By Chris Petersen and Adam Simon
Distributors have been part of the traditional supply chain for decades. They were often called the “box movers” of the industry, because they quite literally performed the essential service of moving mass quantities of products from suppliers to retailers’ warehouses. While distributors still function in that role, what is rapidly changing retail is the customer demand of fulfilling a single unit to a local point they choose. The rising expectations of consumers are creating stress points on logistics and profitability for both retailers and brands. The capabilities for local distribution in the last mile are not only a cornerstone of the new retail ecosystem, distributors are emerging as innovation partners creating strategic opportunities for both retailers and brands.
Nearly half (47%) of customers are frustrated with service worldwide
Pitney Bowes Global Ecommerce recently published the results of an international study across 12 global markets. The results raise a red flag regarding levels of customer satisfaction, and the need for both retailers and brands to strategically collaborate with distributors to improve service levels:
“Nearly half (47%) of online shoppers globally reported frustration with everything from shipping, to returns, to lost products and miscalculated duties and taxes during the 2016 holiday shopping season. What’s worse is that the number of unhappy online holiday shoppers rose six percentage points (pp) over the previous year and increased year-over-year in every single one of the 12 major markets surveyed.”
Can Distributors solve every one of those pain points during the peak period of holiday sales? Obviously no. But, the high level of customer dissatisfaction across so many countries clearly indicates that retailers can’t do it all by themselves, especially during peak holiday periods. The Pitney Bowes study captures the essence of the opportunity for new levels of strategic collaboration for distribution and fulfillment:
“Online shoppers have an entire global marketplace at their fingertips. They expect that there is always a way to get the product they want, shipped where they want, when they want it. This creates both opportunities and challenges for retailers.”
5 Demands of the “last mile” require new services and collaboration
The rise of ecommerce and consumer expectations for last mile delivery are causing new pressures on resources and profitability for both retailers and brands:
- Greater range of products in stock, especially for long tail and ecommerce
- Inventory visibility in store, and at “virtual” sites not owned by retailers
- Inventory proximity to enable shipping in 2 days or less
- Last mile logistics with status tracking every step of the way
- Reverse logistics with ease of customer returns regardless of point of purchase
Retailers simply do not have the capital, resources, systems or infrastructure to handle every dimension of inventory and logistics required for both click and collect and last mile delivery. Innovative distributors foresee a new strategic role beyond being a “box mover” … they play a crucial role of making “real time retail” possible for brands and retailers.
New levels of distributor innovation and strategic collaboration
There are emerging models of strategic collaboration are emerging worldwide. Two case examples are particularly noteworthy, because they illustrate how distributors are innovating and collaborating in new ways.
Redington – Middle East
Redingtion is a technology distributor which offers end-to-end Supply Chain Services and Solutions. Redington has recently collaborated with a retailer to create a smarthome products area in store. This is an example of how distributors are strategically working with retailers on merchandising products, and supporting the inventory required to grow sales in an emerging category.
Ace Turtle – India
It is perhaps inaccurate to describe Ace Turtle as a “distributor”. They describe themselves as “enabling brands and retailers to capitalize on omnichannel opportunities.” In addition to providing end-to-end solutions for the last mile in India, Ace Turtle has developed a unique platform integrating brand, retailer and consumer visibility in ways that enable shipments from partners, distribution and even from local stores. In very strategic ways, Ace Turtle is a “new breed” of collaborative partner focused on customer centric solutions (more than products) for the rapidly evolving ecosystem that is an interface of brands and retailers.
Chris Petersen and Adam Simon are collaborating on a series of blogs that explore the rise of strategic collaboration and new customer centric ecosystems. It will be our great pleasure to engage with Nitin Chhabra, the CEO Ace Turtle, at our Context CES CEO breakfast. Nitin will share his perspectives on innovation and strategic collaboration required for today’s retail ecosystem.
If you are interested in more information on this CES event, contact [email protected].