As many retailers experience an unprecedented spike in e-commerce sales, many are facing operational challenges as they respond to this increased demand – particularly smaller businesses that are not as well-equipped to handle the pressure.
From sourcing suppliers to warehousing to delivery, the boom in ecommerce at a time when operational efficiency has been hit by social distancing and staff illness is a mixed blessing. On the one hand it is a vital sales lifeline, but on the other it is becoming increasingly hard to make it work.
And with shoppers becoming even more fickle about who they shop with – and many looking to ditch any retailer that doesn’t meet their exacting standards of services – getting it right not only counts right now, but also is going to be vital for post-coronavirus growth.
So, in the first in our G2K series of practical advice on how to grow post-lockdown, we take a look at how to leverage the help available in various ways from third-parties.
Supplies and suppliers
Ecommerce relies on speedy supply and many retailers, large and small, already have a roster of suppliers getting them things. At the outbreak of the coronavirus, the impact on supply was unknown. By the implementation of lockdown it was too late to react. In between, canny retailers will have looked to secure as best they could their supply chain.
Coming out of lockdown, the same rules apply. Suppliers are only now starting to look at how to get back to normal and will still be experiencing challenges around social distancing and staff illness – not to mention receiving from their own suppliers.
How can you as a growing SME mitigate for this? Well there are several key supply chain steps that can be taken.
- Identify mission critical suppliers – Firstly, know which of your suppliers are essential and try to ascertain from them how ‘at risk’ they are of letting you down or at least slowing you down, and by how much. It is then worth looking at how to use that to throttle your own sales and marketing, manage customer expectations for delivery (something that they will still swallow, but a tolerance of which will start, soon, to decline) and to assess longer-term what that might mean.
- Seek alternatives – With the above in mind, you need to have alternative suppliers in place and lined up to fill the gaps. They may not instantly be able to fill the gap left by the failure of a main supplier, but they could help with alternative goods and to fill gaps. Longer term, it is always worth having a range of suppliers in place to allow for any fall outs by any supply at any point – with COVID-19 likely to have a rolling impact for years to come it pays to have this in place now.
- Think international – Finding alternative suppliers shouldn’t be limited local or domestic suppliers: look further afield. In these somewhat unique circumstances the way to work has changed and now overseas supplies that may once have seemed to expensive of complex to manage, suddenly offer a vital life line.
- Do your homework – When looking at how to manage suppliers hit by coronavirus or in engage new suppliers to fill the gap, you must check out terms and conditions, SLAs and financial penalty terms in any contracts – existing or otherwise – that you may have. Changing suppliers may actually incur a penalty, which needs to be avoided or negotiated around. It is also vital to understand the financial position of any new company you deal with – especially now: how have they already been hit by lockdown and are they still viable?
Managing the storage of stock, the picking and packing and the order and stock management side of ecommerce has largely been impacted by staff issues during the coronavirus outbreak. Many warehouses have seen as many as 25% of staff off sick or, more likely, forced to stay off while they self-isolate having been in contact with someone ill. This has made warehouse management – both handling in-coming supplies and handling out-going orders.
So how can you plan around this disruption in the short-term and look to mitigate it in future as lockdown ends?
- Manage expectations – At the height of the pandemic, most warehouses world wide were operating with about a quarter of staff (both in the warehouse and among drivers). This has started to improve, but with social distancing measures in place for some time to come, warehouses have to look at operating with lower staff numbers. The impact of this is that everything happens more slowly – and this has to be communicated to customers. Currently, they are understanding of this and tend to be happy with slower delivery so long as they are informed.
- Third-party warehousing – One solution is to look at how other companies can help. It is costly to find another warehouse, but it can be a temporary solution to have more than one location running so that you can use more staff spread out over more space. The cost may, however, outweigh the sales benefits, but it may be made to work.
- Leveraging marketplaces – Using services such as Fulfilled by Amazon (FBA) or other marketplaces and their attendant services could also offer an alternative. Looking to not only sell via marketplaces may open up new audiences, it could also help with warehousing and operations.
One interesting twist to the coronavirus tale is that ecommerce delivery drivers have become ‘essential workers’, up there with healthcare. The boom in ecommerce has put the consumer spotlight in delivery and has accelerated how delivery has become a key differentiator for shoppers when looking to buy online.
However, managing that with a lower number of pickers, packers and drivers is perhaps the biggest challenge of the lockdown and post-lockdown world.
The answer lies in looking at having a roster of delivery options and the tools to manage that.
- Carrier variety – Even before lockdown, retailers were starting to get the idea that logisitics needs to be spread around a variety of carriers. Some will handle next day, some will handle longer delivery times, some will handle certain geographies and some would handle certain goods. Having a arrange of carriers on hand is vital to making this happen – now more than ever.
- Managing it – The tough part of this challenge is in managing it all. Third-party systems such as Parcelhub or Fruugo’s new Logistics Bureau offer excellent dashboards that allow retailers to automatically assign the right carrier to the delivery, track it, manage it when it goes wrong and keep the shopper informed. These solutions are vital in the current climate, but as we move to a post-lockdown world are an investment in how to meet the delivery demands of customers who are now more into ecommerce than ever before.
Coronavirus has caused mayhem with global economies, local economies and all businesses. While ecommerce has seen a surge in demand – and surge that is unlikely to fall back post-lockdown – it has come with its own challenges.
Many of these are slowly drifting into the past – although lockdown may come back, on and off, for years to come – but attempting to grow out of the lockdown and into the ‘new normal’ presents challenges for all retailers.
The starting point of these problems is the very operations of the business – supply, warehousing and distribution – but looking at ways to overcome these problems in lockdown, using technology and new ways of working, offers not only a way to cope now, but also prepares all ecommerce businesses for the days ahead as things start to improve.
NEXT WEEK: USING SOCIAL MEDIA TO HELP POST-LOCKDOWN GROWTH