It's Not All About E-Commerce
Raymon Krishnan
Global Logistics Leader | Supply Chain Expert | Trusted Industry Authority | Process Improvement
In retail, the focus today is very much on e-commerce and there is much being said about how this is taking over traditional retailing. Lower costs, a wider selection of suppliers and options with the convenience of access anytime or anywhere makes buying online an attractive proposition.
Like with many trends, the tide seldom moves in one direction. Take mobile phones for example. At a certain point the market realized that phones needed to be big enough to be used comfortably and had to be practical and so phones (and not just smart phones) started getting bigger until they were right-sized.
Something similar seems to be happening in retail. In the US, brick and mortar retailers account for roughly half of online sales and related activity. Disruption of traditional commerce models continues to accelerate at an unprecedented pace and retailers are being forced to re-evaluate how they go to market, balancing front-end footprints with back-end fulfillment capabilities and their overall digital presence. At the same time, the uberisation of freight and FaaS (Freight as a Solution) offerings and warehouse sites that combine prescriptive analytics capability are resulting in flexible networks and infrastructure capabilities. These developments are elevating supply chains and logistics strategies into must-have, strategic differentiators.
In the experience economy, meeting consumer demand requires a seamless partnership between front-end retail experiences and back-end fulfillment capabilities. Additionally, retailers cannot rely on just one, go to market channel. More and more companies are realizing that an Omni channel approach is needed for long term commercial sustainability. This does not mean that shopping malls are going to have people flocking back to them. What it does mean is that channels and resources to markets will need to be relevant and differentiated as opposed to ubiquitous.
Investing in e-commerce and digital marketing, often with insufficient focus and prioritization alone is not what consumers want and the simple fact of the matter is that the majority of retail purchases, in virtually all categories starts online and till today, digitally influenced physical store sales are far bigger than pure online sales.
The future of omnichannel will not be evenly distributed across all channels and challenges will still remain for brick and mortar malls and stores. Retailers need to have a well-sequenced roadmap of digital and conventional marketing combined with channel integration initiatives rooted in a deep understanding of customer behavior and underlying economics. The scattergun approach many have taken in implementing an e-commerce strategy has not proven to be successful. A laser focus, targeted at specific groups or areas will be what results in success through the coupling of rich data sets and consumer insight. This is good news to me. I am a little old school and still like the personal interaction brick and mortar stores afford the consumer. Being able to touch and feel what exactly I am intending to buy is another plus point and I am sure I am not alone. E-Commerce is not the be all and end all and the winning formula will be one that is balanced and measured.
Raymon, currently serves as President of the Logistics & Supply Chain Management Society and Editor-At-Large of LogiSYM. For more opinion pieces, news and articles relevant to Supply Chain, subscribe to LogiSYM at www.logisym.com
Executive Chairman at Qi World Networking (IFLN - CARVRE SEVEN - Inter-ConneX - World Forwarders Conference - LARGO+)
7 年Couldn't agree more with this article. Sure, the ecommerce business is growing and not even close to finished evolving more (heck, the IT side has not caught that much to ecommence when all editing functions auto-correct ecommerce to commerce).... I think there is one other big aspect we often overlook: The Retailers have not really been fighting back yet. The big Retailers are in the middle of their evolution, obviously some slower than expected, but it is finally happening with them closing down most of their unprofitable stores. The Retailers won't have to subsidize those losing stores anymore and place themselves in a great position to compete more aggressively by lowering their markups on article (which clearly are a bit out of control, allowing ecommerce to gain ground to begin with). Ecommerce will have its rightful and strong place, but it won't be the single all glory solution that some make us believe. Media exaggeration is not only happening around politics, after all.
Headhunters in Global Value Chain | Amazon bestselling co-Author of "Source To Sold"
7 年Well said Raymon! We do tend to get lost in buzz words and hardly ever is there a one size fit all solution. Same for ecommerce and omnichannel. better indeed be focused on what reaches your key target clients, not try to do all.
Headhunters in Global Value Chain | Amazon bestselling co-Author of "Source To Sold"
7 年Well said Raymon! We do tend to get lost in buzz words and hardly ever iss there a one size fit all solution. Same for ecommerce and omnichannel. better indeed be focused on what reaches your key target clients, not try to do all.
Owner, KEYfields Group
7 年Raymon, thanks for sharing your thoughts. Your article is interesting and trigger my thoughts on the following: 1. No businesses will dominate the scene forever. It has to be evolved or replaced. Likewise, one day, e-commerce be replaced by, maybe, predictive selling based on the past purchasing patterns and bring the mountain to Mohamed. Consumer will be alerted what groceries they need to replenish, which brands, any promotions and etc. 2. Looking at the giants in e-Commerce. After snatching the pie from retail, they are now building bricks and mortars retails of course by tapping technologies. Is this what the economist deemed as consolidation and squeezing out?
That is the point: disruptive but still very single customer focused?