In days gone past, the traditional seller and customer roles were simple and well defined. If you were a manufacturer or a brand owner, your customer was either a wholesale distributor or a retailer. To the wholesale distributor, your customer was typically a manufacturer or to the trade.
That left the retailer to own not only the relationship with the consumer, but also the customer experience. That customer experience has evolved over years from the family outing to the local department store on Sunday afternoons or the Bible-sized catalogs that arrived in your mailbox to our current omni-channel environment in which consumers are just as likely to purchase a product via an Instagram sponsored ad than they are from a well-designed storefront window.
We are all aware of the transformation in customer experience that is occurring daily, but little seems to be said about of the emerging battle for end consumers’ hearts and wallets amidst the push and pull of traditional business models and channels.
What was once ceded to retailers has become a hotly contested match. The competitors in the ring are both traditional and new players, and all are armed with the latest and greatest in technology. So, who will win?
Wilhjelm Says... |
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| Irrespective of what channel or business model the consumer arrives from, executing the final mile, both figuratively and literally, determines the level of success of the transaction and ultimately the overall experience. |
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A Newcomer Emerges
Picture for a moment a Las Vegas-style boxing ring being emceed by none other than Michael Buffer himself. Each of the traditional business models have staked out a corner. The retailer, manufacturer and wholesale distributor not only share a peaceful coexistence, but often times a symbiotic one. They might squabble on occasion, but they generally operate as a team, pursuing similar goals.
Then out of nowhere, the disruptor, an Apollo Creed-type character, emerges with an arsenal of technology to claim that 4th and final corner in the ring.
Since then the fight card hasn’t been the same.
The Ring has Changed
The threat posed by Amazon and other online marketplaces is well-chronicled. They have a decades-long hold on the consumer’s experience. But I believe this threat goes well beyond the online marketplaces and the digitally native vertical brands (DNVBs).
We are witnessing seismic shifts in the dynamics of the ring. Traditional business models, once content to reside in their corners, are now coming to the center of the ring with their gloves up.
Manufacturers and wholesale distributors now actively compete for the end consumer through their own websites. Brand owners still provide traditional retailers with product, but they are also opening their own retail locations, launching their own e-commerce sites, and even selling their wares on the very online marketplaces with which their traditional retail customer competes.
Even retailers seeking higher margins through private labels are selling their brands on online marketplaces.
Supply Chain’s Role in the Customer Experience
While the customer experience is comprised of many elements, few will dispute the growing importance of convenience.
Irrespective of what channel or business model the consumer arrives from, executing the final mile, both figuratively and literally, determines the level of success of the transaction and ultimately the overall experience. In order to achieve the optimal customer experience, all channels will have to become highly proficient in handling eaches versus cases and cartons in a hurry.
With a tremendous cost difference between both processes, it’s easy to see the challenges and obstacles senior supply chain executives face in the months and years to come. While the phrase on-time and complete may sound cliché to many in the retail industry, companies across all channels will have to find new and innovative ways to only achieve it but sustain and scale it.
Predictions
The rumble in the ring will continue as competitors encroach on formerly protected corners. Supply chain executives across all channels will face additional pressures to compress their supply chains to not only increase service levels, but to reduce inventory investment. Fulfilling the customer experience will no longer be a store-only mandate, but an enterprise one. While new advanced technologies such as machine learning and AI show promise in the long term, seasoned supply chain executives will be pressed to execute today.
In short, the gloves are off. Traditional business lines are blurred as the new competitors rush in. We’re competing in a new ring, for a new prize: the hearts and minds and wallets of consumers. It’s going to be a bloody fight, but I’m confident we’ll emerge with a superior customer experience on the other end.
I have mentioned in previous columns that it is an exciting time to be in supply chain. It is also not a bad time to be a consumer.
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