Protecting retail business from disruption
AS a retailer, traditionally the goal has always been to place orders as early as possible to get commitment on stock for Black Friday and Christmas. The pandemic and other issues have combined to disrupt the normal flow of things both nationally and internationally, while also causing costs to climb rapidly as demand increases. This has led to problems with availability and controlling pricing.
Both internally and externally, supply chains are experiencing issues, primarily, but not exclusively due to Covid-19 related issues. Among others, we’re seeing the effects of:
◆ Delays with producing stock
◆ Problems with returning empty ship
ping containers for reuse
◆ Reductions in the availability of air cargo as passenger flights recover from lockdowns and immigration restrictions
◆ Lack of space on ships leaving the country of manufacture
◆ Delays in ports due to Covid cases, congestion and strikes, leading to ships being stuck outside ports waiting for capacity, or bypassing crowded ports altogether
◆ Increased shipping costs from scarcity, oversubscription and demand
◆ Lack of HGV drivers to move inventory not just in-country, but into the country Even when the products finally make it in-country, there are still issues. In the UK and Europe, for example, truck driver shortages keep products from being delivered to distribution centres, to retailers and ultimately out to customers — and with the Christmas demand for next-day deliveries, that isn’t helpful. While attempts are being made to address this, commercial and domestic cargo is competing with fuel, food and medical equipment for available drivers and capacity.
How does this affect me?
Our system for moving goods between places to make money is predicated on many things going right, and a lot of those assumptions have become unpredictable recently. We’re learning to live with more uncertainty: margins can’t be so large, while delivery dates might not be quite so concrete.
You will need to get better at communicating with your customers, have the resources to order from more than one source and be sure you can move all the stock you order.
Cost projections are difficult, but we can adapt as we get a feel for the delays and price increases. The hardest thing to manage is the expectations of customers used to fast, free delivery who don’t handle “Out of stock” very well. For this reason, pre-orders are not a good idea — launch when you have stock.
Other tips
Adjust your margins now, both to anticipate future costs and to cushion the shocks from suppliers and logistics companies. Look at alternative suppliers that have stock of the same or alternative products in the country already. Look at whether you can justify using air freight as it continues to get closer to sea freight in cost.
Above all, be very careful not to overpromise. Overdeliver instead, especially on marketplaces, as people are quick to submit negative feedback, closing your account in a hurry. Monitor your shipping provider and talk regularly with them to discuss problems. Look for patterns to raise with them. Your shipping is part of the promise you make to customers, and if you can get products into the country, they should be able to get them to the customer as promised.
How do I improve my customers’e xperiences?
Selling in the current environment means making sure you’re overdelivering and communicating well, not overpromising.
◆ When selling online, ensure that your stock figures are always up to date. In fact, consider amending your figures to show less than is on the shelf to avoid overselling. A lost sale will cost you less than disgruntled customers and poor reviews, especially over the Christmas period.
◆ Don’t make stock available to purchase unless it has been positively confirmed to be onsite, available to ship and the correct product.
◆ Consider issuing updates on expected delivery dates in your emails to customers, or on your website, and updating them frequently. This can help manage expectations and give plenty of warning for people considering purchasing.
◆ If selling on marketplaces, consider updating your lead time for delivery to protect you from automatic penalties if there are delays. Courier companies are experiencing high demand, and you could end up with the customer receiving the product after being refunded.
◆ Finally, consider dropshipping. (Full disclosure: this is a service offered by my company, among others.) The dropshipping model has often been disregarded by retailers that hold stock. If you can buy in bulk to increase profit margins, why would you operate any other way? However, the current challenges the retail industry faces, both on the high street and in ecommerce, mean buying in bulk might not be possible, or the most effective way to operate. Dropshipping gives sellers access to stock already in the country with suppliers, requiring less storage space, while the supplier gets paid for stock before it leaves their premises, meaning they can order inventory in larger quantities. Despite making smaller profits on each sale, sellers have no upfront investment in stock, and by working with multiple suppliers, they can extend and diversify their inventory, changing products they sell from season to season.
Setting up dropshipping used to require developers, but with the growth of dropshipping marketplaces, this is less common.
Conclusion
It’s important to preserve your relationship with your customers. So do what’s best for them, and protect yourself at the same time: Find multiple sources for products, be honest and open about stock and timelines, and look at options you may previously have written off like dropshipping, as costs are changing all the time. — Forbes.