How to Bring Your Supply Chain Into the Digital Age

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So, while this pivot to meet shoppers through ecommerce sales channels happened quickly and easily due to the flexible nature of current digital channels, merchants must be confident that their supply chain is positioned to fully support those channels and provide excellent customer experiences. This necessitates a robust yet flexible supply chain that can pivot and scale as easily as digital sales channels. And in the end, the merchants who can rise to the challenge of connecting their sales channels to their supply chain to meet customer expectations for delivery will see a spike in demand translate to customer retention and long-term growth.

Customer Expectations

Customer expectations for fulfillment through digital sales channels are clear. First, there is strong consumer demand for fast and affordable shipping, with 60% of shoppers reporting that they expect to receive their order in 1–2 days. With 63% of consumers citing high shipping costs as their reason for abandoning a cart at checkout, it’s clear that they expect this fast delivery at little to no cost to them. And the truth is, your competitors are already providing it. “The Amazon Effect” has officially taken up residence in consumer psyches and will continue to drive this expectation as a bottom-rung point of entry rather than a top-shelf upgrade.

Merchants who don’t have the supply chain in place to meet this expectation are likely overpaying for expensive solutions like overnight air and have one of three options. They can absorb the cost of pricey shipping solutions, cutting into revenue. They can pass the cost on to consumers, pricing them out of a competitive market. Or they can offer 1–2 day shipping as an expensive add-on, driving shoppers straight to their competitors who are already offering it for free.

New Market Requirements

Merchants who choose not to meet this customer expectation will see lower overall conversion rates to begin with but will also suffer low retention. In this market, waiting 5–7 days to receive an order is an unsatisfying experience that will sour your brand for shoppers who will likely never return. Customers will also be more likely to return an item that they feel they had to wait too long to receive and are much more likely to leave a bad review. And as merchants expand their digital sales channels, customer reviews will become more and more important. The power of consumer choice has never been stronger, and shoppers scrolling through a digital storefront have the ability to turn away and leave immediately for a competitor at the first sight of a bad review.

Secondly, customers expect a quick and easy return process. Migrating to digital sales channels will inevitably yield a 12%–20% increase in returns over traditional sales channels, and merchants have to be prepared to close the loop on fulfillment with a reliable system for returns. More than two-thirds of shoppers reported that they had stopped short of making a purchase because they would have to pay for return shipping or restocking fees, while 96% of consumers who reported a positive return experience stated that they would shop from the merchant again.

In order to meet these customer expectations, merchants need a geographic footprint and technological capabilities to meet 1–2 day delivery expectations. The most affordable way to accomplish 1–2 day delivery is to forward stock inventory in multiple warehouse locations to get it as close as possible to end customers. This distributed network of warehouses should be comprehensive enough to allow merchants to reach their customers anywhere in the country with 1–2 day ground shipping. The warehouse network should also be supported by a robust technology platform that connects all sales channels to the fulfillment channel, manages inventory allocation, and sets reorder points based on regional demand.

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