Strategies for Holiday Season Omnichannel Success By Peter Edlund
The 2017 holiday season is upon us, and the retail supply chain is kicking into high gear as retailers build inventory to support this vital selling season. Gearing up for more e-commerce sales also demands more from supply chain partners to support direct-to-consumer shipping. Following are some topics to keep in mind as your networks collaborate for a successful season.
E-commerce demands a holistic supply chain strategy. E-commerce sales are expected to increase 18-21 percent during the 2017 holiday season and could reach $114 billion, according to Deloitte_ As retailer competition climbs for these important online shoppers, the entire supply chain will have to adjust to new demands to serve individual consumers.
Direct-to-consumer fulfillment is here to stay. To support their e-commerce objectives, retailers are asking more vendors and distributors to support direct-to-consumer order fulfillment - also called vendor dropship. Dropship enables retailers to expand the mix of merchandise they offer without adding inventory cost or storage responsibility. Dropship also takes the complexity of processing single customer orders and puts it into the hands of vendors.
Dropship is a process that many smaller merchants use to sell through marketplaces such as Amazon and eBay. But for larger vendors — those that typically ship large bulk orders to retailer distribution centers - supporting dropship can be more challenging.
Dropship requires vendors and distributors to maintain a separate inventory to support direct-to-consumer orders on behalf of specific retailers. While a typical apparel vendor, for example, may be required to put merchandise on a hanger for a store shipment, that same item will have to be folded in a polybag and private-labeled with the retailer's branding for dropship. Dropship inventory also must be managed at the individual item level and packaged and stored so that it can be picked, packed and shipped to a single consumer.
Despite these challenges, retailers are expected to increase their vendor dropship relationships from just a handful of vendors to up to 100 this holiday season. Some vendors are taking on this process directly, while others are looking to third-party logistics providers to support consumer fulfillment.
There will be a shift to real-time integration. Dropship demands more real-time data integration than what is typically required to support bulk shipments to distribution centers. The exchange of item, inventory, order and shipment information — which are supported with standard electronic data interchange transaction sets — must occur on and possibly hundreds of times a day as retailers take consumer orders on their website.
The most critical of these data exchanges is inventory on-hand. Dropship vendors must provide inventory visibility to retailers so they can update their online pro1uGt information accordingly. If an online order cannot be fulfilled because the retailer lacks accurate inventory information, holiday shoppers will simply go elsewhere.
Finally, many retailers now support same-day shipping through their own warehouses and stores, so dropship vendors likely will be required to support next-day shipping.
Keep the consumer happy through supply chain excellence. Capturing a greater share of retailer holiday offerings while keeping customers happy is going to be more complex than ever — particularly as more retailers rely on partners to fulfill customer orders. To keep supply chains flowing smoothly, retail e-commerce managers should track dropship key performance indicators closely.
Using the flow of transactions, retailers can monitor and track vendor performance for speed, accuracy and timeliness of data processing, inventory, order fulfillment, and shipping_ Keep in mind that capturing this performance data also facilitates post-holiday meetings with vendors to review and improve the dropship process throughout Ile year.
Supply chain collaboration leads to holiday success. Managing holiday omnichannel commerce requires effective supply chain collaboration and coordination that is built on existing business-to-business intelligence infrastructure and processes. Retailers that excel at working with their supply chain partners are poised to deliver a seamless shopping experience and will win this holiday season and beyond.
Peter Edlund is a founding member of DiCentral, where he is responsible for leading the company's global marketing initiatives. He has more than 20 years of sales and marketing management experience with a focus on supply chain solutions. Edlund may be contacted at firstname.lastname@example.org. To comment on this article, send a message to feedbackaapics.org.