E-Commerce Innovation Needed by Retailers

This is an excerpt of the original article. It was written for the March-April 2015 edition of Supply Chain Management Review. The full article is available to current subscribers.

March-April 2015

Anyone who’s ever bought a house knows the realtor’s motto: Location, location,location. It’s the most important factor in determining the value of a property. Based on the press releases that come across my desk these days, supply chain’s motto is: Innovate,innovate, innovate. This issue includes approaches to inventory optimization, contract management with third party logistics providers and contract manufacturers, and the Goldilocks approach to supply management—an innovative concept aimed at keeping your procurement department from running too hot or too cold.

Browse this issue archive.

Already a subscriber? Access full edition now.

Need Help?

Contact customer service

847-559-7581   More options

Not a subscriber? Start your magazine subscription.

Last summer I wrote a column titled “Holiday e-Commerce: Innovation Required” (SCMR Jul/Aug 2014). In it, I delved into the causes of the substantial late deliveries that occurred during the 2013 holiday season. Many gifts were not delivered in time to be put under the Christmas trees of lots of families. My view was that the e-retailers and parcel carriers set customer expectations too high. They positioned legacy services as if orders could be submitted as late as possible the day before, yet still be delivered by Christmas Eve. The media laid most of the blame on the parcel carriers despite the fact that retailers were equally—if not more—complicit. The carriers had not tailored their delivery services to accommodate holiday nuances, and retailers were characteristically struggling to handle large volumes of e-orders. 

I concluded that parcel carriers and e-retailers needed to jointly innovate new holiday delivery services, especially more realistic delivery schedules. They appeared to have done this as delivery performance vastly improved this past holiday season. Apparently the parcel carriers added costly capacity and convinced retailers to not overpromise delivery dates, as well as to provide forecasts that they would not exceed. While deliveries improved, brick-and-mortar retailers still struggled because they retro-fitted existing supply chains, rather than making the investments needed to succeed in e-commerce.

Short History of Mass-Market Retail
I started my career at a consulting firm with Sears, and Roebuck and Co. as a client. Sears was the Wal-Mart of its day as the highest grossing merchandizer. Sears was also an early version of a successful omni-channel retailer with two major sales channels: brick-and-mortar stores and mail order catalogs (the precursor to e-commerce). Its legacy catalog business grew from the late 1880s by servicing the expanding Western frontiers. Sears separately managed two supply chains.

This complete article is available to subscribers only. Click on Log In Now at the top of this article for full access. Or, Start your PLUS+ subscription for instant access.

SC
MR