COVID-19 has disrupted all areas of ecommerce, and one of them is the supply chain. According to Accenture, 94% of Fortune 1000 companies are seeing supply chain disruptions from the pandemic, and 55% of them plan to downgrade their growth outlook (or have already done so).
With vaccinations rising and daily virus cases reducing, Americans are eager to get back to their favorite outside activities and have the option of returning to their workplaces.
Data from Deloitte shows that in Q2 2021, U.S. consumer spending recovered and grew at 20% to 30% year over year, reaching 4% to 7% above pre-COVID-19 levels. This will put more pressure on ecommerce supply chain management.
In this post, you’ll learn about what’s causing ecommerce supply chain disruptions, how they have impacted businesses, and what you can do to turn these challenges into meaningful changes.
What Caused Ecommerce Supply Chain Disruptions?
Enforced COVID-19 lockdowns and social distancing rules accelerated ecommerce. According to Blue Yonder’s 2021 State of Supply Chain Execution report, online sales increased more than 120% over 12 months, and logistic service providers (LSPs) saw a 200% growth over the same period.
Deloitte added that consumer spending will be set for strong growth during 2021–2022 as they still have a large amount of savings to deploy. Their survey found that “consumers saved about $1.6 trillion more than what they would have saved had there been no pandemic.”
Causes of Supply Chain Disruptions
To adapt to this trend, traditional pure-play brick-and-mortar retailers that had been reluctant to grow their online presence started creating or expanding their ecommerce offerings. However, the following resulted in extreme supply-side disruptions for many firms:
- Increased border controls;
- Lack of availability of raw materials;
- Transportation capacity; and
- Visibility needed to produce and move essential products.
How Consumer Expectations Furthered Disruptions
Additionally, consumers’ expectations for visibility into their shipping and delivery have escalated. They now expect:
- Free shipping;
- Large return windows;
- Flexible delivery offerings; and
- Instant track-and-trace capabilities, and more.
While some brands added these services to their processes, others have still struggled to incorporate these options as standard practices.
With the pandemic still a live threat and consumers’ pent-up demand, the disruptions to ecommerce supply chains continue to be severe.
What Should Brands Do to Navigate This Supply Chain Crisis?
Many retailers have tried different ways to overcome current supply chain disruptions. According to Blue Yonder, direct-to-consumer (D2C) brands have applied approaches like partnering with micro-fulfillment centers and building infrastructure to facilitate a wide range of delivery drop-off and pick-up systems.
Another strategy is to buy up all the inventory as soon as it’s available and store it at leasing warehouse space in the U.S. and abroad.
Other businesses also lease warehouses near their factories to keep up production. Mark Baxa, president and CEO of the Council of Supply Chain Management Professionals, shared with Digital Commerce 360 that this strategy is great because it allows brands to store inventory that can’t be shipped now caused by shortages of shipping containers, port closures, and other factors.
Centralize Data and Create a Single Source of Truth
These strategies can help brands deal with current inventory problems and demands of consumers. That said, given the increasing complexity and need for optionality in the modern logistics world, there is another vital area supply chain managers need to pay more attention to: clean and accurate data.
In the past, manufacturers, retailers, warehouses, and delivery services operated separately and focused solely on their areas of expertise. As explained by a recent research study, this made it difficult to obtain information on the entire supply chain accurately or in time, resulting in periodic overproduction and shortage of goods.
Considering that, along with increased customer expectations of seamless omnichannel experiences, brands need to centralize data from all partners into one place and create a single source of truth for information.
The Ultimate Supply Chain Crisis Solution: Better Product Information Management
The ultimate solution is to implement a product information management (PIM) system. With PIM, you can:
- Deliver consistent and accurate information to all channels;
- Get a real-time picture of your inventory, capacity, and supply across the ecosystem;
- Remove data silos;
- Improve visibility across supply chains;
- Build transparency;
- Strengthen collaboration; and
- Enhance business performance.
According to Accenture, businesses with digital platforms, accessible data, and advanced analytical capabilities will respond more quickly, accurately, and successfully to COVID-19 disruptions.
This is also aligned with DHL’s report, stating that “the need for accurate information about product availability, shipping, and inventory counts will become the single-most strategic element for driving bottom-line success and establishing customer loyalty.”
Be Proactive in Handling Ecommerce Supply Chain Disruptions
The COVID-19 pandemic isn’t just a short-term crisis, even with improvements in vaccine status and a falling number of cases. No one knows when it’ll actually end. There’s no doubt that ecommerce will continue to be on the rise.
Brands need to make rapid decisions and take immediate actions to keep supply chains under control, address customers’ needs, and sustain their digital shelf success.
So, are you ready to get started, but aren’t sure how? Take the Digital Shelf Maturity Curve Assessment to evaluate your current commerce experience and receive recommended strategies from experts in just 10 minutes.
- Posted in: Australian eCommerce