The escalating growth of e-commerce, rising consumer expectations and amplified demand for same-day deliveries will revolutionize the ways the retail supply chain does business.
Here’s a peak at some of the factors expected to impact the retail supply chain.
1. E-commerce, m-commerce
Not surprisingly, two of the key trends that industry experts point out are the continued expansion of e-commerce and the rise of mobile commerce, or m-commerce. Gerry Mercure of Dynamex points out that e-commerce has been growing at 14 percent per year. He expects that trend to accelerate in 2017 and beyond.
“This segment is here to stay and it promises to be a bigger component of what we do,” he says. “E-commerce has shifted things. It’s the consumers’ expectations that are dictating shippers’ requirements here. Consumers expect things to arrive fast and free. We think of this as consumer-driven logistics.”
M-commerce, the mobile device version of e-commerce, will similarly continue to have a dramatic impact on the retail supply chain. “Mobile devices will be raising consumer expectations even higher,” Mercure continues. “M-commerce is what millennials especially want to be able to do. They want to order something on their phones, get it from anywhere in the world and have it delivered wherever they are.
“Millennials value their time differently. They aren’t content to wait for a package at the office when they want to leave to make it to their son’s softball game. They expect to be able to change the destination of that package while it’s in transit so it meets them at the softball field. And they think they should be able to make that change in destination from their mobile devices.”
2. Home delivery
The rise of e-commerce has shifted the power to the consumer. Players like Amazon and Wayfair have raised consumers’ expectations of the final mile and given them that power.
Today’s final mile is designed to meet consumers’ rising expectations. “Once these expectations have been created, we can’t go back,” Mercure sums. He points to end-to-end visibility of the shipment as the most obvious consumer expectation that those in the retail supply chain must respond to.
“The big online retailers and the big delivery providers have set that expectation high. And when it’s met, it’s a more positive experience for the customer.”
As such, other industry experts expect the continuing trend toward providing retail home delivery at cost-effective rates as another key consumer expectation that must be met. Retail home delivery will continue to explode in 2017 and carriers need to find a viable solution to fully service this vertical or completely stay away from it, because there is no in-between.
3. Home try-ons
Reverse logistics is another process that those in the retail supply chain have to master in 2017. Consider Zappos, whose customers order several pairs of shoes, figure out which pair fits and then send those that don’t back. The cost of handling this reverse logistics process is significant for manufacturers and retailers, who are going to have to figure out how to make this work, cost-effectively, all around.
Shippers are offering same-day in response to consumer demands according to Gerry Mercure. “They are insisting upon faster delivery options and they still expect a consistent delivery experience,” he says. “Amazon, Google, Jet.com and others have utilized same-day distribution to reduce order-to-delivery time, gaining them a strategic and competitive advantage.
“The consumer’s mantra is: ‘I need it now: I want it now.’ That lends itself to a more on-demand delivery model.”
With each passing day, thought leaders are seizing on this emerging reality. It’s why already we see a segue into having a push model for delivery: Customers order something, get it in 4 to 5 days, and are ready because the supply chain was alerting them to its status at each checkpoint along the way.
Consumers are pulling. Their demands are shaping the delivery options we must provide. Those in the retail supply must adjust their business models to the way the consumer is acting
