Digital merchants should also be equipped with advanced and intelligent inventory management. Managing multiple digital channels means that merchants have to ring their inventory to strategically move it between channels and feed their highest performing channels based on both volume and profit margin. I’ve seen merchants leverage this type of inventory strategy to squeeze the maximum profit from a limited inventory much more effectively than with a standard FIFO model.
Flexibility in Times of Uncertainty Gives You Certainty
Above all else, digital sales channels are flexible. They give merchants the ability to scale up or down on their market exposure based on their available inventory and capital. This is a distinct advantage in times of uncertainty like the recent and ongoing pandemic. As effects of the pandemic emerged, retailers had the ability to pivot their strategies and bolster their online presence in response to traditional sales channels being shuttered, but, ultimately, traditional fulfillment models were unable to pivot to support this shift. Customer satisfaction hinges on the delivery experience, and when this critical piece of the buyer’s journey fails, even the most highly optimized digital sales strategies crumble.
This shift to digital channels has catapulted us into the era of business to everyone (or B2E). We see the same customer expectations across the board, whether a transaction is B2B or B2C, which tells me that those long-accepted business models are now a thing of the past. This means that a digital supply chain should be flexible in handling order and transportation mix—able to handle small parcels, pallets, and LTL/FTL seamlessly from end to end.
Many ecommerce businesses are already operating at peak levels and should be prepared if there’s an additional 20%–30% increase in demand at peak season. Alternatively, merchants should be ready if there’s no spike in demand at peak season, a sudden turn in the economy as a result of the election, a continued spike in COVID-19 cases, or any other number of factors that would affect commerce in the course of a “normal” business year. The truth is, no one knows what the future of this market will bring. Historical sales data is inconsequential this year, and there is not a handbook for the types of challenges we’ve faced so far. In times of uncertainty, a business’s greatest asset is the flexibility to be ready for whatever may happen.
However, traditional supply chain models are anything but flexible. They require fixed assets invested in warehouse space and staff or rigid contracts with restrictive storage or ADV minimums. These types of inflexible models are difficult enough to scale up (particularly with the current state of packed warehouses and labor shortages) but can be nearly impossible to scale down, leaving merchants with little to no certainty that they will be able to pivot if things turn for the worse. To achieve flexibility in their supply chain, merchants must find partners that allow them to flex up or down warehouse space and labor at a moment’s notice. These types of partnerships allow digital merchants to keep inventory as their sole fixed asset, keeping them nimble in an uncertain economic landscape.
Facing an Uncertain Future With Confidence
Ultimately, any digital sales strategy that is not supported by a robust and flexible supply chain is doomed to fail. Today’s shoppers can shop not only from the comfort of their homes, but they don’t even have to leave the comfort of their preferred digital sales channel to find the products they need. The digital merchant’s advantage lies in the flexibility of these channels and the ability to seek out customers and get products in front of them wherever they are. The front-runners on these channels support and compound those sales by meeting customer expectations for fast delivery, simplifying the returns process, and delivering the same experience to both B2B and B2C customers. In an uncertain landscape, the merchants with flexibility across end-to-end operations, from sales to last-mile delivery, can face the future of this economy with confidence.