Undoubtedly, the recent global health crisis has changed the world, particularly in terms of retail and the way people shop. E-commerce has become a lifeline to the nation in more ways than one, from essential grocery deliveries to games and toys for home entertainment, causing online sales to jump 18% percent this year.
More recently, the disruptive effect of the coronavirus pandemic on global supply chains has dominated headlines and emerged as a crucial factor to running a seamless online business. It has been a real wakeup call for merchants on the importance of a strong and diverse supplier network, to avoid dreaded stock shortages and customer churn.
The capability to diversify and adapt, combined with having an effective fulfillment strategy and strong partner network, constitute four key supply-chain lessons from the pandemic, for mitigating unexpected future risks.
Diversification. The first and most vital lesson has been to diversify the countries from which products are sourced. China is the center for sourcing worldwide, yet it was the first hit by the pandemic and forced into lockdown. Many online retailers were impacted by relying solely on one country for supply, and faced prolonged periods of stock shortages which ground their businesses to a halt. Every merchant needs a backup plan.
Understandably, merchants want to maintain good relations with one supplier, and are hesitant to jeopardize this by reaching out to more. Nevertheless, they must realize the resilience that diversification adds to their business. Going forward, it will be key not only to find a broader range of products and sourcing countries, but to identify more selling channels, such as online marketplaces via Amazon or Rakuten. These have essentially become the virtual malls of the future, and are opening up a new, global customer base and revenue stream for online sellers.
Adaptability. Being able to quickly adapt to unexpected challenges is vital for any business, but it’s even more relevant today, given the life-altering impact of lockdowns across the nation. Certain retailers with a strong capability to adapt were able to explore and capitalize on new products and selling categories that they didn’t stock pre-pandemic. Many other sellers overlooked the opportunity to adapt their supply chains and strategize against the current situation. As a result, they failed to understand how their customer buying patterns were changing, and how they needed to quickly adjust to that demand.
PingPong Payments identified the most popular selling categories in the e-commerce space during the pandemic to be groceries, toys and games, educational material and home and garden, while swimwear, travel-related products and consumer electronics such as cameras were no longer in demand. E-merchants that don’t fall into one of those lucky selling categories can adjust by analyzing the business’s selling strength and, where possible, draw comparisons to what’s currently popular. Adaptability means identifying and sourcing new products quickly, while ensuring that old supply chains remain strong to restock and sell products when they become relevant again.
Fulfillment. During the pandemic, a number of temporary yet impactful changes occurred in the e-commerce sector that made merchants realize having a flexible fulfillment channel is key. For a short period, Amazon closed down shipments for non-essential products, leaving some merchants who rely on Fulfillment by Amazon to suffer, at least for a couple of weeks. But even after that initial two weeks, merchants were still impacted by a loss of search relevance and customer churn that has long-term damaging effects.
Merchants should always have a Plan B when it comes to fulfillment channels. Self-fulfillment is costly, and can be challenging to adapt quickly. Partnering with the right payments provider, however, can provide essential logistical insights, enabling merchants to leverage their networks and receive reasonable suggestions to improve their strategy.
Partners. Having the right network of partners is essential. It can help save merchants both time and money, crucially allowing more to be invested in important optimizations, such as effective fulfillment strategies. Certain value-added products can also help merchants make beneficial choices in terms of product selection, which is particularly useful for small to medium-sized businesses that lack the capability to quickly assess situations themselves, and hence risk falling behind the competition. Artificial intelligence and machine learning software are additional tools that can be deployed for smart inventory management, as well as for analyzing market and searching trends, to help merchants maintain the right stock levels and strategize what they should be selling.
E-merchants should be smart about the costs associated with every aspect of their supply chain. This has never been truer than during the pandemic, when cash flow is strained. Traditionally, merchants go to the large banks when sourcing from other countries, but bank transfers are slow and expensive, and exchange fees eat into seller margins. Keeping just one percent of margins is a huge help to merchants. Partnering with the right cross-border payment companies that specialize in convenient, quick money transfers can take this hassle away while lowering costs. It also means suppliers are no longer required to do additional paperwork, and is helpful to maintaining strong ties. Having a tightknit relationship with the sourcing factory means merchants can glean more insights from the supplier network so they aren’t completely blind — a capability that’s especially useful in a crisis.
During COVID-19, some companies have been in a better position to mitigate the risks than others. They’ve had diverse and strong relationships with key suppliers, combined with the ability to quickly adapt. Moving forward, merchants can take these valuable lessons for prospering in an emerging e-commerce landscape, and protect themselves from future unexpected challenges.