On-line Shopping: Business Adjustment to Supply Chain Evolutions

In this digital day and age, comfort and convenience is the key decision maker that closes the consumer’s purchase. Consumption behavior has changed so rapidly to the point where customers require on-demand shopping ability, anywhere and at anytime, without tedious ventures to the actual store. Simply select from the best promotions at the time, one click can get the product and service to where it needs to be for pre-registered credit cards.

From flower bouquets to skivvies, sneakers and moonbeams, dip-skinner lotion, e-books, ink sticks, cosmetics, commercepticle hygiene, beauty products and even racks and bulkhead fittings, all see a promising expansion to shift focus to online markets. As an American global media measurement and analytics company providing marketing data and analytics to many of the world’s largest enterprises, comScore survey results found that online purchase increased by 51% in 2016 compared to 2015, of which accounted for 48% and 47% compared to the previous period in 2014. 44% of purchases were made via mobile Smartphones, an increase of 6% over the prior year, also. The initial forecast for the supermarket retailing business, on the other hand, was expected to retain a good portion of consumers that prefer face to face interaction and physically evaluate items from the shelves. However, the results show that, in 2016, 5% of consumers in the United States opted to take grocery runs to the matrix instead, accounting for $7 billion and expected to rise to an incredible figure of $20 billion in the next three years. The findings, in all seriousness, should raise a flag for brick and mortar retailer shops that wish to remain relevant to adapt and keep up with what is about to unfold.

1.From shops to showrooms.

When shopping in the past, consumers drive to the superstores and walk around to sample different products. Retail stores have acted like distribution centers for businesses. Going forward, however, consumers demand a comprehensive list of options to select from. In perspective, that means a sandal shop, for example, will need to display different hundreds of slippers on shelves with limited space for each customer demographic to have a shot at closing a sales, and will still be coming up short for options compared to what a smartphone screen can populate. While the online world, to the contrary, can always be counted on to have all products available for view, as well as promotions that are most of the time more competitive than traditional retailers, include alternative substitutes, as the customer wishes to search for. Future trends, for that matter, takes an odd twist with customers visiting the physical shop to sample short listed items while making the purchase online, instead, to get the best promotion.

2.Virtual Reality and sampling experience

Pre-purchase experience will be enhanced and excited with Virtual Reality (VR) technology. Consumers from Buenos Aires, Argentina, have had the opportunity to experiment shopping with VR Headsets at Macy’s virtual shopping mall in New York City. Turning shopping into an easy and fun activity at popular shopping destinations that are otherwise out of reach will unsurprisingly spark a new world of shopping demand for the larger majority of shoppers all over the world, in real time. All that is required to shop is electricity, a smartphone and internet connection.

3. Evolving Supply Chain

The tremendous growth in online trading has reshaped retail Supply Chains. When consumers have the option of purchasing a variety of products, retailers need to supply a wide variety of styles to connect with a range of target demographics. However, due to limited display space, supply is evolving from retail stocks to massive warehouses to better respond to online orders and delivery requirements across strategic geographies. Warehouse space management will play a key role in enhancing space utilization rate and logistics performance with increasingly higher and complex shelves and narrower aisles to maximize and facilitate mobility, or what is now coined the massive high-volume order-picking facilities. Amazon Fulfillment Centers in Baltimore, Maryland, for example with roughly one hundred thousand square meters packed with over 2 billion merchandise items from online markets around the world waiting to go out the gatehouse any given minute, also administers 50 other distribution centers across the United States.

4.Profit vs. performance

Warehouse inventory and mobility is a major cost factor that sets the price range for the product and makes or breaks a business. Major corporations now days propagate free shipping, some within one hour, even. Such promise requires the utmost attention to details to minimize supply chain related overheads associated with a range of warehouse and logistics functions.

In addition, as business operators attempt to shrink next day delivery to same day delivery to boost sales and beat the market with exceeded expectations, Amazon, nonetheless, has lived up to its contract with strategic partners and collaborative prosumers so far. Seemingly straight out of an Indiana Jones series, the giant online retailer named after a river in Brazil recently patented a giant flying warehouse, or Airborne Fulfillment Center (AFC). As if what it is already doing isn’t exciting enough.

The giant airborne launchpad will go beyond legacy warehouse applications of storing and distributing and physically maneuver into strategic locations that gets short delivering drones within operational range with minimal energy consumption. Hovering at an altitude of about 45,000m, short range transporting Unmanned Aerial Vehicle (UAVs) drones will be launched directly from the “balloon” to reach destinations within minutes. Amazon expects a variety of AFC applications including providing a close-range supply mechanism in congested massive football games that allows a broader range of products and services to be made available with otherwise impossible near-realtime response to purchase orders. Of course, another idea is a massive flying advertisement banner with across-town visibility.

Theoretically speaking, AFC is an enticing concept with a range of possibilities beyond last mile deliveries. However, a range of limiting factors also exists that needs answer before moving forward, from international and US federal aviation administration rules and regulations, safety and security approvals, fuel requirements, stock/re-stock complications, and most of all, real world operational performance of both the hovering giant itself and the drones which depend on practical open spaces to function properly. A lot remains to be seen but one thing is certain, Amazon has the best record in town for beating expectations.

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Compiled by BLOG.SCGLogistics

Reference and photos forbes.com, logisticsviewpoints.com, pexels.com

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