In ancient times, you went to a chaotic open-air market where farmers and craftspeople hauled their goods for sale. About a century ago or so, that model shifted to permanent shops set up near the center of town. That slowly shifted to larger local, and in some cases regional, department stores. Then Walmart came along and created the big-box retail model, and it still rules in-store sales today, with its 2016 revenue rolling in a hefty $482.1 billion. And it all happened because of changes in the supply chain.
Today, however, that’s changing. Small online retailers are popping up everywhere and can compete in their own way. Even though retail has changed dramatically over the millennia, why consumers buy hasn’t changed. Their preferences have always been:
What has clearly changed, though, is the how. But why should you focus on your supply chain as your key driver of growth, rather than something else?
- Logistics Costs Are the #1 Reason for Shopping Cart Abandonment
The global average shopping cart abandonment rate in 2016 was 77.24%. Could you imagine your reaction if 7-8 people out of every 10 who entered your store left empty-handed? Your jaw would hit the floor in astonishment.Online shoppers don’t purchase for many reasons. But the chief one is additional fees at checkout.And what are those?
Shipping fees. You could also call those “logistics costs.”
It’s tough to deliver every package to each customer as fast and affordably as they want. But with strategic use of robotics and automation, you can keep your logistics costs down.
- New Technologies Are Driving Supply Chain Success
Investing in your supply chain no doubt carries significant risk. Invest in a new type of data analytics or data science company, and you could find yourself losing all your money in 18 months anyway because it turned out their system wasn’t the most efficient after all. Many leading retailers have considered this, and then failed to adopt, but that too has only put them in an even weaker position.
- If You Don’t Innovate, The Worst Could Happen
Currently, Americans can order (to a certain extent) directly from Asian manufacturers on Alibaba. They can provide lower costs than American manufacturers. But, they can’t match convenience or speed (yet). Customers may not actually get their product. It could take 3 weeks, or longer, to get it. And if it arrives damaged, a distinct possibility since it had to travel thousands of miles, the whole process starts all over again.
But, what if Asian manufacturers eventually innovate to the point where they master speed and convenience? Even Amazon’s not safe if it fails to innovate.
Is your supply chain your key to growth? Likely so. Taking the next right steps to innovate forward rests on you.