Poor supply chain visibility a challenge to growing e-commerce market
09 / 10 / 2020
A survey carried out by freight forwarder Geodis and analyst Accenture Interactive has found that a lack of supply chain visibility is one of the key challenges faced by retailers looking to capitalise on growing e-commerce demand.
The survey of 200 retailers in Europe and North America showed that 76% of companies state that improving the customer experience, which includes the purchase and delivery service, is their greatest long-term challenge.
Among other things, this means providing improved e-fulfillment, a range of flexible delivery options, more practical tracking visibility and simple returns.
The study reveals the ambitious objectives of the brands to reduce shipping times to three-day shipping within a maximum of three years for the domestic market and four-to-five for intercontinental shipping.
However, supply chain visibility is a key requirement of being able to achieve this.
The survey found that just 16% of the companies questioned are able to get real-time key performance indicators for their supply chain (25% of American brands and 10% of European brands say they have access to this information).
In addition, 40% of European brands say that their analytical capabilities are too rudimentary, generating data in a fragmented way, often manually and without clear governance.
Ashwani Nath, vice president and global head of e-channel solutions, Geodis, said: “Only a minority of them have real-time supply chain inventory visibility. However, this visibility is essential to ensuring product availability, offering a variety of shipping choices and informing the customer of the product’s shipping status. In short — satisfying the customer.
“Behind the scenes, this means optimising the logistics cost for each order and overcoming many logistical challenges: reconciling the physical with the digital, maintaining a real-time inventory, optimising stock, managing transportation, orchestrating orders while dealing with a variety of processes and partners. This will help brands to better utilise their physical assets and gain a competitive advantage.
“This calls for integrating stores with e-commerce networks to serve as order processing centers, collection points, shipping facilities and fulfillment centers. One thing is for certain: inventory will have to be closer to the end customer, no matter where they may be, to ensure agility and availability,” added Nath.
The survey also found that the pandemic greatly accelerated online commerce growth. Brands estimate that e-commerce in 2020 will represent nearly half of their sales, compared with a third before Covid-19.
Before the crisis, companies were making 34% of their sales online (28% on average in marketplaces and 6% on their own websites). During lockdown, 65% of sales were made online: 38% via marketplaces and 27% on brands’ online stores.
A second finding indicated that most companies (52%) felt that their e-commerce potential is limited by their logistical capabilities and therefore rely on the logistics services provided by market places.
59% of European companies rely on marketplaces for their online sales, a number even higher than for American companies (46%). Marketplaces held a 28% market share in the pre-Covid-19 period, a number that has risen to 38% during the pandemic.
However, most of the brands surveyed believe that over-reliance on marketplaces is not sustainable and wish to shift more of that balance toward owned e-commerce channels. Nearly two-thirds (64%) state that reducing their dependence on marketplaces is their first or second priority for the next six months.
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