The last time I wrote for EC-BP was in mid-May. Since then we've had the GS1 Connect 2012 Conference where I enjoyed meeting up with my peers and colleagues. I'm wondering what some of you thought of this year's program. It felt like there were more people, however something seemed to be missing. There were some great sessions but the one thing that may have been different with this conference was the lack of Retailers and/or maybe the typical tracks that were Retail specific.
One of the sessions that stuck out to me was the one that Scott Bolduc from SPS Commerce and Bill Gratke from Lamps Plus conducted on the process/Steps in supporting E-Commerce and managing the processes for Shipping Vendor Direct to the consumer. I've written over the past years about many of the parts of an E-Commerce and Drop Ship fulfillment model but nothing to the extent of what these guys put together. For those that did not attend that session or were not at the conference, I'd recommend going out to the GS1 website and reviewing the archived presentation. They did a really good job presenting us with a Road Map of the process and how electronic trading could be used to manage each step.
Thinking about their presentation made me recall conversations that I've had with suppliers over the months around E-Commerce and Shipping to Consumers, so I thought it appropriate to write on the topic of whether "E-Commerce is here to stay..." or is it just a fad.
As I've stated over the years, many of the existing brick and mortar retailers have added online ordering as another channel to sell to today's technology-savvy consumer. Many of these Retailers have implemented fulfillment of these E-commerce orders through their Distribution Centers, utilizing the infrastructure already in place. Interestingly enough, there are limitations to this strategy as there are only so many products that can be stored within a facility. So how do we support a wider selection of products to the ever demanding consumer without investing capital for another warehouse? I've also shared over time that there are more and more E-Tailers popping up adding on the competitive landscape. Again, many of these companies fulfill from a warehouse and then face the same limitations of capacity. What are the options?
Many have implemented, or are looking at, an Inventory-less fulfillment model; this model being consumer orders fulfilled and shipped by suppliers. In my observations, this process is probably one of the fastest growing methods of distribution we've ever seen in the Supply Chain.
Not all Retailers or E-Tailers have embraced the concept, so why is there reluctance? I think that part of this may have to do with trusting suppliers to meet the high expectations Retailers may have. In addition there are concerns around releasing control to another partner. Also, there are concerns that there is limited visibility once the order has been released to the suppliers. Lastly, there are concerns around the limited number of suppliers that can fulfill shipments to the consumer. Perhaps these retailers are unclear about where to look for these types of suppliers. I'll also state that technological capabilities may play a part in their reluctance.
It is true that not all suppliers are able or even willing to support managing these types of orders. This reluctance tends to be around investing in the infrastructure to support the process. Many have either embraced this process either through necessity or to be the front runner of their competition.
In talking with many of my clients (suppliers) and reading articles about this market change, there appears to be the thought that online websites or Direct to Consumer is just a test for Retail Store marketing, and the thought that retail will change from individual DS orders back to larger shipments to the DC again. In my option this is a misnomer. Suppliers are hoping that these processes will be short lived but I believe that shipping directly to a retailers' customers is only going to continue to grow and will become a natural requirement for any supplier to support; "It's here to stay..." and there's really nothing that can stop this train. As a supplier, you can continue to fight it or embrace it.
If you're ready to embrace this change then my recommendations are that; success for all parties will mean electronic trading of these orders and the information needed to provide visibility is imperative. Do not assume, however, that if electronic trading is already in place with your partnership, that managing the item set, availability and order visibility can be supported by these same partners. This will need to be a business discussion.
For those suppliers willing to support this type of fulfillment with the assumption that this is a fad and that fulfillment will be moving back to retailers managing selling and fulfillment, I think you are fooling yourselves. This process will be with us for the distant future.