer market to opt for an online market, companies have been investing in their supply chains to ensure that they have sufficient stockrooms of the right inventory. Businesses have also put in additional efforts to ensure that delivery providers send out packages in time to consumers’ doorsteps with ease.
However, with online spending going berserk this holiday season, the supply chain faces new challenges. The pandemic has made it difficult for businesses to predict or forecast what the customers will buy. In contrast, commerce warehouses face a stiff challenge of maintaining social distancing amongst the working staff. At the same time, some prominent delivery providers such as UPS and FedEx see a spike in demand as shipping costs rise.
“We face a different sort of problem today than early in the pandemic when the issue was within the retailers’ warehouses, and the question was: Were they geared up enough to be able to pick (items) fast enough and get it out to the shippers?”, said Michael Brown, a partner in Kearney’s consumer products and retail practice.
“Then, the issue became product availability: Was it in stock, and could companies really ship the items that the consumer had ordered?” Brown said. “Once they got over that hurdle, I think we’ve seen a prolonged period of successful shipping. But coming into the holidays, we’re going to have all of the above problems combined into one”.
Retailers Must Be Ready for Multichannel Management
As online sales have taken control over the past few years, online shopping and brick-and-mortar solutions have been working in synchrony – where online orders are being delivered to potential customers, and location-based advertisements are offering in-person shopping when the customers enter the intended shops.
However, the COVID-19 pandemic has made this retail shopping process stressful. According to a recent study from the United Nations Conference on Trade and Development, “the pandemic has accelerated the shift towards a more digital world and triggered changes in online shopping behaviors that are likely to have lasting effects.” Survey data shows that ecommerce sales of cosmetics, electronic goods, and health-related supplies have garnered significant traction. And the customer responses to these sales indicate that these changes will last in the post-pandemic world.
Therefore, multichannel management is a new challenge for new retailers making a move to ecommerce. Brands today need to deliver a seamless experience to their customers by ensuring consistent pricing, accurate inventory reporting, and reliable delivery frameworks. This can be achieved by retailers if they can manage a variety of customers on different channels, such as users familiar with online purchasing and social media interactions and brick-and-mortar customers who prefer the more human touch at in-person stores.
Keeping Pace With the Changing Retail Landscape
As the retail landscape continues to move into unexplored arenas, supply chain technology needs to keep pace in key areas, such as:
Pandemic restrictions have seen multiple single-source supply chains dry up. As the retail brands have now pivoted themselves at multiple locations – the multisource suppliers need a way to manage these retailers to prevent over- or under-supply volumes.
As 62% of OEMs have experienced production delivery or time-to-market delays due to the COVID-19, stronger resilience strategies are crucial for ensuring quick recovery and keeping customer delivery timelines on track. This real-time visibility into both current and incoming stock levels can be facilitated by using robust supply chain management tools.
Digital Process Automation
Customers are evolving with time – they now demand more transparency and product traceability for a better-customized shopping experience. Such user customization requires a supply chain tech capable of automating key data collection, storage, and updating both sides (i.e., customers and suppliers) simultaneously.
Adaptive Supply Chain Technologies
As the supply chain adapts to the new normal, it is more critical for brick-and-mortar retailers to navigate the online-first shopping options. However, there’s no one-stop solution to meet all the supply chain demands. Instead, companies must employ the right kind of software and hardware to meet specific operational needs.
With physical solutions at play, companies like Datalogic and Honeywell provide ample options such as handheld tablets and scanning solutions capable of capturing inventory data and integrating this information with larger supply chain processes. This facilitates the creation of real-time reports that are relevant and help in detailing current stock levels.
Coming down to software solutions provided by technology leaders such as IBM and Oracle, the solutions are designed to provide in-depth analytical insight around evolving trends to help companies better match supply levels to anticipated demand. Such software solutions are critical as they help manage inventory levels during high-demand shopping events such as Black Friday and Cyber Monday. Further, these solutions also assist in creating sustainable supply models capable of withstanding current and post-pandemic public health requirements.
Supply Chain Gears up for Christmas and New Year
As Christmas and New Year’s Eve are around the corner, retailers are trying to manage shoppers’ expectations. Shipping cutoffs for Christmas are earlier than ever, and many websites are cautioning customers of the possible delays in delivery.
American lifestyle retailer, Abercrombie & Fitch, insists that shoppers order by December 4 so that their items can be received by Christmas with standard shipping facilities. West Elm, a furniture chain, sent out an email to all its customers, which read, in part: “The postal services are predicting one of the busiest shipping seasons ever. To ensure your items arrive on time, we encourage you to place your orders extra early.”
“This is a time when stores matter,” said Abercrombie CEO Fran Horowitz. “What we’re going to do is shift our marketing, post (December 4) from just shipping delivery, to pick up in stores and pick up curbside.” According to Adobe Analytics, December 11 is slated to be the final day for cheaper shipping this holiday season, with shipping costs peaking from there at 14.6% higher than the rest of the holiday season.
“We know that 97% of shoppers this year tell us that they plan on shopping online,” said Harley Finkelstein, president of the ecommerce platform Shopify. “Black Friday-Cyber Monday shoppers in the U.S. plan to spend, on an average, about 23% more than they were going to spend last year.”
About 1+ million merchants, including direct-to-consumer brands such as the shoemaker Allbirds and candle maker Homesick, have reported $2.4 billion in Black Friday sales, which is 75% up from sales figures in 2019, Shopify said.
“A number of operational factors have to align for retailers to get products to the consumer on time this holiday,” said Michael Brown, a partner in Kearney’s consumer products and retail practice. “Only time will tell which consumers reacted and shopped early, and which ones are still going to be waiting for their packages on New Year’s Day.”
As Cyber Monday and Black Friday 2020 garnered the biggest online sales ever, the trend seems more likely to continue in the years to come. Ecommerce and brick-and-mortar retailers are now exposed to the pandemic purchasing, and sustained spending changes opted by the consumer market. This demands more agile and adaptive supply chain management technologies to meet evolving consumer demands.