Never before has retail been under siege from so many competitive fronts. Whilst the internet has been a boon for established foreign retailers to take a foothold in the Australian market, agile start-ups have also proved stiff competition for established players.
With one in ten purchases now made online by ten million Australians who are increasingly demanding quicker, more convenient service at a lower cost, it’s clear that the battleground for e-commerce is going to be won or lost in the supply chain.
The strategies and tactics to create an optimised supply chain for online however are quite different to traditional bricks and mortar.
How traditional retailers can optimise their supply chains for online
In the short-term, there is opportunity in considered pricing structures for delivery slots, locations and options. Retailers are moving to differentiate their online offers in this way whilst, at the same time – not be too ambitious. Retailers are making sure that it is consistent and reliable, for the right customer.
For instance, retailers are now less likely to go to market with a broad sweeping, full range, national delivery offer particularly when we consider the scale of the inventory complexity and fulfilment distance to some of Australia’s more remote locations.
In the medium-term the opportunities lie in the networks. For instance, understanding from a fulfilment perspective if you should be in fulfilment should be from stores, or by utilising a dedicated facility model.
These decisions need scrutiny as they come with trade-offs between working capital, inventory, transport and labour costs.
Looking to the more mature US online market we can see the long-term trend towards improving the customer experience in receiving goods, as well as, maintain brand in a delivery channel.
For instance, deliver staff are being trained to set up and install products in customers’ homes. It’s about going the extra mile in the last-mile.
With time customers’ experience of the supply chain will evolve. Overall, the thinking will shift from “How does my day fit into the supply chain” to “How can the supply chain fit into my day”.
For instance, rather than going to the post office to collect a parcel, the consumer will experience greater convenience using technologies such as Amazon Key, Alexa and Google Home. Delivery will be a more seamless integration in their day – there will also be a convergence of ‘Click & Collect’ and ‘Delivery’ models.
To compete with the influx of overseas retailers and agile start-ups, established Australian retailers need to evolve quickly.
They need to be anticipating their competitors’ next moves and focus on going above and beyond to exceed their customers’ expectations.
A well optimised supply chain will no doubt give them a solid foundation to gain a competitive advantage, and ultimately be winners in the battle for the e-commerce customer.
GRA Supply Chain Consultants can help with not only designing an optimal retail supply chain but also ensuring that your inventory is optimised to ensure that the highest possible service levels can be achieved at the lowest possible cost.
Find out more at www.gra.net.au