Supply Chain Management: Big brands doing online war-dances mean more SCM components to fix

Last week my colleague Karmesh Vaswani, who heads client services group for Retail & CPG vertical in Europe forwarded me a very interesting article from Financial Times titled "E-retailers find big brands hard to touch" from Samantha Pearson (dt 08-Jul-2009, Page 20, part of FT series Dotcom Redefined). There were a number of interesting observations in there starting with the dominance of the traditional giants like TESCO, Argos and Marks & Spencer in the Top-15, how the predicted dot-com way of buying never really became de-facto with a forecast of dot-com retail sales reaching just 10% by 2013 and also, major challenges faced by the diverse set in the top-15 as they try to ramp-up their sales online. One specific point to note was that Amazon.co.uk rules supreme (with Amazon.com independently at no.4) and would be definitely the one to beat, when it comes to dot-com revenues as well as e-commerce & fulfillment models.

As I mentioned above, the article talks of increased presence of brick 'n' mortar biggies in online space - TESCO, Argos, HMV, Marks & Spencer, Dell, Next etc are all there. I was listening to a briefing session by Kevin O’Marah of AMR last week where he was elaborating on this year’s AMR Top-25 (TESCO is the sole non-US retailer in the list) and the key message was what he terms as “flight to quality” of consumers gravitating towards more established names during a downturn.

Also, while online retailing in UK may crawl to only 10% by 2013, everyone realizes it’s the engine of the future including the huge investments some of the top retailers themselves are making in revamping the online channel. One major retailer we do quite a bit of business with has embraced the philosophy of “order anywhere, fulfill thru store” model which makes the distinction between channels that much more blurred and resultant outcome truly cross-channel commerce with far lesser resultant cross-channel conflict.

The article ended with a couple of paras on importance of “delivery service” being the key focus for everyone going forward. Taking care of the supply chain practice here at Infosys, you need to excuse me if I have blinkered vision vis-a-vis everything else, but this could only be interpreted as getting the back-end SCM in order (including all enabling functions – procurement, TMS, WMS, OMS, reverse logistics… the works). That said, this also results in some back n forth not-very-friendly banter between the retailers and their delivery companies with the latter saying retailers wanting to keep costs low prefer to let go of all other delivery parameters. This was in response to 26% of online shoppers saying they'd love it if retailers delivered in less unearthly hours (or thereabouts!).

Anyway, the way I see it, anyone getting their back-end delivery & fulfillment process ramped up could only mean more work for all of us, hopefully!