It’s no secret that the events of 2020 were a nightmare for supply chains across the world. Factory shutdowns, employee layoffs, and extended delays caused inventory shortages for both essential and discretionary goods.
In the early months of the pandemic, more than half of e-commerce consumers faced order delays due to inventory or shipping problems, according to a survey by Digital Commerce 360 and Bizrate Insights.
In response to these shortages, many retailers amassed huge inventories later in the year. Imports spiked in fall 2020, causing a different kind of discrepancy. Retailers dealt with inventory excess, and sales could not keep up with swelling import levels that continued into 2021.
Correcting the resulting inventory problems will be a major focus of the post-pandemic retail world. But what lessons can retailers take away from the supply chain crisis of COVID-19 to mitigate these issues going forward? They need to diversify their supply chains, emphasizing an omnichannel approach across retail operations. This way, if one channel of inventory is cut off, operations can still continue. If the inventory is in excess, it can be diverted to other channels. “The more flexible the supply chain, the easier it was for companies to pivot [during the pandemic],” reflected Haozhe Chen, Ph.D., professor of supply chain management at Iowa State University.
Omnichannel strategies are not new, but they took on a new life with increased investments from retailers last year. “This new view requires retailers to think of omnichannel as the full suite of ways a consumer can engage with the brand,” said Amanda Bourlier of Euromonitor International. Omnichannel has expanded past simply shopping at a retailers’ brick-and-mortar and online stores. It now encompasses a range of touchpoints, including selling on social media and virtual marketplaces as well as delivery and returns through last-mile providers. These partnership-driven omnichannel strategies increase convenience for retailers and provide multiple avenues for customers to interact with the brand.
A lack of omnichannel flexibility harmed many retailers to the point of no return last year. Conversely, some retailers found success amidst the pandemic. Those were the ones prepared to use a variety of nontraditional methods to fulfill orders and meet needs. In Target’s third quarter of 2020, for example, order fulfillment from stores accounted for an impressive 95% of sales. Alcohol producers like Bacardi and Anheuser-Busch leveraged in-stock materials to produce hand sanitizer, which proved to be a hot commodity. Nano-warehousing using closed retail centers like shopping malls also proved to be a strong strategy. “Those who have supply sources close to customers or markets seem to have suffered less than those that rely on distant suppliers,” Dr. Chen also noted.
Certain aspects of life may be returning to normal, but the effects of COVID-19 will have a long-lasting impact on the retail landscape. Companies that readjust their focus and optimize supply chain performance now will be prepared in the wake of future challenges. Take a look at the story of one GEODIS | City Delivery client since 2018.
When the pandemic brought in-store shopping to a halt, e-commerce exploded, inundating one big box consumer electronics retailer with online orders. While others struggled to keep up with this increased demand, the retailer was able to quickly pivot to existing inventory and use ship-from-store strategies because of its existing partnership with GEODIS | City Delivery. Since 2018, this partnership has yielded an incredible 425% growth in delivery volume.
By diversifying your supply chain now with a total solutions provider like GEODIS | City Delivery, your supply chain will be more prepared to withstand the world’s next unprecedented event. See how GEODIS | City Delivery can help you correct inventory problems and optimize your supply chain to stimulate business growth.