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Demand & Inventory Planning

Change and Cheese

Demand & Inventory Planning
October 6, 2020
6 min read
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Ware2Go’s CEO Steve Denton explores how the Coronavirus pandemic not only accelerated ecommerce sales but expanded the types of products consumers expected to have shipped to their homes. These changes mean that traditional retailers and ecommerce merchants alike will need to enhance both in-store and online shopping experiences while building a flexible supply chain to support evolving sales strategies.

Originally featured on Forbes

By Steve Denton, CEO, Ware2Go

The coronavirus pandemic has dramatically altered the way companies do business. The rapid and sustained shifts in both B2B sales and consumer shopping habits have tested supply chains around the world. As a logistics and freight solutions provider, my company is constantly dealing with disruptions associated with the pandemic economy, and, only half-jokingly, I’ve started calling this shift “change and cheese.”

By “change and cheese” I don’t mean nickels and dimes and shipments of cheddar or mozzarella. I use the word “cheese” to represent the mind-blowing array of goods customers can buy online — everything from appliances and home furnishings to clothing and even groceries. “Change”, meanwhile, refers to shifting consumer habits and our need to adapt to them. 

The pandemic has driven high demand in new product categories, and consumers have headed to online shopping in droves — yes, for greater convenience and choice, but also for safety, as social distancing protocols continue to shape shopping habits. In the past, being stuck at home likely would have meant forgoing perishables and other hard-to-ship items, but that’s not the case for today’s shoppers.

Our own survey data from May 2020 revealed that 87% of American consumers were shopping online. More than half of our survey respondents (55%) reported buying from online retailers they had previously never shopped with, and CBS News reported that consumers are buying products in categories that range from “comforting to the indulgent.” Around 64% of our respondents indicated that they had replaced traditional weekly shopping trips with online ordering, and 61% of shoppers reported purchasing groceries and even vitamins and supplements online (34%).

At the pandemic’s onset, consumers were forced  by shortages to compromise on their purchases, but in general, the supply chain has adjusted admirably. I’ve seen that the ability of manufacturers and retailers, in conjunction with supply chain partners, to deliver customized experiences has grown.

Christmas in Summer

Ware2Go has seen a sustained and measurable consumer demand for products. When operating at peak capacity, the new supply chain demands a reimagined infrastructure and a new level of planning — key issues with primarily digital sales channels.

Companies must adapt to the new digital-first world and find methods of transporting goods to consumers. This can mean building a more flexible supply chain, adapting to process a greater number of small packages and varying shipment sizes, and meeting the now general expectation for free, nationwide two-day delivery. 

Companies should work to enable the steady flow of goods, regardless of demand or shipment complexity. This applies to not just retailers and direct-to-consumer companies, but to B2B firms as well. The ability to scale supply chains on demand is particularly important when a warehouse or distribution point is impacted by the pandemic because in these cases workers may simply not be available when case numbers spike. By diversifying their supply chain operations, companies can mitigate risk and effectively serve customers, even in the most challenging times.

Demanding Access to the World’s Inventory

Another major lesson of the “change and cheese” era is that in addition to consumers’ high expectations around delivery, they also control brand engagement. A 2018 BRP study (via Inc.) supports the fact that consumers expect a consistent, personalized, digital experience across all channels, devices and operating systems. They likely also expect to have access to the “world’s inventory” when, where and how they choose.

And consumers don’t only want to access the world’s inventory at a fair price and with two-day delivery. They also want to buy these things through a curated experience with enhancements like personalized product recommendations and payment terms that are already plugged into their devices. This level of customization was once the province of specialty retailers, but the pandemic is forcing everyone to raise their game to ensure everyone gets the customized experience they’re seeking. 

Brands should also adapt their once physical customer touch points – like in-store shopping — to the new era. What retailers call “omnichannel” should now incorporate expanded online shopping choices as well as contactless or low-contact delivery. While we may not often think about it, the relatively simple act of ordering groceries online and picking them up at a store location or having them delivered to our home requires an incredible amount of supply chain coordination. Any failures in this process are highly visible to customers and can be potentially damaging to a brand.

What’s Next?

The forcing function of the pandemic could, however, have long-term benefits. In my experience, it has made consumers comfortable with online shopping and has created positive, convenience-driven experiences that build trust. Many of these changes we’re seeing are likely permanent; once consumers establish trust in the process and habits are ingrained, there will be no turning back.

The next step in supply chain evolution could be the implementation of seamless return and exchange capabilities, which would effectively close the fulfillment loop and increase customer satisfaction. Many online retailers now offer drop-off services at retail and shipping locations. Expanded capabilities in this area will include free returns, exchanges at multi-merchant retailers and immediate credit once goods are dropped off. 

For now, companies should create more efficient ways for their products to reach consumers, while at the same time figuring out how to stay in business. Even before the pandemic, the U.S. Census Bureau observed significant growth in e-commerce sales, and they are poised for further growth this year. These factors could indeed set the stage for still greater improvements in the supply chain. And while I may no longer hit the supermarket every week, I know that I don’t have to go without perishables and hard-to-ship items, which is a comforting thought. And it’s why we are living in the era of “change and cheese.”

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