Analyst insight: Retailers are moving away from traditional distribution models and over to more flexible, adaptable strategies that help them serve customers directly and within anticipated timeframes.
In an era when next-day delivery is becoming a fundamental expectation, companies across industries are rethinking how they receive, fulfill and ship customer orders. Shipping has to be free and fast, and if a hovercraft can get the package to the doorstep within an hour, that’s even better.
Meeting these expectations isn’t easy, as seen by companies that have tried and failed to beat some of the world’s largest e-tailers. In many of these cases, the risks of racing Amazon have turned into liabilities, effectively slowing progress and forcing companies to rethink everything — from online order interfaces to shopping cart conversions to final-mile and same-day fulfillment management.
Here are three risks that all retailers should be thinking about:
Web-based order interfaces. Success in e-commerce starts with a user-friendly interface that doesn’t frustrate customers or send them off to buy from another site. Put simply, if your online store’s ordering system is cumbersome and difficult to use, no one is going to use it unless they have to.
Achieve the right balance by segmenting SKUs based on what you think customers will actually buy. Trying to put too much out there could risk high costs of inventory duplication.
Same-day order fulfillment. Handled improperly, same-day delivery can be a logistical nightmare and a major risk for retailers. It’s also a necessary evil. Making it happen requires establishing locations close to buyers, modifying existing fulfillment procedures, and ensuring the right product is in the right place at precisely the right time.
The right transport mode. Retailers often don’t have access to data that allows them to control transportation mode. Instead, many focus solely on getting same-day and next-day shipments out the door as quickly as possible — without worrying whether shipping makes sense economically.
This is a huge risk, and these retailers would benefit from using transportation management systems (TMS) to select the most economical mode that meets customers’ delivery expectations.
Retailers are wanting more control over their order fulfillment strategies, which comes with increased risks and requires supply chains that can support next-day and same-day shipping. To best mitigate risk while growing market share, leading retailers are partnering with logistics and technology providers to tick those boxes one by one.