E-commerce and electronic retailers, irrespective of their size and geographical reach, are becoming global local with an increasing shift from one-size-fits-all approach. Thus, in order to create value, it’s necessary that the delivery and supply chain that play a hand in gloves role for this sector need to step up.
Hungry customers sending strong demand signals are pulling brands into new locations and expanding into already existing markets stimulating a debate on how to balance the global versus local buyers. Nonetheless, with an astonishing rise of customers preferring to shop the digital way, companies are pressed for more customisation at every opportunity, more transparent and tailored delivery options within much shorter time span. Inadequate warehouses, poor tracking systems, lack of skilled and reliable workers, and limited cargo options are leaving a dent on the future of e-commerce. Under these circumstances, supply chain flexibility, agility and technological convergence turn out to be critical building blocks for the future of e-commerce driven by the omni-channel paradigm.
Logistical capabilities are confronted when unprecedented demand come up during festive seasons and local big buying days, which in turn may hit the bottom line for e-commerce. UPS, for instance, lost nearly $180 million in operating profit due to unexpected peak-season demand patterns. Doing a better job on peak volume and resolving growth bottlenecks has turned out to be tough task even for the e-tail magnets, however, the fruits can be sweeter as Alibaba experienced when they took just two hours to reach $2 billion in sales on Singles Day, and by day’s end, reported sales surpassed $9 billion. The implication is that global e-commerce need to have scale on demand and operate an ultra-tight supply chain as soon as they enter these markets.
Shipping from nearby store locations, rather than exclusively from warehouses or fulfilment centres is becoming the norm with the trend of same day or within hours delivery on all days. To gain from this disruption, companies like Amazon has partnered with PS and DPD for Sunday delivery in the US and UK, respectively. The result is an ascending number and dimensions of the warehouses and fulfilment centres, which in turn brings about more operational complexity in order fulfilment and difficulty or inability to coordinate and synchronize creating barriers for end-to-end supply chain processes. Elimination of functional silos needs to be implemented with the help of supply chain and logistics software platforms to incorporate greater convergence and functionality into their systems. This will create completely integrated and streamlined platforms. This will also help in removing wastes from supply chain by reducing the dependency on intermediaries.
Though all this sounds feasible for the biggies, for SMEs bringing in such technologies requires huge investments. Anticipatory shipping or crowd sourcing of technology enabled services or third party logistics may bring the world closer to them and translate the benefits from localisation.
Putting together a demand-driven supply chain anchored in real time flow of information can be achieved by location-specific and customer-centric services. This will enable digital commerce companies distinguish themselves by recognising the desires, values and behaviours of regional markets, enhancing customer engagement and harnessing the potential that e-commerce and digital retail can bring.
Author: Debaleena Debnath
Debaleena is a digital media consultant @ speradigital.
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