Online shopping’s share of U.S. retail sales has continuously grown year over year in the past few decades, jumping from 0.6% of all retail sales in 1999 to 8.4% in late 2016. This trend has necessitated an increased focus on eCommerce when supply chain management strategies are designed and implemented in order to meet the demands of online shoppers.
In order to keep up with eCommerce’s growing segment of retail sales in the United States, professionals in the business of supply chain management are pivoting to secure and maintain the necessary (but limited) warehouse space, meet customer service demands, and increase overall efficiency through the use of emerging technologies. As customer desire(s and experiences shift, so must shippers’ practices.
Increased Customer Service Demands
Consumers’ increasing preference for online shopping experiences has shifted the burden of delivering quality customer service experiences away from brick-and-mortar establishments and towards supply chain management professionals and their business practices. Customers – be they individual shoppers or commercial clients – expect their online purchases to arrive with appropriate speed and accuracy at low costs.
The responsibility falls on logistics professionals, who must ensure the right goods arrive to their respective destinations with maximum efficiency. To meet the demands and needs of online consumers, shippers can (and increasingly do) turn to strategic logistics management to find ways to lower shipping costs, reduce wait time between purchase and delivery, and avoid filling orders incorrectly. It should come as no surprise that eCommerce leader Amazon utilizes 20 logistics providers, and many in the online shopping space are jumping on board to do the same.
Securing Warehouse Space
The trend towards online retail experiences affects not only how supply chains are managed, but where and how inventory is housed between production and delivery to consumers. As shippers navigate the current transitory state from brick-and-mortar retail to eCommerce, an important discrepancy in the current commercial real estate market emerges: there is a plethora of available, often unwanted commercial retail space, but a limited supply of warehouse space.
According to Jonathan Petersen, an industry analyst at investment bank Jeffries, there simply aren’t enough warehouses in America to keep up with the burgeoning eCommerce movement. “Retail sales are not in decline,” Petersen notes to CNBC, “but rather shifting towards e-commerce retailers who require large amounts of warehouse space.” STAG Industrial CEO Ben Butcher also told CNBC that “As retailers reconfigure their supply chain to accommodate the shift in consumer behavior, the requirement for warehousing space will increase substantially.”
As shippers adapt to service online shoppers and face a limited supply but increasing need for warehouse space, they can turn to logistics managers and technologies to maximize the efficiency with which they operate in the space available to them.
The popularity of using new technologies to improve supply chain management continues to rise as consumers increasingly rely on tech for their shopping needs. With warehouse space limited and customer service expectations reaching new heights, strategists can rely on both hardware and software solutions to improve supply chain management practices.
For example, the use of automated technologies in warehouses helps cut down on lag time during the shipping process. Inventory management is one of the major challenges of warehouse management, and shippers are increasingly turning to Internet of Things or “IoT” to reduce the room for error that arises when attempting to match the goods sold online with the ones available in inventory. IoT allows different inventory management systems to communicate with each other in order to better optimize and streamline the supply chain.
Strategic logistics managers often look to implement technologies rooted in the IoT to help shippers meet increasing customer service demands from online shoppers, and to alleviate the efficiency-related issues that can result from a limited supply of physical warehouse space.
Adapting your Supply Chain
With online retail sales projected to increase through 2017 and beyond, adaptation is key for shippers to keep up with the demands and challenges of servicing eCommerce retailers. As online shopping grows in popularity, shippers continue to assume greater responsibility for the quality of customer service and face limited warehouse space availability.
Strategic logistics – including the use of new technologies – are helpful and sometimes even crucial to shippers’ effective transition from servicing brick-and-mortar retailers to participating in the online retail boom. The shift towards eCommerce will continue to heavily influence supply chain management practices, whose practitioners would be wise to look to logistics partners for troubleshooting and support in order to keep up with the evolution of retail.
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