In 2013, we can expect to see retailers’ stock management and supply chain strategies embrace the need for holding and effectively managing a single stock, in response to continued cost pressures and raised customer expectations.
Growth in multi-channel retailing – such as online and in stores – is forcing supply chains to be much more ‘joined-up’. It’s now far more common for brands to sell across multiple channels – such as eBay or Amazon Marketplace – in addition to their own online stores and this brings specific challenges. The last thing an e-commerce brand wants is to lose sales due to a customer being told a product is sold out on one platform when they could have purchased it from another, or to unexpectedly run out of stock altogether because people are buying simultaneously through different channels.
As retailers continue to embrace new and
more diverse online platforms in 2013, including the increased implementation of social media campaigns and mobile coupons, these new pressures will drive demand for a single physical stock combined with an integrated end-to-end view of inventory across all sales channels.
It’s an approach that offers additional strategic benefits. For example, supply partners are able to offer systems that allow brands to strategically select which channels they sell through – including allocating exactly how much stock is made available for certain platforms.
The natural evolution of this move to centralised stock is a growth in ‘drop-shipping’, where a supply partner holds a central stock. When an order is received, it gets picked, packed and shipped directly from the warehouse to the consumer, removing the need for retailers to physically hold any stock themselves. For brands, drop-shipping allows greater penetration into marketplace and for retailers – as well as removing the need to invest significant sums in stock and warehousing – it enables greater flexibility and faster delivery times.
As the high street continues to consolidate and more customers buy online, the appeal of drop-shipping is set to grow. So too will the appeal of warehouse outsourcing as an option for smaller e-commerce brands. The fact is, supply chain partners are often better equipped to manage peaks and troughs in the sales cycle, by flexibly allocating warehouse space and resources by working with clients whose products have different peak seasons. For a small retailer with limited resources, investing in warehousing that may be half-full outside of peak periods is a huge drain on both capital and cash flow. As a result we can expect to see more outsourcing providers developing solutions for these niche players in 2013.
☛ Joe Fogg is business development director, supply chain solutions at arvato UK & Ireland