Jul. 14, 2020

Ecommerce Rising: Adapting Your Supply Chain to a New Paradigm

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This year more than 10 major retailers have filed for bankruptcy, including Neiman Marcus, J Crew, Pier 1 Imports, JC Penny, and Tuesday Morning. The coronavirus has emptied stores and moved enough traffic online to make ecommerce, for retailers in many sectors, the new main storefront. Now, beyond worrying about the usual retail issues, the pivot to rely on ecommerce ushers in a new mix of concerns with warehousing topping the list.
The effects of this tectonic shift on supply chains are deep. Recently, Flexport’s chief economist hosted a webinar with industry leaders from inside and outside the company to discuss how businesses should adapt their logistics to this new retail paradigm.

The webinar covered a wide range centered around five key areas:

  1. The impact of COVID-19 on traditional retail
  2. Changes to the ecommerce landscape
  3. The importance of flexibility in transport modes and rates
  4. The link between accurate inventory and curbside pickup
  5. How supply chains are adapting to increased ecommerce

Interestingly, one of the polls conducted during the webinar revealed that the greatest concern is warehousing for ecommerce—not too surprising when one considers the difference between moving a few pallets to a big box retailer versus 1500 units directly to consumers. Outbound B2C shipments require minute steps involving labels, boxes, and carefully choreographed handoffs into parcel networks, additional warehouse labor to do all the work, and sophisticated forecasting to keep workers from sitting idle.

Warehouse location is also top of mind for many. Facilities in expensive real estate near top retail markets like Los Angeles or New York are worth the additional expense if major retailers are the main channel. But when any address could be the final destination, the logistics demands are different. Should companies shift warehouses to the Ohio Valley or Kentucky for a more cost-effective way to connect with national parcel networks? And, how will brands improve their forecasting and understanding of customer expectations? It’s essential for brands to know whether two-day delivery is worth it for their customers and their businesses, before spending to quicken the tempo.

Understanding the potential of ecommerce and the different demands online B2C sales will make on a business’ supply chain is imperative. Companies that can arrive at answers now may find themselves at a permanent advantage as online buying behaviours triggered by the pandemic become their own new normal.

Tune in to the full recording of the webinar and its slides to learn more.

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