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Supply chain disruption is going nowhere – what can retailers learn and take forward

By Suzette Meadows, Lead Consultant, Contact Centre/Unified Communications, Exponential-e

While many retailers are beginning to bounce back from the worst effects of the pandemic, others continue to see their bottom lines negatively impacted by its fallout, whether in the form of supply chain delays, staff shortages or rising living costs. All these obstacles pose a potentially disastrous threat if not handled correctly and are challenging retailers to adapt if they’re to survive and thrive in a post-pandemic context.

Technology will be a crucial part of that equation, helping boost operational efficiency and deliver those seamless customer experiences that are crucial for maintaining customer loyalty. Striking a balance between online and in store experiences is central to this process, and there are several learnings that retailers should be taking forward to drive omnichannel success.

  1. Understanding technology as a core foundation to a seamless retail experience

The draw of having hundreds and thousands of retailers at our fingertips shows no sign of diminishing, with the pandemic further accelerating the trend towards online shopping. Consumers today prize convenience and near-unlimited choice, so retailers simply have to adapt both the in-store experience – which while less popular than several years ago, is still a key source of revenue for many traditional retailers – and online shopping to their ever-changing needs and demands.

Technology will undoubtedly play a pivotal role in this process, helping both online and bricks and mortar stores underpin their product offerings with efficient operations. The last few years have shown that no retailer can predict what will happen in the future, and with supply chain challenges continuing, investing in technology that helps cope with erratic rises and falls in supply is essential preparation for whatever lies ahead.

The potential of software, for instance, is remarkable. Solutions that can help stabilise operations and prepare for unknown terrains, such as Enterprise Resource Planning (ERP) systems, are remarkably mature already and promise transparency across entire business processes. ERP itself makes it possible to track all aspects of production or distribution, financials and back office, while Workforce management solutions can help analyse and predict customer demand and match them with available resources, to ensure your shift patterns and staffing levels are as efficient as possible

These kinds of tools are critical in supporting an omnichannel approach, streamlining processes and gaining greater insight into the business, allowing retailers to make real-time decisions based on what’s best for their customers and employees.

  1. Efficiency is key

The world is as fast paced as it has ever been, and every day customers expect their experiences and products to be delivered at greater speed. Inevitably, this means an increased use of digital channels and a further elevation of the pivotal role contact centres play in the retail sector. Although often overlooked, contact centres are critical to an omnichannel model of customer service, as their customer service agents – who interact with customers over digital channels such as webchat, video and social media – are at the heart of the digital service delivery. The intelligence and insights they glean from interactions with customers are critical to retailers seeking to assign, manage and more effectively track actions and improve customer outcomes, and a big part of why the contact centre has to sit at the heart of planning and managing customer lifecycles.

  1. Putting empathy at the heart of customer service

If there’s one learning we’ve all seen from the pandemic, it’s importance of empathy. Its role in any retailer’s customer experience is crucial and simply has to be factored into a customer’s entire journey.

Video is a great place to start. One thing many of us lost and missed during the pandemic was face-to-face contact, which has in turn led to a newfound appreciation for being able to see each other when we communicate. Where in person is not an option, video can provide customer service agents with the critical information they need to better understand a customer’s emotions – body language.

Technology has other roles to play in helping customer service agents build an accurate picture of a customer’s situation and show empathy, too. Big Data and analytics solutions for example can help them focus on what their customers are actually telling them. The point being that while human empathy is critical to a good customer experience, the best agents will not only be able to use their own skills, but will also be able to use insights generated by technology to improve their customer service delivery.

  1. Brick and mortar stores can still thrive where innovation is involved

Retail organisations have been engaged in a battle between online and in-store shopping for some time. While this battle was certainly heightened by the pandemic, plenty of ‘e-tailers’ and traditional retailers have weathered the challenges and come out the other side stronger. Typically, it’s been those that have demonstrated ingenuity, persistence and a willingness to innovate.

One leader in sustainable energy has been leading by example, embracing digital tools to transform its customer experience and create a seamless journey. To do so, the company is intelligently leveraging the data it has access to, to improve its quality of service, streamline operations and offer a superior experience against competitors. For example, it has adopted a remote payment system and adapted to offer digital menus on its pioneering forecourts, all of which deliver better customer experience and in turn generate huge amounts of data to further personalise and tailor the customer journey. Now, when a visitor connects to charge their car, their regular coffee could be automatically ordered for them, or even a booking made at the gym, or one of the featured restaurants.

Retailers that follow suit will be able to maintain that all-important human touch, while simultaneously introducing a level of efficiency that would previously have been inconceivable.

Innovate to thrive

If retailers want to thrive and succeed in recovering their losses from the pandemic, embracing technology has to be a non-negotiable part of the journey. Digital tools are pivotal to helping retailers deliver the customer experience and service that today’s consumer demands, and a vital enabler of future growth.

Businesses that succeed in carefully assessing their needs and deploying the most appropriate tools to help improve efficiency, demonstrate innovation and enable stronger relationships, will undoubtedly be the market leaders. Others that wish to build the right foundations for seamless operations should look to no further than their example, if they’re to have their own success to celebrate in future.

What does good subscription box fulfilment look like?

By Prolog Fulfilment

Back in 2017 the Royal Mail report on subscription boxes predicted a rapid growth in demand over the next 4 years. Now, post pandemic, the latest report sees the value of the UK market having more than doubled in that period:

  • The subscription box market has grown by 135% since 2017.
  • Shoppers spent £1.4 billion on subscription boxes in 2020.
  • In 2020 deliveries of subscription boxes in the UK were just shy of 88 million.
  • The UK market is forecast to grow to £1.8 billion by 2025.

Subscription Boxes – A Trend for Our Time

Subscription boxes tap into the psyche of the ecommerce shopper. They’re the perfect antidote for consumers who are tired of endless choice and are looking for personalised packages offering a dopamine-fuelled rush of excitement each time a new box arrives.

Add into the mix two lengthy UK lockdowns during which ecommerce sales rose by around 80% and the rise of the subscription boxes begins to look inevitable. The most popular subscription box items are currently: male grooming, beauty products, fashions, niche food and drink products such as craft beers, gins and snacks.

Retail and Fulfilment Partnerships Make Subscription Box Success

Most subscription boxes start out simple, then become more complicated as customisation develops. Providing repeat items each month is simple. Additional customer approval and choice is manageable. Once they require individually customised bundles of items, though, it’s time to find a fulfilment partner.

What is Subscription Box Fulfilment?

Customised subscription box fulfilment is a complex task, requiring the development of failsafe processes on the part of logistics partners:

  • Inventory Management and Stock Control. Subscription boxes succeed or fail on their ability to adapt to individual consumer demand, fast.
  • Picking, Packing and Kitting. Well-trained warehouse staff assemble the boxes. Additional services are offered such as branding, gift notes and personalised extras.
  • The subscription box is shipped efficiently by trusted carriers. Any returns are dealt with promptly and efficiently by your fulfilment partner.

What Does Good Subscription Box Fulfilment Look Like?

Now is a great time for ecommerce retailers to dip their toe in the sector. Success depends on picking the right product and choosing a fulfilment partner you can trust.

Not sure how to assess the range of 3PLs on offer? Contact Prolog Fulfilment for expert guidance and support. We provide kitting, subscription box fulfilment, print & mailing solutions and prompt returns processing. Our goal is always to exceed your customers’ expectations and provide end-to-end visibility.

  1. Warehouse Management System. Comprehensive systems management for warehousing, ensuring seamless order fulfilment, and a prompt and faultless service for customers.
  2. E-Fulfilment Solutions. Fully integrated software and ecommerce fulfilment means that you can deliver personalised subscription services to customers, confident that complex orders are handled efficiently.
  3. Dedicated Customer Support Team. Prolog’s dedicated support team is on hand should you need us. You also have access to your account portal to review orders.
  4. Continuous Improvement. We make cost savings for customers through innovation. The additional value is an enhanced customer experience.

We’re excited by the potential of the subscription box market here at Prolog Fulfilment and we look forward to working with new retail partners throughout 2022.

EU VAT changes – is your eCommerce business ready?

Doing business with Europe has become so expensive and onerous since Brexit that a vast number of UK eCommerce businesses have simply turned off all EU activities. Managing the different VAT thresholds and rates across each EU country has certainly added to the admin burden and cost of doing business – so how much difference will the new Import One Stop Shop (IOSS) make? James Hyde, CEO of James and James Fulfilment explains why businesses need to take urgent steps to ensure they can still trade after July 1st...

Harmonising VAT

As the European Union pushes forward with its plan to change the way VAT is accounted for on cross-border B2C supplies, UK eCommerce businesses need to be aware of the sweeping reforms being introduced on 1 July 2021 by the 27 member states. Designed to make it easier to account for local VAT in the consumer’s country, the new rules are also targeted at cutting loop holes and reducing the substantial value of VAT fraud. 

For UK eCommerce businesses that have wrestled with the need for different VAT numbers – as well as VAT thresholds and rates – in different member states, the creation of the Import One Stop Shop (IOSS) single EU VAT return is broadly welcomed. Allowing businesses shipping goods from their home country to customers across the EU to report all pan-EU sales in one place, the IOSS is an extension of the 2015 Mini One-Stop-Shop (MOSS), which successfully trialled a single EU return for B2C sales of digital, telecoms and broadcast services.

The process is relatively simple – a business simply needs to go online and register for an IOSS number. However, to do so requires an existing VAT number – and if a business does not already have that in place, it will require fiscal representation to acquire the number and currently, this process is taking up to eight weeks.

Reducing Thresholds

The other significant change is the withdrawal of the €22 import VAT exemption on small parcels – something that has been used – intentionally or mistakenly – by companies to avoid VAT in the past.  From July 1st VAT must be charged at the point-of-sale for consignments not exceeding €150.  Companies using the IOSS simply need to ensure VAT is calculated at the point of sale and goods will be automatically passed through customs. However, any company that has overlooked this change and continues to send lower value items into Europe will face a nasty surprise because both VAT and an admin fee will be applied, and the cost will be presented to the end customer.

For those that register in time, the use of the IOSS will create a more efficient process for quick and easy customs clearance – which should reduce delays and avoid unexpected admin fees from both customs and carriers. However, to ensure goods pass smoothly through this new ‘green channel’ UK eCommerce businesses must ensure all commercial invoices include the correct IOSS number. 

Furthermore, much of the burden of compliance to the new EU VAT regulation has been passed on to the carriers, who have only just released their technical specifications, which include electronic invoice formats. Therefore, in addition to ensuring the correct IOSS number has been attained, companies will need to determine how to create invoices in the correct format with the right information to avoid expensive customs delays.

Get Ready

Getting this process right will remove a huge component of the additional costs that have made trade with the EU far less profitable since Brexit. It will avoid the customer experience disaster that occurs when €10 admin fees and unexpected VAT liabilities are imposed on each transaction. The onus is therefore on UK eCommerce businesses to get this right – whether that is attempting to determine the technical expectations of carriers and amending IT solutions in time, or finding a fulfilment partner that can automate the process, ensuring all commercial invoices are created in the correct format, with the correct data.

And time is against UK business. With just a matter of weeks before the changes are made – it is those companies ready on July 1st that will be best placed to exploit the lower cost of sale, rapidly reinvigorating EU expansion plans that have been side-lined since January, to steal a march on the competition.

Navigating Covid-19 through e-commerce: Lessons learnt

By Michiel Schipperus, CEO at Sana Commerce

Covid-19 has had a significant impact on the global retail industry, with sales expected to dip by 5.7% this year. At the same time however, global Amazon sales increased by 26% in Q1 and 40% in Q2, and e-commerce spending in the U.S. grew from 11.8% in Q1 to 16.1% in Q2

In the UK, Covid-19 is expected to add £5.3bn to UK e-commerce sales this year. These figures demonstrate that industries that were already predominantly focused online have been able to weather the storm more easily than those that were focused on traditional, face to face customer relationships. 

McKinsey carried out research looking at the various impacts that Covid-19 has had across the globe and the findings underline the need for businesses to ensure their digitisation strategies are in place for both customer channels and supply chains. In the UK and Europe, 40% of those questioned said that Covid-19 had accelerated the digitisation of their supply chain and 21% said it had significantly accelerated digitisation of customer channels. In North America these stats were 31% and 13% respectively. 

While these figures incorporate both consumer and B2B e-commerce growth, it’s still evident that manufacturers, wholesalers and other B2B organisations can benefit from moving sales online. But B2B sales require a very different approach to the customer journey than B2C, so ensuring that the online solution is fit for purpose is key. What approach should businesses take as they start on their digitalisation journey?

Finding the right solution

During this period of increasing uncertainty businesses need to make quick decisions around digital strategies. It’s all about speed to market – getting a business online can be the difference between the business being open or closed. Customers want to know that they are dealing with a reliable business that puts them first, understands their specific requirements and then delivers a personalised approach. Most businesses are keen to get a solution in place now to help them to capitalise on the accelerated need for online sales through an e-commerce solution that simply works. For those that have never had e-commerce before it needs to be straightforward and easy to maintain through cloud based automated updates, enabling businesses to capitalise on existing markets. For those businesses that have a more mature e-commerce offering, it’s all about refining the customer journey to make purchasing a simple as possible.

Make it personal

Key to success is the organisation’s ability to focus on its relationship with its customers. Covid-19 has taught us that customers are seeking reassurance from the people they do business with. This means that a website that is completely self-service must offer the customer such a strong purchasing experience that they do not feel the need to have the personal contact that would have previously been the norm.  

People want to do business with businesses they can trust. This means having a platform that delivers personalisation for the end user through flexible design that can be implemented quickly and be customised to specific requirements. Personalisation allows a business to target customers more closely, offering discounts to either a specific group of customers, or on products that are in high demand, for example. It means showing personal payment options and delivery possibilities that are specific to a segment or even an individual customer. Or drawing into a customer’s previous buying patterns to make suggestions, recommendations and advice. It is possible to get your web store live quickly to meet these challenges by using a SaaS solution – meaning it can be built and integrated into your ERP in a matter of days. 

Consider your timeframe

Customers expect swift response times, even in the world of B2B. If you are not able to provide them with this, it is likely they will go to a competitor so choose a webstore solution that’s responsive. Consider looking for a site that is built on single-page application (SPA) designed for B2B, creating dynamically loading pages and not rebuilding each time visitors navigate to a new page. This improves the overall customer experience and enables them to get to where they want to go on your site much faster meaning time to basket can be reduced.

Integrate your ERP

Integration with a company’s ERP systems is crucial as this ensures that existing data, such as stock availability, personalised pricing options, and order history, are instantly reflected in the online store, eliminating errors and delays and delivering a reliable online experience. Businesses should seek a solution that provides the maximum amount of flexibility. One that offers headless-ready e-commerce is the best approach here as it means it can be integrated with ERP system(s) in the back end whilst using other platforms for the customer front end. This is important as it opens up opportunities for the additions of applications such as voice or even barcode scanners in the future. This type of solution helps to create a seamless, personalised customer experience – enabling businesses to foster long lasting relationships even once the global pandemic is under control. 

The current climate is impacting every business, no matter what industry they are in. The days of face to face buying and selling may become a thing of the past and the need to be able to deliver that personal service through e-commerce is increasingly important. While it may be tempting to rush to find a solution, particularly when faced with the threat of losing customers, it is vital to carefully consider the best possible solutions available at this time. This considered approach will allow businesses to secure their current customer base whilst setting themselves up for a successful online future.

How COVID-19 has impacted global supply chains

By Nick Pike, Chief Revenue Officer, Vizibl

The impact of COVID-19 has been swift and devastating to those directly affected. Not just from a health perspective, but also for businesses who had to promptly close their doors as the country went into lockdown, particularly those in hospitality and retail. And as we now slowly emerge from these more stringent controls, the indirect consequences of the pandemic on global systems and networks, specifically global supply chains are also being felt.  

The spread of COVID-19 has affected operations globally in ways that are difficult to model and assess. Many of the affected countries are at the heart of global supply chains and as a result have witnessed depleting (or idling) stock; the net result is that many organisations have simply not been able to meet their contractual obligations on time. 

This is because multiple areas have been disrupted.  For example, suppliers have been unable to fulfil orders due to labour shortages, including shortages of drivers.  There have been transportation restrictions, and restrictions moving from one country to another.  This has resulted in stalled production, unfulfilled orders, slower shipments, stock shortages, incomplete deliveries, inflated costs, and less products on the shelf at the retailer. 

Manufacturing issues in China 

Additionally, it would be remiss to talk about issues affecting global supply chains, without talking about China. Earlier in the year, analysts warned that manufacturing activity in China would face significant disruption due to COVID-19.   For example, Apple has 10,000 direct employees in China with almost all the company’s flagship iPhone products being made in the country. Likewise, US car manufacturer, Ford relies on nine auto manufacturer facilities in China. Indeed, auto manufacturers are one of the industries that have been hard hit, due to parts shortages. 

Over the years, China’s share of global exports has more than doubled from just under 6% in 2003 to nearly 13% in 2018 according to OECD and World Bank data.  However, in the past where China has been viewed as only producing low-end, low-value products, but today China is in the supply chains of many of the high-end products  meaning the impact on the supply chains has been and will continue to be significant. 

Similarly, a slowdown in China affects the global economy. The country accounted for just over 4% of global GDP in 2003. By 2018, it accounted for nearly 16%. The global supply chain is not just vulnerable to China’s position as the world’s largest producer of goods and parts, but also as the world’s second largest consumer. Weaker demand from China further complicates the impact on global supply chains. 

Diversification and resilience will be the watchword going forward 

Containment of the virus is important for disrupted supply chains as they can only return to normal once it stops spreading. This will only really happen once a vaccine has been developed.  While COVID-19 is not the first public health emergency to impact global networks, its severity highlights a need for greater supply chain diversification and resilience. Natural disasters similarly prove this point: the 2011 Tōhoku earthquake in Japan exposed the dependence of global motor vehicle companies on auto parts manufacturing in the country.  

The need to diversify supply chains and build in greater resilience will be critical for long-term survival. Greater visibility into complex supply chain activity will equip organisations with the knowledge to reduce supplier exposure and risk, which will help them vary their supply chains.  New technologies are emerging that allow conglomerates to manage partnerships with a wider range of suppliers, from global corporations to smaller start-ups. Data shows that supplier diversity not only helps to reduce costs but also enables organisations to innovate and deliver more value to end users. 

A growing number of organisations are now incorporating diversity and visibility into their wider supplier collaboration and innovation programmes.  There is a greater focus on regional suppliers to mitigate risk. COVID has exposed the fragility of long distance, international supply chains. In addition, governments are starting to demand local sourcing, for example drugs and PPE. 

So, what tips would we give to organisations both now and in the future. In the short-term as we start to emerge from COVID-19 organisations should look to: 

1.     Create cross-functional and/or cross border SWAT teams to deal with supply chain shortages 

2.     Build additional buffers of inventory and raw materials 

3.     Develop expected-case and worst-case scenarios 

4.     Explore additional delivery routes and how they can source locally 

5.   Explore technologies and partners who can help them to diversify and innovate throughout their supply chain.  

Digitally transforming your supply chain 

Understandably, most companies are currently focused on the near-term, with their strategies addressing the COVID-19 situation as a temporary problem. But, if businesses look at the current situation strategically and align smartly, it will certainly help to propel future growth and competitive advantage for many years to come. For example, this could help organisations to digitise and enhance faster decision making and execution.  

As a result, organisations will gain better end-to-end supply chain visibility.  By collaborating more with their suppliers, they could build new products, services and innovations to deliver more value to their customers. Companies can develop better digital capabilities that enable better sourcing, collaboration, and supplier management.  Finally, this could enable more eCommerce and a better balance with more traditional operations combined with online channels to deliver an omni-channel approach. 

Three challenges to delivery efficiency during Covid-19

Andrew Tavener, Head of Marketing at Descartes, outlines the impact that Covid-19 has had on ecommerce, addressing the three main pinch points for delivery service that have been caused due to a surge in demand, and how they might be overcome...

The current Coronavirus pandemic has presented challenges for every industry, organisation and individual across the world. In particular, the increased pressures that have been placed on ensuring efficient deliveries; to stores and to homes – have never been experienced before. With the Government placing the UK on Police-enforced lockdown, not only has panic-buying ensued, but with the public unable to purchase items from stores – ecommerce demand has seen huge growth, with a resultant exponential increase in the number of home deliveries for all types of goods. So what are the main pinch points for delivery that have been caused by the crisis, and how can they be addressed? Andrew Tavener, Head of Marketing at Descartes, explains.

Delivery to store

In light of panic-buying and stockpiling caused as a result of the outbreak, many supermarkets have struggled to keep up with demand and keep shelves stocked. We’ve already seen certain measures come into effect to support retailers, such as the relaxation of the enforcement of the EU drivers’ hours rules, as well as changes to MOT testing requirements on commercial vehicles to keep deliveries moving. But while these initiatives will all contribute to the overall effort to streamline delivery to stores, with the temporary lack of regulated checks, implementing vehicle safety technology to make sure vehicles are roadworthy and drivers are safe when they go out is more important than ever before.

Additionally, the government has announced that it will be temporarily relaxing elements of competition laws to allow retailers to work together and share resources to take some pressure off of supply chains; sharing stock data, pooling staff, delivery depots and vans, as well as coordinating opening hours to allow for shelf stacking time. When it comes to sharing delivery capabilities, an online, remote, centralised system is essential, so that everybody can access it in order to provide maximum visibility and capitalise on technology to get more out the existing resources in place, as they come under increasing pressure.

Crucially, supermarkets are now closing overnight to allow for deliveries and stacking to take place. This is where dock appointment scheduling becomes a critical component, to be able to manage demand in line with resources and capacity, to prioritise deliveries and create a foundation for better carrier/supplier collaboration – addressing this significant pinch point during a critical time can help to streamline the delivery process. One well known supermarket is currently coping at four times its peak with the use of Dock Appointment Scheduling, demonstrating how effective the tool can be.

Home Delivery

Add to all of this the growing concerns over the delivery driver shortages, especially as many may have to start self-isolating depending on whether they experience symptoms or not, the use of technology to optimise delivery efficiency has never been more important.

Steps have also been put in place by delivery companies relating to the actual delivery at the addressees’ homes, including leaving the goods in a specific place and not requiring a signature from the person accepting the item for proof of delivery.

A routing and scheduling solution that continually assesses the resources available, versus actual visibility throughout the supply chain, from initial collection through to the last mile of the home delivery process, offers the opportunity to maximise operational efficiency. Integrated telematics and mobile data communications provide increased visibility for the fleet manager and consumer, as they can see in real-time, exactly where a vehicle is against the plan and route set out by the scheduling software. This added insight allows transport operators to add or amend jobs to avoid disruption, such as traffic, as well as send automatic updates to the customer about any changes to their delivery. One well known pharmacy that relies on semi-retired drivers – those at higher risk to Coronavirus – is coping with a 15% absence rate with the use of routing software, demonstrating how the technology is enabling the pharmacy to keep up despite driver shortages.

Moreover, in light of temporary changes to drivers’ hours law enforcement, by combining digital tachograph analysis and reporting with driving licence and driver CPC verification with the DVLA, as well as digital driver vehicle safety checks, all in one platform, operators can practice proactive compliance management to underpin optimisation of fleet efficiency. Operators need a simple and convenient way to stay on top of their compliance requirements, especially as more changes are likely to come into effect as the situation unfolds.

Growth of ecommerce

The Coronavirus crisis has meant that retailers have had to go back to the drawing board when it comes to forecasting. For example, despite warmer weather approaching, comfy tracksuits are booming as people are staying at home, rather than purchasing evening wear or prom dresses. Home and garden, DIY and workout gear is also seeing a surge. While retailers can prepare for peak-periods such as Christmas, many are struggling to cope with this unexpected surge in demand.

With the public turning to online delivery during lockdown, businesses that have not had an online presence have realised that given the current state, this could mean the difference between surviving and going under. Even for those businesses with ecommerce in place, they have likely never had to deal with such an unprecedented crisis we are currently facing.

Primark, for example, has no online business to offset its lack of in-store revenue, now all of its 189 UK stores have closed. Estimates calculate the lost sales at Primark to equate to about £85M of gross profit, even before store closures. But all is not lost for those retailers that have not yet set up an ecommerce channel. With rapid turnaround remote solutions, warehouse management software can be deployed without the need to physically visit a site to get up and running. As long as warehouse facilities are available, businesses can deploy a logistics platform in three to four weeks, not months.

Moreover, with the likelihood that businesses will see more staff shortages as increasing numbers of workers will need to self-isolate, an efficient way of picking, packing and shipping is essential to keep up with increasing demand. And as consumers have no choice to turn to online shopping methods, it’s also likely that many will continue with online shopping even after the pandemic is over – especially if they have received a good experience. Retailers need to be prepared for the shift in consumer habits to not just be a temporary change in operations.

With technology that provides continuous background optimisation of resources, operators can get more out of their existing resources. Drivers and the public can be kept safe with real-time updates on delivery ETAs and mobile applications for proof that your goods were left in a safe place or outside your door for ‘contactless delivery’. These are testing times for every business, but those that can adapt now and capitalise on technology that can unlock valuable efficiencies will be the ones that will come out the other side stronger and in a better position to ride the wave of future demand fluctuations.

Some logistics firms ‘will evolve to become retailers’

Some logistics companies will evolve to become retailers as the first standardised wave of ecommerce fragments in a variety of creative new ways to sell and add value.

That’s according to a new report from IGD, in association with The Consumer Goods Forum.

Looking at how companies can respond to this change and how businesses will utilise digital technology to become more relevant, the report explores three digital retail models of the future and predictions for an increasingly digital food and consumer goods industry.

Major grocery ecommerce markets will continue to expand rapidly, growing at almost four times the rate of any other channel. Data highlights from the research include:  

  • Asia-Pacific’s online grocery market will grow by 196% by 2023, adding $198bn
  • North America’s online grocery market will grow by 152% by 2023, adding $38bn
  • Europe’s online grocery market will grow by 66% by 2023, adding $21bn

Asia and North America will lead the way on the rate of growth, with Europe set to develop this channel at a comparatively slower pace.

Indeed, grocery ecommerce sales in Asia-Pacific are set to triple over the next five years, with IGD forecasting that in 2023, ecommerce’s share of grocery in Asia (7.5%) will be twice that of North America (3.4%), and close to three times larger than Europe’s (2.5%). 

IGD says businesses are transforming their established operations through digital technologies to enhance their stores, reduce costs and improve connection with customers. Its predictions for rapid evolution include:

  1. Technology-led strategic partnerships will accelerate rapidly. Technology companies will have a much stronger influence on CPG retailing
  2. Advanced digital technology will help physical stores close the data gap on pureplay operators
  3. The commercial trading interface between established retailers and suppliers will be transformed by AI
  4. The most advanced traditional retailers will diversify to become less reliant on selling products
  5. Retailers with the best data capabilities will win in the long term by becoming incrementally better every single day

Ecommerce 2.0 – The first, mainly standardised wave of ecommerce is fragmenting in a variety of creative new ways to sell and add value.  IGD’s predictions for Ecommerce 2.0 include:

  1. Successful pureplays will diversify offline, either by opening their own stores or forming alliances with traditional retailers 
  2. Manufacturer D2C businesses will become a major force and they could be consolidated through a single ordering platform
  3. Specialist retailers and marketplaces will proliferate
  4. Some logistics companies will evolve to become retailers
  5. Social commerce will go global, with platforms integrating with ecommerce to offer more frictionless shopping

Ecosystems A network of retail and consumer services is emerging, linked by logistics, financial services and technology.  IGD’s predictions for Ecosystems include:

  1. Ecosystem evolution will vary considerably by market
  2. More technology companies will evolve into ecosystems, with more major technology businesses broadening their capabilities and services
  3. Ecosystems will recruit a growing number of established businesses to get even closer to shoppers and the wide range of products and services they need and want
  4. New consumer services will be bolted onto ecosystems (e.g. healthcare, leisure, hotels etc.), connecting as many consumer touchpoints on the path to purchase as possible
  5. The centralisation of data and use of advanced technology means that ecosystems will gain real time insights, promoting rapid change, driving greater personalisation for shoppers and raise profitability, a benchmark for all other retail models.

Peter Freedman, Managing Director of The Consumer Goods Forum, said: “While of course growth remains challenging for all of the established players in the industry, many are nevertheless finding that the ongoing disruption presents exciting opportunities. This report presents several ideas for consumer goods and retail companies looking to secure their long-term future, and we’ll be discussing some of these themes at the Global Summit in Vancouver: how scale and agility can impact your business model, how digital technologies will permeate decisions and how new forms of collaboration will help drive the sustainable evolution of our industry.”

Download IGD’s free report: igd.com/digitalretailmodels

Image by StockSnap from Pixabay