E-Commerce Necessitates the Retail Industry to Prioritize Sourcing & Supply Chain Management
Amazon has served as an industry disruptor over the past 2 decades beginning when they posted 100% growth rates for every quarter in 1996. Amazon sustained that growth into 1997, leading to 148 million dollars in sales at the close of that year. In the 1990’s selling direct to consumers was a novel idea that caused pause and hesitation for many large retailers. Amazon’s success was followed closely by Dell who moved to offer products through e-commerce channels directly to consumers. The landscape of the retail industry was changing underneath the foundations of many large, well-established businesses.
Now in 2018 according to Deloitte’s "Global Powers of Retailing 2018" which announces the 250 global retailing leaders, an interesting trend has emerged. Within this list of industry movers and shakers, the 50 fastest growing companies on the list have made selling direct to consumers online a critical task, by dedicating massive amounts of resources to building out their online platforms.
“The 50 fastest-growing retailers grew revenue, on average, four times faster than the Top 250 group as a whole, recording a 20.9 percent composite compound annual growth rate from FY2011 to FY2016. This robust pace was driven largely by rapidly expanding e-commerce sales”.
(Deloitte Global Powers) By selling online, these companies are making a strategic decision to expand to omni-channel selling or move away from traditional brick and mortar locations all together. Transitioning from one channel to another gives rise to an entirely new set of problems. Product speed-to-market, quality issues, product information accuracy (data accuracy) and inventory control (smaller orders/shorter lead times) are just some of the issue that can cause supply chain disruption. Supply chain inefficiency can stagnate and growth would be near impossible. The flow of products in the supply chain has to be collaborative, reactive, agile, and easily communicable all while being completely visible.
It comes as no surprise to see that Albertsons (59.7 billion in revenues) and Steinhoff International Holdings (13.6 billion in revenues), two of the top 50 fastest growing companies have invested in a retail sourcing and product development platform. The decentralized total sourcing management platform compresses the supply chain, helping Retailers and Brands expand assortments, accelerate new products to market, and efficiently on board new suppliers. By using the retail PLM platform combined with end-to-end supply chain management, it clearly shows the emphasis these retailers put on streamlining their product development and supply chain processes, to fully utilize their omni-channel strategy. John Standely CEO of Albertson’s newly acquired Rite Aid stated, “the merger will help the company expand its food offerings to stand out from CVS Health Corp., Walgreens and Walmart. It will also expand Rite Aid’s e-commerce offerings given Albertsons’ progress in that realm.” (WSJ Haddon 2018)
Clearly the landscape for retailers has shifted a great deal since 1996 when Amazon began selling online. In this age of omni-channel selling, supply chain efficiency has taken a front seat for many large retailers. Product Lifecycle Management (Retail PLM) and Retail sourcing platforms will play an ever increasing role in the pivots retailers are faced with. As decision makers take a deeper look at their supply chains and realize their product development, sourcing and supply chain needs, retail PLM and retail sourcing software will be there as an invaluable tool to compress the supply chain, and create greater visibility along the way.