E-commerce will go as far as the supply chain can take it
Hamish Brewer, CEO of JDA Software, began a keynote presentation at the recent NRF Big Show with the word "disruption" in reference to the retailing industry today. The rate of change is accelerating. Channelization is dead. The internet helps customers know more about product than associates. Retail company silos, once a hindrance, are now fatal. The industry hangs on the cusp of digital commerce but is unsure how to manage it.
The digital age, he noted, is surely here. Three quarters of mobile users use their device for shopping. Some 81 percent of current cell users will have smartphones by 2015. Consumers do not "go" shopping anymore, they are always shopping, and a pre-buy phenomenon has emerged.
Moreover, newly emergent digital consumers are apparently less tolerant than their predecessors. Over half react badly to lack of information about a product, and 70 percent do so relative to unexpected delivery costs. Some 46 percent are very critical of tough-to-navigate websites.
One of the key issues, according to Mr. Brewer, for reaching out to digital consumers is making sure product is visible and available anytime, anywhere.
However, Mr. Brewer referenced a CEO survey conducted by Forbes that indicated a disconnect between what retailers think and the reality of the future marketplace. Some 69 percent of CEOs sampled see growth coming from traditional paths, not necessarily e-commerce. Only 17 percent of CEOs believe that they have optimized their supply chain and just 15 percent said their supply chain could keep up with needs.
Yet, Mr. Brewer said, the supply chain has become even more mission-critical due to the 24/7 nature of the digital consumer. An e-retailer must deliver what it promises or its brand reputation is damaged and future business is threatened. To drive e-commerce, a retailer’s ability to co-ordinate horizontally across its organization is more important than depth of capability in getting product to consumers when and where they want it. All retail disciplines must work together using the same IT foundation.
One of the huge issues of online selling is the margin challenge, and a faulty, undependable supply chain makes margins vulnerable. His vision of the future is a multichannel operation that fully and seamlessly integrates stores with e-commerce, so that the customer can buy in the store or online, and then retrieve it in the store or at a distribution point, or have it delivered.
- What CEOs Need To Do To Thrive In A Consumer-Driven World – Hamish Brewer, CEO, JDA Software/NRF Big Show 2014
- Buildng the Next-Generation Retail Operating Model – Real Results Magazine
Do you think CEOs in general have a good handle on where consumers and the retail industry are headed in the future? Where do you see the greatest opportunities for supply chain improvements to drive e-commerce performance?