Commerce Trends

by Manhattan Associates

Narrowing the expectation gap by supercharging the supply chain

With super-fast fibre Internet on the horizon, we are on the verge of an era where buffering is a thing of the past and download times are practically non-existent.

The exponential rise in the speed with which we can transfer data online has been mirrored by an increase in demands by customers to receive their goods more quickly. Where consumers were once constrained by bricks and mortar stores’ opening hours, today the global retail marketplace is open and online 24/7. Unfortunately for retailers, however, goods cannot be delivered via fibre optics.

Customer patience has evaporated and their expectations have skyrocketed. Three day wait? Shop elsewhere. Overnight delivery? Well, only if I can order up until midnight and pick it up nearby the next day. Wait at home and sign for your parcel? A thing of the past.

The instantaneous nature of today’s connected world is fuelling the desire for instant fulfilment. But a disconnect exists between what consumers want and what retailers can give them – and its growing by the day.

Supercharging the supply chain

Supercharging the supply chain

In a survey from just one year ago, consumers ranked speed as a 4 (1 being most important, 5 being least). Today, they rank it as a 3 – behind the twin pillars of price and choice, but ahead of convenience and expertise.

Shoppers want to see more two-hour click-and-collect (57 per cent) and same day delivery (48 per cent), because it is these service offerings that get them their goods as quickly as possible..The problem, however, is that eight out of ten retailers simply don’t have the infrastructure to provide these services.

To close the gap, retailers need to modify the legacy systems that were primarily designed for high street shopping only, and get them fit for serving multiple channels. Retailers need to track and understand fast-changing consumer behaviours and have in place the requisite back end systems needed for multichannel fulfilment. However, despite offering multiple channels, 37 per cent of retailers still remain organisationally siloed, meaning order fulfilment using stock from multiple sources from across the supply chain doesn’t and will not happen. Ultimately, this results at best in slow and unpredictable fulfilment, and at worst, in lost sales and a downward spiral of profitability erosion.

Many retailers are investing in responding to these rising customer expectations though – because they must do to survive. They’re making two hour click-and-collect a top priority, because 37 per cent of shoppers already want it, and that number is only going to increase.

Those retailers that are able to deliver such services profitably will be successful, but the process needs to start with closing the expectation gap. And that is about getting the business operating “an integrated one” and having the enabling supply chain processes and technologies in place to give customers what they want in a way which is profitable for the business.