Smoothing the Electronic Retailing Supply Chain

by Eric Best on Apr 28, 2016 12:00:00 AM e-Commerce, Retail, Support Services

Smoothing_the_Electronic_Retailing_Supply_Chain-318022-edited.jpgAt the core of electronic retailing is a direct relationship with the consumer. From the very beginning, there is a point of connection with the shopper—something compelling that spurred him or her to action—establishing a strong foundation for future interaction, loyalty, and lifetime value.

In the high-pressure e-commerce environment—where we constantly face aggressive metrics for sales revenue, margin, and conversion—it’s easy to forget about those human relationships and their long-term value. But thinking about your customers first and optimizing your supply chain around their needs can yield incredible dividends, turning one-time shoppers into repeat customers and transforming customers into advocates for your brand.

A lot goes into those relationships behind the scenes, and caring about your customer isn’t enough if you can’t back it up with the top-level service and efficiency that customers today have come to expect, particularly online.

To ensure that your supply chain is up to the challenge of meeting—and exceeding—your customers’ expectations, focus on the following three areas:

Offer the right product assortment.

Retailers can combine owned inventory with drop-ship and marketplace assortment to maximize product selection for shoppers.

Because direct response retailers have such a close relationship to their customers, they are ideal partners for suppliers who are looking for efficient channels to get their products in front of shoppers. On the flip side, working with more suppliers and having them ship directly to your customers provide direct response retailers with the opportunity to increase their product assortment without increased risk or capital investments.

While leveraging additional suppliers can expand your product assortment and increase visibility, it also entails a certain loss of control. Of course, you have to trust your suppliers to provide quality products and service to your customers. But perhaps even more importantly, you need to set yourself and your partners up for success by optimizing your supply chain.

Fortunately, new technology makes it possible to bridge the gap between your processes and those of your suppliers. Tight electronic integration not only makes sure product orders and details aren’t lost in translation, but also ensures products are taken off of your site when inventory runs out. With this level of control and visibility, you can track, analyze, and gain complete order transparency across all suppliers and drive greater supplier efficiency, responsiveness, and compliance.

Compete on fulfillment and delivery.

It’s no secret that customers today demand nearly instantaneous shipping, and the speed at which you can promise the arrival of a product is driving purchase decisions. In fact, our data at CommerceHub shows that for every day a retailer can shave off its delivery promise, order conversion spikes an average of 4.3 percent.

Delivery promise is particularly important for direct response retailers because the shipping offer not only directly impacts conversion rate, but depending on how shipping fees are configured can also make or break the profitability of orders and customers. To make your fulfillment and shipping process more efficient, consider distributing inventory across warehouses and use analytics to upgrade shipping when you need it, while sticking to lower cost options when you don’t.

Maintain a seamless brand experience.

Your customers don’t know—and aren’t interested in—how you source and supply products to them so long as their experience remains consistent and positive. Supplier mistakes are no excuse for subpar service, presentation, or efficiency.

In addition to ensuring you get the right products to the right customers quickly and smoothly, your supply chain should also be set up to cascade your brand identity throughout the whole process. For instance, branded packing slips can be shared automatically with suppliers’ warehouse management system, strengthening your relationship with customers from order through delivery.

The particular opportunities and challenges that will face retailers in the coming years will be varied and demanding, ranging from the economic to the technological to the cultural. Despite this unpredictability, though, one bulwark will remain core—an agile and efficient supply chain.

By optimizing your supply chain to meet shopper expectations today, you have the opportunity to build on the relationships that will sustain your business. And by ensuring that those processes are flexible and adjustable, you can set yourself up to continue to delight those customers far into the future.

Photo by David Castillo Dominici/FreeDigitalPhotos.net

Eric Best is CSO, CommerceHub.

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The statements, opinions, and advertisements expressed on the ERA Blog and other online entities owned by the Electronic Retailing Association are those of individual authors and companies and do not necessarily reflect the views of the Electronic Retailing Association.