Exclusive: Human error and lack of robots threaten booming e-com space
The pandemic has resulted in changing consumer behaviours which may have crushed many shops and retail businesses, but it also brought about new opportunities for retailers, particularly when it comes to going expanding their reach, diversifying their clientbase and offering products and services online.
However, retailers will only succeed in the space if they ensure they have a strong logistics strategy, warns Ciaran Bollard, CEO of e-commerce platform provider Kooomo.
“Until the pandemic, international e-commerce logistics networks were primarily designed to get goods from warehouses to store shelves,” he told City A.M. this afternoon.
“However, the coronavirus has accelerated e-commerce requirements by almost five years, meaning, this already lagging system has had its weaknesses exposed and magnified,” Bollard said.
“This has resulted in some significant logistics challenges including: poorly optimised processes, supply chain fluctuation and maintaining reputation,” he added, as he zoomed in on a number of challenges and opportunities.
Human error
Human error is an unavoidable part of life, laughed Bollard, adding that “no matter what industry or position you work in, at some stage your processes will be subject to a hiccup.”
“The trouble for retailers hoping to sell internationally, is that a small mistake could result in a significant loss of productivity and profit,” he noted.
The more information you store and transfer, Bollard pointed out, the likelihood of human error increases, while manual management of information and processes can also create enormous overheads and is extremely time-consuming.
“Automated inventory management is the obvious answer, with most of your business’s repetitive tasks and backup system processes. However, in a recent survey, a little over a third of retailers stated that the main issues that arise with cross-border selling are poor system integration.”
Automated tasks reduce the risk of mistakes and a moderate workload can help employees carry out their tasks to a higher standard.
Moreover, it can also provide “one view of the truth” that’s constantly updated with the latest data, he noted.
“This helps enormously with managing data, understanding issues and ensuring all stakeholders understand what’s happening.”
Supply chain fluctuations
Throughout 2020, most companies experienced major fluctuations in demand across all industries.
As the first lockdown began, there was a sharp rise in the demand for safety equipment, household essentials and homeware.
Many retailers who relied on Amazon for supply also found themselves in bother last year
Almost a quarter of British retailers reported severe disruption to their supply of goods, with only 7 per cent of retailers having the flexibility to switch their suppliers.
“Many retailers who relied on Amazon for supply also found themselves in bother last year, when the marketplace decided to halt shipments of all goods other than PPE and essential equipment. Therein lies the challenge for retailers who don’t have full control over their supply chain,” Bollard said.
“This therefore presents an opportunity to initiate a D2C strategy as an international company can provide retailers with significant control over their supply chain. This also allows brands to boost their online sales even more by getting a clear, first-hand look into their customers’ buying behaviour,” he added.
Grocery retailers in particular, dealt with significant out-of-stock situations on many key products as consumers snapped up supplies. Therefore, the ability to predict and manage demand has never been more important, Bollar stressed.
Reputational issues
Has the pandemic had a massive impact on customers and the relationship between customers and companies?
A McKinsey report found that more than 75 per cent of consumers have tried new brands, places to shop, or methods of shopping during the pandemic.
This is down to a number of factors, Bollard said, most notably friction in the supply chain.
“For example, if brands were out of stock of particular items consumers explored new websites/companies to find them. How do you maintain trust in your brand and your products and services and how will you recover the customer experience in the future?”
Consumers have become increasingly conscious of their purchasing with lockdown sparking a movement of belief-led buying, he said, singling out a recent study that revealed that 75 per cent of consumers are more likely to favour brands who had clear and frequent communication during the pandemic, showing that the consumers are aware and listening.
Only 3 per cent of shoppers state ‘next-day delivery’ a must have
In fact, 96 per cent of shoppers want tracking notifications on their deliveries, which means the industry is shifting from speed to reliability.
“Retailers also now have the opportunity to ease pressures as consumer behaviours turn towards items arriving on time instead of ‘the next day’. With more people working from home, windows for delivery are much broader,” Bollard concluded.