How The Supply Chain Enables Successful Retail And e-Commerce

Introduction

Hi, my name is Deanna Kaufman and I'm a managing consultant with FedEx Customer Solutions. This division of FedEx specializes in assisting customers with their supply chain challenges and objectives.

The Importance of Supply Chain in Retail

Supply chains play a critical role in enabling successful retail ventures. According to NRF research, logistics decisions are intrinsic to the shopping experience. Nowadays, consumers prioritize shipping speed, cost, delivery time, and return processes. If retailers fail to clearly communicate these aspects, it can lead to cart abandonment and reduced customer lifetime value.

Key Supply Chain Challenges

Retailers face multiple supply chain challenges:

Determining the right shipping speed.
Establishing appropriate pricing thresholds.
Designing efficient returns processes.
Providing visibility and control over the delivery experience.

Failure to address these areas risks poor customer experience and decreased satisfaction.

Best Practices for Retailers and DTC Brands

To meet shopper expectations, retailers and direct-to-consumer (DTC) brands should:

Understand what their customers want in terms of logistics.
Be transparent about costs.
Provide an uncomplicated returns process.
Ensure visibility around shipping and delivery.

Outsourcing vs. Self-Managed Supply Chains

The decision to outsource or self-manage a supply chain depends largely on its complexity. Start-up retailers may find it easier to outsource due to limited know-how and systems capabilities. Conversely, larger retailers with complex supply chains might benefit from managing it themselves or adopting a hybrid model.

The Evolving Face of Last Mile Delivery

Last mile delivery, the final leg of the supply chain, is the most challenging and costly. Innovations like autonomous vehicles, delivery synchronization, and convenient pickup locations aim to reduce costs and increase delivery efficiency.

Trends Impacting Supply Chain

The top trends driving changes include increasing shopper demands for speed, cost-effective shipping, and greater delivery visibility. As disruptive technologies emerge, customer expectations will continue to rise, pushing towards near-instantaneous shipping.

Future Innovations

Over the next two years, innovations such as autonomous vehicles and FinTech advances are likely to dominate. Simplifying payment methods through FinTech can accelerate sales velocity, further impacting the retail landscape.

Impact on Businesses and Consumers

To stay competitive, businesses must integrate these technologies into their operations. Many legacy retailers will need to overhaul their IT systems to build more efficient supply chains.

For consumers, the increased convenience will make online shopping more appealing for quick purchases, while in-store visits will focus on brand experiences.

Key Drivers of Cost

Handling and distance are main cost drivers in outbound shipping. To reduce costs, retailers should consider:

Getting closer to the customer geographically.
Implementing more efficient scalable systems.
Improving returns processes, possibly by outsourcing and consolidating returns.

Keywords

Supply Chain
Retail
Logistics
E-Commerce
Shipping Speed
Returns Process
Customer Experience
Autonomous Vehicles
FinTech

FAQ

Q1: What are the critical supply chain challenges for retailers? A1: The key challenges include determining the right shipping speed, pricing thresholds, efficient returns processes, and providing visibility and control over deliveries.

Q2: How can retailers improve customer satisfaction through their supply chain? A2: Retailers should understand customer preferences, be transparent about costs, simplify the returns process, and ensure visibility around shipping and delivery.

Q3: Should retailers outsource their supply chain or manage it themselves? A3: It depends on the complexity of the supply chain. Start-up retailers might benefit from outsourcing, while larger retailers with complex needs may prefer a self-managed or hybrid approach.

Q4: What are the main trends impacting the future of retail supply chains? A4: Increasing consumer demands for speed, cost-effective shipping, greater delivery visibility, and the adoption of technologies like autonomous vehicles and FinTech are key trends.

Q5: How can retailers reduce supply chain costs? A5: Retailers can reduce costs by getting geographically closer to customers, implementing efficient scalable systems, and improving or outsourcing returns processes.