Jul 19, 2017

Entering the Age of eCommerce with the Right Supply Chain Strategy

The writing has been on the wall for some time, but now it’s quite clear that online shopping is more than just a footnote or a hot consumer trend. In the not-too-distant future, shoppers will be able to order just about anything they need on the internet, and in many cases, they’ll get it in a matter of hours.
 
When Amazon announced plans to purchase Whole Foods for $13.7 billion, it was a telling sign that a major shift in the retail landscape was underway. Amazon already has the reputation of being a “disruptor,” upending the way people shop online and in physical retail stores.
 
The 2016 debut of the first Amazon Go store showed the internet giant was eyeing up ways to transform grocery shopping and experimenting with brick-and-mortar. Inside the Amazon Go store, shoppers can pick up items and simply walk out the door to get charged for purchases.
 
There’s also Amazon’s Prime Pantry program, in which members can have common grocery and household items shipped to their doorsteps for a flat rate. Prime Now allows members in select locations to shop online and have merchandise from local retailers delivered that same day. Plus, anything from Amazon can be ordered with the convenience of voice-recognition technology through the Alexa virtual assistant.
 
Forbes contributor, Howard Yu, notes that Whole Foods has a 456-store footprint. Its stores are located in urban areas, and its customer base tends to be wealthier. He writes …
 
“I can’t even begin to fathom the infinite possibilities whereby Amazon could start remodeling every single aspect of Whole Foods’s operations: front-end customer support, supply chain management, warehouse operations, online web store presentation, curbside pickup services, auto replenishment services, promotion based on geolocation data, and much more. The list goes on and on. Never in business history have we seen a single company with so wide of a scope in its operations, so deep of its analytic capabilities, and so committed to embark on such a bold experiment. It’s set to reinvent the retail industry as we know it.”
 
Anyone who’s curious about the crossroads of traditional retail and eCommerce should look at where Amazon’s interests lie.
 

Online Shopping by the Numbers

 
Retail stores are still important, but the stores that failed to launch an effective omni-channel strategy are struggling, and statistics show how much online shopping is becoming part of everyday life.
 
The State of Omni-Channel Retail study from Kelton Global and BigCommerce found that 80 percent of Americans purchase something online at least once per month.
 
An eCommerce strategy is extremely important for reaching coveted Millennial consumers. More than two-thirds of this generation say they prefer shopping online. Millennials and Generation X spend an equal amount of time shopping online (6 hours weekly), but the study found even seniors are spending more than two hours a week browsing potential purchases on the internet.E_By-the-Numbers.png
 
For parents, eCommerce can provide convenience, especially in homes where both Mom and Dad are working and have little time to run errands during the day. So, it should come as no surprise that parents spend more time and money online than non-parents. Additionally, nearly half of all parents surveyed in the State of Omni-Channel Retail study said they “couldn’t live without online shopping.”
 

Dealing with Change and Challenges

 
With changes in shopping habits come changes in the supply chain. As a result, brands and retailers are finding their logistics becoming increasingly complex.
 
Fulfilment for eCommerce is creating a higher volume of deliveries in smaller package sizes. It includes more touches and transitions as merchandise moves from the manufacturer through an omni-channel supply chain including online marketplaces, direct-to-consumer methods such as third-party delivery, and traditional retail distribution. Drone delivery will be yet another aspect of fulfilment to consider in the near future.
 
The complexity of these supply chain changes is adding costs and tightening margins, as are high consumer expectations. Online shoppers can use the internet to easily compare competitor prices. Plus, they want fast and free shipping.
 
Online shoppers also expect the merchandise they order to get to their homes in good condition. This presents a challenge as the eCommerce supply chain puts a lot of stress on packaging. Merchandise must be packaged in a way that stands up to the rigors of being shipped across the country, often in a box with other items.
 

The Amazon Factor

 
The graph below illustrates how Amazon is far and away the leading online retailer in North America. That’s one reason to explore ways to work with Amazon rather than compete against it.Why-Amazon-Matters-the-Most-Image.png
 
Amazon is setting the standard for ways to improve eCommerce packaging for a better consumer experience and waste reduction.
 
“Wrap rage” is a term used to describe the way customers can become irritated with the unboxing process when they are forced to deal with pointless packaging that is difficult to open. This can sometimes occur when merchandise is unnecessarily delivered in packaging designed for a retail store when a much simpler packaging solution would suffice. The video below demonstrates this concept.
 
Traditional packaging is not designed for eCommerce. More efficient solutions include eCommerce Ready Packaging (ECR), which minimizes the chance for damage during transit and is often shipped in an overbox. There’s also Ships in Own Container (SIOC) packaging, which does not require an overbox.
 
To improve the user experience, Amazon is strongly encouraging the adoption of what it calls frustration free packaging (FFP). It considers this type of packaging to be at the pinnacle of eCommerce shipping solutions, providing the best customer experience.Amazon-packaging-certification-pyramid.png
 
Certified Frustration Free Packaging from manufacturers selling through Amazon is designed to:
 
  • Open easily while protecting the product.
  • Reduce the overall amount of packaging materials.
  • Be recyclable.
  • Eliminate packaging prep by Amazon.


Get eCommerce Packaging Guidance from Menasha

 
Navigating the changes and challenges that come with meeting the demands of eCommerce is easier when you work with a partner that understands the requirements and can help you develop the right strategy.
 
At Menasha, we’re not only thinking about the retail shelf, we are also considering the requirements of the ever-evolving omni-channel supply chain. That’s why we’ve developed solutions designed to reduce the need for transit packaging, improve efficiency, and help manufacturers gain proper certifications.
 
Through our contract packaging services, we can reduce touchpoints and transitions, identifying ways to simplify your supply chain instead of adding complexity. Menasha has a reputation for leading the way in merchandising promotions and retail displays. Now, we’re proud to be helping brands adapt and break new ground in eCommerce while providing expert insights that ensure our clients stay in compliance with major retailers, including Amazon.
 
Contact Menasha today to learn more about opportunities to work with us.