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The new age of ecommerce is here - and consumers are in the driver's seat. The pandemic years of 2020 and 2021 created significant opportunities for online retailers as ecommerce sales surged above all predictions.
Consumers were already seeking out the convenience of shopping online, but the pandemic accelerated not only the dollars spent online, but the range of products purchased and the spread of online channels in which consumers are looking for shopping opportunities.
Retailers have been forced to adapt their operations and strategies to remain competitive - having faced the dual challenge of getting their products onto more platforms and in front of more customers, while creating the frictionless shopping experience that shoppers now demand. Brands have also had to scale and automate their backend processes to retain control of their inventory, cross-channel merchandising, stock management and order fulfillment. On top of this, the global supply chain crisis has negatively impacted on retailers’ sales and revenue and customer service, and has resulted in price rises.
Linnworks latest research surveyed over a thousand retailers in the UK and USA to discover how prepared retailers are for the great ecommerce acceleration, and the key strategies they need to focus on in 2022 to meet these challenges head on and drive growth.
Commerce is increasingly happening in multiple online environments, wherever consumers are spending their time, and consumers are expecting effortless shopping experiences in these channels. To be competitive, it’s essential for retailers to adapt their operations to be able to sell in multiple channels, while delivering a frictionless and seamless shopping experience across all touchpoints. These heightened consumer expectations present two clear challenges for retailers.
Firstly, for retailers staying connected to their customers by accessing multiple commerce environments simultaneously requires specialist capabilities and knowledge. Secondly, continuously adapting and controlling commerce in all of these environments is complex, costly and technically challenging.
To be competitive and achieve real growth, retailers must adopt an omnichannel selling strategy as a priority. The pandemic already pushed many retailers to launch on new channels, partly as a result of stores closing and partly as a result of seeking new shopping audiences. Of those surveyed, 52% launched products on an online marketplace while 49% launched a social media storefront or marketplace. This is a core execution of a Total Commerce approach - being present where your customers are spending their time. From those retailers who expanded their selling channels, the clear winners were the biggest platforms with the broadest audiences, like Amazon and Facebook.
The complication and cost of serving customers across different platforms is one of the key challenges facing retailers as they expand. Maintaining a frictionless shopping experience while expanding their selling network requires a combination of better supply chain and fulfillment partnerships, and an integrated tech stack which can integrate all backend operations.
Expanding into a multichannel selling strategy opens up a number of complications for retailers as their selling network grows - from managing accurate product listings, through to managing inventory and stock levels across multiple sites. Retailers require backend systems that can integrate information from a number of different sources, both to manage logistics efficiently and to provide accurate data for forecasting and decision making.
Respondents to the Linnworks survey indicated that this was one of the biggest challenges facing growing retailers, with 43% indicating they used more than four tools to manage fulfillment, inventory and all selling channels, and 70% having difficulty leveraging data for decision making due to information silos. The outcome is either retailers have to spend significant amounts of time collating information for decision making, or have to forecast based on singled data points without visibility across their business, limiting the ability to identify new opportunities and and forecast and optimize for growth.
Focusing on optimizing key processes that impact on a retailer’s ability to create an optimal customer experience is key. Keeping control of product optimization and inventory levels across multiple selling channels, while maintaining service levels through streamlined order picking, fulfillment and warehouse management cannot be achieved manually while driving business growth.
There are equally valid reasons for managing fulfillment and warehousing completely inhouse or outsourcing to a third party logistics provider (3PL) to manage. Expanding to cross-border commerce is one of the key drivers of using a 3PL provider as managing orders in-house across multiple international locations can become both impractical and inefficient. Utilizing a 3PL to outsource your distribution, warehousing and fulfillment can lower the barriers to entry into new geographical markets by allowing you to scale up quickly without having to make an investment into infrastructure, Having fulfillment locations close to your new customer base can also help you establish a competitive position in the market with fast and efficient delivery options.
Keeping control of your inventory is also key to protecting your revenue and meeting customer expectations in uncertain times. Key supply chain mitigation strategies include supply chain diversification, forecasting accurately for future demand, and managing availability and product range across different sales channels to avoid overselling and customer service issues. To implement an effective supply chain strategy, it’s essential for retailers to also have full visibility across their business and bring together insights and data points from different functions, not only to identify any issues that need immediate attention but to accurately forecast future demand to maximize selling opportunities.
This shift to both omnichannel and convenience is a major challenge for retailers who need to expand their reach into new platforms like marketplaces and social channels. With this expansion, retailers need to ensure their service levels meet the new raised expectation of what a good shopping and fulfillment experience looks like.
Speak to us to find out how Linnworks can connect and automate your commerce operations so you can capture every revenue opportunity.