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COMMENTARY

How smart logistics can enable the future of retail

The rapid growth of e-commerce is fundamentally changing the retail landscape. According to a joint report by Google and Temasek, South-east Asia's online economy is on track to exceed US$240 billion by 2025.

With more businesses jumping on the e-commerce bandwagon, customers today expect speed and convenience at any point of their shopping journey: from where they want to make the purchase to when and how they receive their items. While going online might satisfy the 'where', efficient supply chain management is required to complete the rest of the equation.

In order to meet these changing expectations, it is crucial that retailers rethink their entire supply chain processes, which were initially designed for manual work that can only support a single-channel distribution model. Increasingly, business investment in smart logistics will become a point of differentiation and a success indicator in today's competitive landscape.

Connected retailers today understand that logistics will only grow in importance in tandem with e-commerce, but the devil is in the details, and they might encounter several potential challenges as they transition their business online.

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One characteristic of e-commerce is the prevalence of single item or small-batch purchases and deliveries.

Brands that are used to conventional selling by the pallet or container to other retailers will need to contend with sales cycles that are now compressed from months to mere minutes, and the corresponding need for business-to-consumer fulfilment.

Brands that are transitioning from brick-and-mortar to click-and-order will face similar pressures in ensuring consistent product pricing and availability across all platforms.

In both cases, there is a need for brands to rethink the role that the supply chain has traditionally performed. To truly be successful online as well as offline, they will need to view the supply chain in its entirety, to ensure that the process of fulfilment is seamless and efficient. This is where smart logistics plays an integral role.

Smart logistics is about incorporating technologies into current supply chain systems, to create new or better solutions for companies. It creates a demand-driven and market-responsive supply chain model, where businesses can move stocks quickly to respond to fluctuations in demand within a short period of time and deliver products within the expected duration.

Businesses with smart logistics solutions will gain greater visibility of their entire distribution channel while catering to growing demands and pressures from selling across channels.

The future for retailers will not be a binary choice between physical stores and e-commerce - but a hybrid model that can be executed both simultaneously and seamlessly.

This future can only be realised with the implementation of smart logistics solutions, where retailers can reach and sell to more customers across various platforms with a streamlined supply chain process. For traditional retailers, this represents an exciting untapped opportunity to complement their existing brick-and-mortar operations with an expanded point of sales and new revenue streams.

CHOOSING A PARTNER

While some big retailers have already started building this capability in-house, smaller retailers and startups can tap the help of a third-party solution provider.

When choosing a partner, businesses should pay attention to its ability to help manage and sell across multiple channels, as well as its technology and ease of the onboarding process, so as to minimise any disruption to their day-to-day operations.

E-commerce enablers can provide a one-stop solution to help businesses tap the potential of selling online while not neglecting their brick-and-mortar point of sales. Such integration is crucial to serve the future customer, who will increasingly expect a seamless shopping experience, regardless of touchpoint.

More importantly, whether retailers choose to do this in-house (by investing in more distribution centres and warehousing infrastructure) or with the help of a smart logistics partner, it is important to note that these should not be handled in silos as isolated processes, but holistically, under one unified distribution model.

In addition, smart logistics solutions can also provide retailers with data that can be leveraged to further enhance the overall customer experience down the road.

They can gain insights into customer behaviour and preferences to better understand and deliver on what they want/need. In today's competitive landscape, businesses will need to acquire a bird's eye view of their multichannel commerce data, supply chain processes, and changing customer habits to inform their retail strategy.

The retail industry is on the verge of seismic change, one that will require businesses to completely rethink and transform their distribution model in order to survive. Early adopters of smart logistics will find that the benefits are multi-fold.

With an integrated supply chain model, not only will they be empowered to drive sales and meet current customer demands, they will also be able to respond to new opportunities in an agile manner.

  • The writer is managing director of UrbanFox