In today’s online retail landscape, success can sometimes arrive like a lightning bolt, catching even the most seemingly prepared off guard. Picture this: a small apparel retailer suddenly finds itself thrust into the spotlight overnight. How? A single TikTok video featuring one of its products goes viral, catapulting sales to an unprecedented 1000% surge.
Yet, amidst the jubilation, chaos ensues. The retailer, unprepared for the tidal wave of demand, is grappling with a nightmare scenario: sold-out inventory, backorders stretching into the unknown and countless disappointed potential customers left in its wake.
So what went wrong? The problem here lies not in social commerce — selling products directly via social media platforms — but in the delicate balance of supply chain management and inventory levels failing to support the surge of interest in their products. With nearly 5 billion users on social media (over half the global population!), the likelihood of this situation happening to businesses only multiplies daily. We live in a world where social platforms like Instagram, TikTok and Snapchat allow anyone to become a brand ambassador or salesperson; a single viral post shared by a popular celebrity like Taylor Swift, for example, can create an immediate virtual stampede as thousands flock to the website to buy — and the product instantly sells out.
The rise of social commerce and its challenges
Social commerce is exploding, creating immense opportunities for businesses to reach new audiences and drive revenue through viral product promotion. By 2025, experts estimate social commerce will be a $1.2 trillion market worldwide and surpass $100 billion in the U.S. But, “going viral” can lead to ruin if retailers don’t solve the supply chain challenges that come with it.
Companies must be prepared by being flexible enough to manage and fulfill orders rapidly and respond to spikes in demand. And legacy systems won’t cut it. To thrive in this new era of social selling, business leaders need to reinvent their operations, implementing scalable, nimble technologies like order management software.
Visually captivating and interactive platforms like TikTok and Instagram Reels are ideal for product discovery and impulsive purchases. With features like shoppable posts and integrated checkout, buying becomes seamless, eliminating the need to leave the app. In 2022 alone, consumers spent $20 billion on livestream commerce, a number that could reach $55 billion by 2026 as nearly 20% of U.S. buyers watch influencer livestreams and make impulse buys.
This trend empowers retailers to connect with younger demographics, tap into organic reach, and boost sales through user-generated content. A standout case is the Stanley Quencher water bottle. Despite maintaining a steady $70 million in annual sales, the Quencher experienced a surge in popularity due to savvy marketing tactics and social media influencers generating buzz. With influencer endorsements and viral unboxing videos on TikTok, the Quencher propelled Stanley’s annual revenue to over $750 million within a few short years.
However, the explosive growth of social commerce presents significant challenges for operators and their supply chains:
- Half of warehouse operators struggled to forecast demand accurately for 2023, likely because factors like fluctuating consumer preferences and market trends complicate forecasting and inventory planning. When demand surges rapidly overnight, it could exacerbate the challenge, potentially resulting in missed sales opportunities and increased inventory costs.
- Nearly three-quarters of consumers think stockouts have worsened since the pandemic panic-driven buying spree, and 54% also believe product availability is bad in stores and worse online (61%). These sentiments stem from the ongoing supply chain struggles to remain agile and flexible, hampering company ability to respond quickly to sudden increases in demand. Consequently, stockouts, shipping delays and overall unsatisfactory customer experiences remain a serious problem.
- Nearly half of supply chain leaderslack real-time visibility into their inventory and operations, creating blind spots in their operations and hindering efficient decision-making. Supply chain visibility is crucial for businesses to respond quickly to changes in demand, optimize inventory levels and enhance overall operational efficiency.
- Outdated order management systems — built for traditional retail — exacerbate these challenges by struggling to handle the complexities of omnichannel operations, leading to inefficiencies and customer dissatisfaction. Upgrading to modern, omnichannel-enabled systems is crucial for streamlining operations and enhancing customer experience.
Businesses should seize the vast opportunities to reach new demographics and fuel growth through viral promotion. But taking advantage of these prospects requires supply chains to undergo a digital transformation — implementing solutions enabling visibility, automation and agility across channels — or risk getting swept away.
The need for agile order management
To fully capitalize on the opportunities presented by social commerce, businesses must invest in agile order management systems. These systems not only enhance visibility, automation and flexibility throughout the supply chain but also play a crucial role in optimizing inventory allocation across various sales channels, stores and warehouses in real-time. Automated order processing expedites fulfillment processes, reducing errors often occurring with manual tasks.
Additionally, dynamic inventory allocation and routing ensure efficient fulfillment by leveraging the most appropriate stock location. This seamless integration among order management, logistics, inventory and suppliers facilitates end-to-end coordination, facilitating smooth operations. This approach empowers retailers to swiftly adapt to the dynamic industry landscape by responding quickly to shifts in demand patterns and inventory availability.
Moving away from basic tools to navigate the complexities of supply chain management is imperative. Doing so becomes more crucial with the added intricacies of social commerce. Half of supply chain organizations will invest in applications supporting AI and advanced analytics capabilities through 2024.
Enhanced data analytics and machine learning (ML) are increasingly essential for accurate demand forecasting and inventory planning, ensuring retailers can effectively meet customer demands. These advancements are seamlessly integrated into existing management software, providing businesses with a comprehensive solution that optimizes their supply chain operations.
Modern order management software offers a range of key capabilities designed to meet the evolving needs of retailers in the digital age. These include:
- Omnichannel order orchestration to streamline fulfillment across multiple channels.
- Rules-based order sourcing and routing for efficient order processing.
- Integration with third-party logistics providers, inventory systems and suppliers to ensure flexibility and agility.
- ML algorithms embedded within the software, which enable intelligent order promise dates based on inventory capacity for enhanced fulfillment efficiency and customer satisfaction.
As more leaders recognize the importance of incorporating AI-driven technologies into their supply chain processes, the adoption of purpose-built order management solutions continues to rise. By leveraging these advanced capabilities, retailers can gain the supply chain agility required to capitalize on viral product opportunities and drive sales growth, mitigating the risk of lost revenue from inefficient operations. This way, retailers are well-prepared for unexpected spikes in demand, like Taylor Swift wearing their clothing or during seasonal rushes when everyone pulls out their Stanleys.
