Retail Logistics: Opportunities and Challenges
The introduction of e-commerce brought unimaginable earnings but along with it, the consumer demands and expectations also rose dramatically during the past decade. Tech giants such as Amazon, eBay or Alibaba had a crucial role in altering the consumer’s perception and ultimately defined the norm of today. Both an opportunity and a threat, the reduced willingness to wait and the instant gratification of buying a product almost immediately resulted in a new retail logistics landscape.
The rise of the connected customer and the critical changes in technology are other factors that contributed heavily to how digital retail stores interact with consumers worldwide. Personalization, influencer marketing and social media are some of the most powerful tools the retail industry is using to exceed the consumer’s expectations and enhance the experiences they promise to deliver.
Using digital to drive retail sales not only expanded the services and products across an omnichannel but it also created new opportunities for reaching beyond the target audiences. According to a market research published by Deloitte, retail is at a tipping point, where 84% of visitors report using digital for shopping activities before or after their most recent trip to a store and 75% of consumers stated that their shopping behaviour and brand loyalty were dramatically influenced by the product information found on social media channels.
The simplicity of using digital services to shop online and place orders led to concerns regarding the product availability and in general, challenges in retail logistics. Getting the right product at the right place at the right time is not as simple as it sounds. The amount of effort that goes into product movement and demand management is getting more and more complicated. Managing all the components that come into play it is already a struggle by itself. However, mastering these component equals high profit and returning customers.
As described by Fernie and Sparks, authors of the Logistics & Retail Management book, the components that need to be fully-integrated and interlinked in retail logistics are as it follows:
Storage Facilities – Also known as distribution centres, stock rooms of retail stores or warehouse, retail managers need to ensure that these facilities can keep stock in anticipation or otherwise, react to more demand for products.
Inventory – This part lies entirely with retailers. What is the amount of stock that needs to be held and in which locations?
Transportation – The single and most important stage from production to consumption, retailers need to understand the best and most effective ways to get their products transported. This starts from what types of containers and vehicles to covering the scheduling and availability of drivers.
Utilization and packaging – We finally get the point of what the consumer sees and the psychology of product presentation. Is the packaging perceived as a part of the design itself, with high-quality touches or is it simply seen as the wrapping that goes around the product? Retailers should take into consideration the costs involved at this stage, their marketing ability and purpose.
Communication – To capture data and use information at each stage of consumer journey is probably the most well-known component, yet also the most challenging one, due to the influx of information across the entire retail space. How does one successfully influence the buying behaviour of the consumer when there is a variety of options?
According to Salesforce’ market research, 56% of customers actively seek to buy from the most innovative companies, where 63% expect new product and services more frequently than before. In other words, customers expect innovation. It is safe to say we can see a lot of smaller businesses or companies emerging with new concept ideas or tech giants constantly reinventing the retail sector, but the question remains: Is retail logistics entirely dependent on the use of information technology or is it still the basis of product movement?
Nilu Masrour is a Content Marketing Manager at Saloodo!. Previously based in London, she used to generate all types of content ideas and make up sentences for a living. Not much has changed, except for an interest in the German culture, logistics and technologies impacting our society. Like her bio, she’s still a work in progress.
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