Published on

How The Supply Chain Enables Successful Retail And e-Commerce

Introduction

In the current retail landscape, the supply chain plays a pivotal role in enabling success for businesses. As expressed by Deanna Kaufman, a managing consultant at FedEx Customer Solutions, understanding logistics decisions is integral to the shopping experience. Shoppers often weigh factors such as shipping speed, pricing, and return policies when making purchasing choices. A lack of clarity in these areas can lead to cart abandonment and dissatisfied customers, ultimately diminishing customer lifetime value.

Key Supply Chain Challenges

Kaufman identifies several challenges retailers face in their supply chains, including:

  • Determining the appropriate shipping speed.
  • Establishing effective pricing structures.
  • Designing an efficient returns process.
  • Offering visibility options to customers.

For retailers, understanding customer preferences regarding logistics, from outbound shipping to returns, is crucial. By closely engaging with shoppers to identify their needs, businesses can streamline the shipping and returns processes and improve overall customer experience.

Outsourcing vs. Self-Management

The question of whether to outsource or self-manage a supply chain often hinges on the complexity of the operations. Start-up retailers might lack the knowledge and systems to manage logistics effectively, making outsourcing a favorable option. On the other hand, larger retail brands with more complex supply chains may find it beneficial to self-manage, especially if they can reduce the number of suppliers they utilize.

The Evolving Face of Last Mile Delivery

As last-mile delivery continues to evolve, Kaufman highlights that it is often the most expensive segment of the supply chain. Traditional delivery methods struggle with density since most retailers send only one item per delivery to residential addresses. Innovations such as autonomous vehicles, synchronized deliveries, and convenient pickup locations are anticipated to reduce costs and enhance density.

The retail sector is rapidly changing due to evolving shopper demands for speed, lower shipping costs, and enhanced visibility. The shift toward customer-centric logistics means that retailers must continuously adapt to meet these expectations. Technologies like FinTech could significantly impact payment processes, thereby increasing sales velocity and driving the speed of retail.

Legacy Systems and Consumer Convenience

For traditional or legacy brands, existing IT systems often act as a barrier to implementing more efficient logistics solutions. Retailers need to leverage technology to create seamless and convenient experiences for consumers. As customer expectations grow, brands will need to differentiate between needs for convenience and experiences. Shoppers are likely to order products for convenience online while seeking out physical experiences with brands.

Understanding Customers

One of the keys to leveraging supply chain trends is a deep understanding of customer preferences. Retailers often focus on competitors rather than comprehending what their specific customers want. By tailoring logistics experiences according to customer needs, brands can differentiate themselves in a competitive market.

Cost Drivers in Supply Chain

The primary cost drivers in shipping include handling and distance. Retailers can reduce costs by getting closer to their customers and optimizing their outbound delivery systems. On the returns side, many retailers handle returns inefficiently, which suggests that consolidating returns and potentially outsourcing them could lead to cost savings.

Keywords

  • Supply Chain
  • Retail
  • e-Commerce
  • Logistics
  • Shipping Speed
  • Returns Process
  • Outsourcing
  • Autonomous Vehicles
  • FinTech
  • Customer Experience

FAQ

What role does the supply chain play in retail success?
The supply chain is crucial for meeting customer expectations on shipping speed, pricing, and returns, which in turn affects overall satisfaction and customer loyalty.

What are the primary challenges retailers face regarding supply chains?
Key challenges include determining shipping speeds, pricing strategies, crafting efficient returns processes, and providing visibility to customers.

Should retailers outsource their supply chain management?
It depends on the complexity of the supply chain. Smaller or start-up retailers may find outsourcing beneficial, while larger brands may benefit from self-management.

How is last-mile delivery expected to evolve?
Last-mile delivery innovations may include the use of autonomous vehicles, synchronized deliveries, and strategic pickup locations to enhance convenience and reduce costs.

What technological innovations are influencing retail logistics?
FinTech innovations are expected to simplify payment processes, increasing sales velocity and driving overall retail speed.

Read More