The rising popularity of e-commerce is creating rapid and dramatic changes in how retail supply chains operate and what their goals are. One of the major shifts that have occurred is how these businesses achieve the goal of happiness. Instead of focusing on advertising that speaks to the desires of the consumer, they offer incentives that make the consumer feel better about their purchase.
For example, the increasingly common incentive of free shipping is a huge draw for consumers. These offers tend to encourage shoppers to spend more money on products they can actually use instead of wasting their money on shipping. Easy-to-navigate return policies and email marketing campaigns are other features that are helping the world of e-commerce grow, expand, and change.
In addition to new developments in the market, the market itself is also growing. According to emarketer.com, e-commerce sales are projected to reach $1.3 trillion yearly, worldwide. Not only that, but the increased popularity and capabilities of smartphones and tablets are leading to a rapid expansion in the mobile e-commerce business. About 11% of online sales made in 2012 came from these types of devices. Furthermore, emarkerter.com forecasts that this number will rise to over 30% in the coming years.
Because of these developments, more and more changes will be seen in how retail supply chains are operating. These changes will have effects that reach beyond the consumer. Industries that provide services to these supply chains could see differences in logistics, as well as demand.
Shifting Retail Supply Chains
Many of these changes are stemming from the need to adapt to the types of shopper we see in modern society. According to the annual UPS Pulse of the Online Shopper report, today’s consumers are much more sophisticated and empowered than those of previous years. They are also highly tuned to the availability of information on online retail sites. They do a lot of research before purchasing a product. That is why detailed product information, extensive photographs, reviews, return options, and coupon codes are so essential to the modern e-commerce business.
This shift in consumer knowledge and expectation has created changes from both an upstream and a downstream perspective. For one, an increase in information has led to fewer returns. Since the consumer can make a better-informed decision, they are more likely to be satisfied with their purchase the first time around.
However, the thirst for convenience has led to a natural increase in demand for shipping options. Now, many online retailers are offering both ship-to-home and ship-to-store choices. Since shipping an item to a store is generally free, 38% of online shoppers will actually choose that option over home delivery. (Bala Ganesh, senior marketing director for the UPS 2020 Team)
This change in shipping technique has also led to a difference in how retail stores utilize space. More and more retailers are combining their storefronts with their virtual distribution centers, leading to a decrease in demand for warehouse space. Additionally, these shifts in operation have led to a greater need for improved communication and coordination with shippers.
Another result is a greater reliance on technology for improving the efficiency of inventory management. These are positive changes for those in the shipping industry since better communication and technology leads to fewer complications.
E-commerce has become something of a competitive advantage. If a retailer can offer the same or a similar product at a cheaper price with easier accessibility, then a consumer is likely to choose that retailer over the more expensive, less convenient provider.
Next Steps for Retailers
Even though these changes may seem vast, there are more to come. As retailers pay more attention to e-commerce trends, they will see changes in their business models. A very noticeable difference is the increasing availability of non-traditional products online. Being able to purchase construction supplies and even homes completely online have opened up a whole world of possibilities in the e-commerce community.
Virtual dressing rooms are something else to pay attention to. The True Fit Discovery Engine is one that is popular right now. It analyses clothing to discover whether or not it will be a good fit for the consumer’s body type. This is a technology that many retailers may consider including on their websites.
We have already discussed having items shipped to store to save money, but other types of deliveries are also on the market. One of the largest growing industries right now is at-home grocery delivery. Many companies are even working to develop return kiosks that will provide consumers with an easier way to return items.
Finally, an even greater understanding of customer needs is necessary. This can and will constantly expand. As long as retailers strive to do this, consumers will be more satisfied with their shopping experiences.
Customization and Personalization
According to Bala Ganesh, senior marketing director for the UPS 2020 Team, retailers need to “Act now to develop a deeper understanding of your customers, so you know what they buy when they buy, and how they want purchases delivered.” He says that doing so “will give you the insight you need to quickly respond to their needs. Getting closer to the customer is what will give you an edge over your competition in the future.”
The biggest leap that the industry could make right now would be offering more customized items. This could be achieved by utilizing just-in-time manufacturing and 3D printing. For retailers, this would mean a shorter and less complex supply chain, which would lead to reduced inventories that are better controlled. It will also equip retailers with the ability to provide more fashion cycles, which would be in line with current consumer interests.
Getting Closer to Consumers
Now, knowing that you need to get closer to consumers and actually getting closer to consumers are two entirely different things. In order to accomplish this goal, you will need to continuously adapt. Make sure you:
- Do Market Research: Research is always your friend. Keep up-to-date on what market research is saying about your business type and target consumer. This will help you tailor any changes so that you can reap the most benefits.
- Have Continuous Engagement: In order to stay in tune with what your customers want, you need to consistently engage with them through social media and email marketing.
- Segment and Specialize: If you can offer a quality product that no one else can, the consumer will flock to you. For that reason, you need to segment your e-commerce business into specialties. This will allow you to focus on more quality items that the consumer really enjoys.
- Offer More Options: Although specializing in certain items is a great way to achieve success, those items need to have variety. Switch up your design offerings as often as possible to meet customer demand.
E-commerce is not going to stop expanding and changing any time soon. To keep up with the increased number of entrants and the new types of consumer demands, retailers and shippers must be willing to adapt. If you can do this, then you could see a rapid expansion for your business over the next few years.
