Major Shifts in the E-Commerce Supply Chain System

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With dramatic spikes in orders, reductions in manufacturing, and a slowdown in orders for products deemed unessential, e-commerce companies and their supply chain system partners are planning new ways to respond in the short- and long-term.

Changes in Where to Shop

The best place to begin is with the end of your supply chain. Focus on the people who are going to be buying your goods. With half the world in lockdown in some form or other, we all are living with the reality that digital-only has quickly become the new normal. So, what does that mean?

Currently in retail, the online channel is the only channel available. There is not a lot of ways to stay in touch with your customer base when your physical doors are closed. Even with stay at home orders slowly lifting and stores being able to partially open with social distancing measures in place, the reality is that the online channel is the majority of how customers are consuming right now.

Today’s current industry leaders may be digital, but being digital isn’t the only thing making them a leader. Digital leaders are using data and AI to support supply chain system processes and deliver unique customer journeys. In so doing, they are setting a new competitive bar. The challenge is the impact these digital leaders have made are now how customers are expecting to experience the world.

Especially over these past few months, consumers that may have only used online shopping occasionally, have now been forced to fully embrace it. Because of this, this online shopping behavior will most likely not be short-term, but will be how many consumers will continue to expect how to experience the world.

Consumers are also changing their buying habits to focus on products deemed essential, upending predictive models and shifting spending to new stores, channels, and product lines. At the same time, businesses that do not produce essential products are facing shortages. With these changes, organizations must find ways to address these novel needs or temporarily target new markets to remain in business.

Changes in the Supply Chain System

Supply chain systems are tricky to try and change reactively. You need to have pre-established relationships and alternatives in place, and what-if scenario plans to guide your team on when to act before the disruption. Being purely reactionary makes change increasingly difficult, as you try to gain suppliers who are experiencing shifts in demand themselves.

One thing that many organizations have learned from COVID-19 is that over-reliance on any single country or region for manufacturing can lead to extended delays for products. Having a lean supply chain might keep costs down, but it comes with the risk of disruption when large-scale delays hit. Long-term, it is likely that many e-commerce organizations will become larger, spreading their eggs over many baskets rather than one, and sourcing products from multiple suppliers.

The need for more advanced supply chain planning solutions has never been more prevalent. Now, more than ever, retailers are going to need to re-evaluate their supply chain system and supporting technologies. Investing in next-generation S&OP platforms, such as Vanguard Software, is an option that many industry leaders are investing in.

Changes in Consumer Behavior

Millions of online consumers are changing their behaviors all at once, putting a strain on e-commerce. How fast organizations can react will define the future of e-commerce. Once stay-at-home orders are lifted, e-commerce demand may settle and stabilize at a lower rate that it is today, but consumers are reluctant to go back to old shopping habits for fear of getting infected. The behavioral changes are already in motion to completely change the retail landscape for years to come.