AirBNB-ification and Uber-ization of the supply chain

by | Nov 21, 2016

The old models of the supply chain are being smashed to bits. The route from manufacturer to today’s customer can travel many different paths with more and more possibilities every day. Continuing with the old methods of having freight delivered to a distribution center or retail store isn’t enough, and drop shipping or outsourced fulfillment are only the start.

Technology has made it possible for consumers to get pretty much whatever they want delivered to their homes, within bounds of the law. Consumers can have much of the world delivered to their door in two weeks globally, two days nationally or two hours regionally.

The “last mile” of the supply chain is changing

It’s not just Amazon and Walmart getting in on the innovation, other retailers are finding more ways to make themselves convenient to consumers, and services are popping up all over to help retailers out. Uber has made same-day delivery service available for any merchant. They’re even testing the use of self-driving Uber cars to make deliveries. That’s not even getting to Amazon’s testing of drones or the robots making grocery deliveries in the Washington, D.C. area.

Instant gratification for that one “gotta have it now” product isn’t the only motivation for change. Sometimes there are markets that are not as popular for some products, or vendors don’t even know that their product could have a secret following in another country. Or, perhaps a country has a high population of immigrant groups that want a little bit of a taste of their homelands, but their favorite thing isn’t available where they are.

Sharing economy enters the supply chain

Enter services like PigeeBee. PigeeBee connects shoppers who want a product from a foreign country with travelers who are headed to that destination on business or personal vacation. The service started with a new parent and a newly adopted baby:

After adopting his son in South Africa, entrepreneur David Vuylsteke brought a tube of cream home with him from the orphanage. It worked so well at soothing his son that Vuylsteke wanted a steady supply, but the cream was nowhere to be found in Brussels, forcing him to rely on family members making the trip to South Africa. “This is stupid!” Vuylsteke thought. “Planes are taking off from Johannesburg every night for Europe. How can I get in touch with somebody?” So he built the infrastructure himself, launching PiggyBee in 2012 to connect travelers with far-flung people in search of foreign goods.

PiggyBee is one of a many sharing economy companies sprouting up thanks to technology. One or more of these new delivery models is bound to disrupt the logistics industry, not unlike what Airbnb has done to hospitality and what Uber has done for taxi services. With Uber dabbling in delivery, as well as e-commerce giant Amazon, traditional shipping companies are taking notice, testing new programs and seeking to make strategic investments as they try to stay ahead of a rapidly changing industry.

Moving forward in the new supply chain reality

These methods for getting purchased items delivered to consumers are extreme. They are at the very leading edge of the possibilities for shipping and delivery – they’re not going to be practical for every e-commerce provider or consumer for that matter. But knowing how the supply chain and package delivery are changing can help online retailers, and drop ship capable suppliers plan and strategize for how to compete in the future.

There are a variety tools and technologies to help retailers become as streamlined as possible. Not every shopper is going to need items delivered within two hours. Statistics show that if you can deliver an online order within 2-3 days, many consumers will be happy. Most shoppers are also not willing to pay the higher shipping prices charged for same-day delivery, and most shoppers are willing to buy online and pick up in store (BOPIS).

How can you get to the tightest turnaround? Here are a few examples of helpful tools that can get retailers to their quickest turnarounds for faster delivery.

  • Order automation – Time is money and automation reduces how much time people spend doing manual entry. Order fulfillment can be automated, sending information instantaneously from the time that a shopper’s order is placed, thus decreasing the amount of time it would take to get their order out the door.
  • Fulfillment (EDI) – Have online shopping orders skip straight to the supplier for fulfillment via drop shipping, either to the consumer’s home or even to a local store for pick-up.
  • Data analytics – Stock outs and inventory in the wrong location can contribute to delivery delays, especially as ship-from-store initiatives expand. Use data to identify inventory levels and buying trends so you’re never out of the products your customers need, then they’re most likely to need them. Which brings me to…
  • Real time inventory – When consumers place an order online, they take it at your word that you have that item for ready for them. If they place the order and you’re still waiting for your supplier to deliver, they could get frustrated, cancel the order and find another retailer who can get the item to them faster. With real time inventory, you can temporarily pull a product from your e-tail store if you’re running low and put it back up when you get the items in stock again.
  • Inventory location – Related to the amount of inventory is the location of the inventory. You may not have a total stockout, but if your available inventory is on the other side of the country from your customer it will take more time for delivery. The shopper’s expectations will not be met they’ll likely take their business elsewhere. Use data analytics to help identify where inventory is and make adjustments before the customer demands it.
  • Sourcing tools – Perhaps you have a hot product on your e-commerce site and you want to make sure that you always have a steady supply. Or perhaps you want to find new products that you think your customers would like. Utilizing a sourcing solution with a retail network can help you to keep a steady supply of existing products as well as discover new items to appeal to your shoppers. A sourcing solution can help identify suppliers and vendors that offer the products you want and have the delivery capabilities to fit your needs.

The retail landscape is changing, and with it, the supply chain changes, too. Planes, trains and 18-wheelers are no longer the only options for getting products from point A to point B, or off to point C. Knowing how shipping and delivery is changing can help retailers try to strategize now about how they’re going to satisfy their customers in the future.

Retailers looking to provide better inventory visibility and streamlined fulfillment can visit the SPS Commerce website for more information on our cloud-based solutions that can make this process run more efficiently and profitably.

Streamline and improve workflows with EDI.

Streamline and improve workflows with EDI.

Enhance supply chain predictability and connect to the retail industry’s largest network with EDI.

Sara Duane

Sara Duane

Content Marketing Manager at SPS Commerce
Sara Duane is a content expert for the SPS Commerce marketing team. She provides valuable articles and important information about e-commerce, merchandising strategies, order fulfillment and other topics related to retail supply chain optimization.
Sara Duane


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