The Retail Supply Chain in 2021 & How to Adapt Your Business to Survive
March 29, 2021
Ordering inventory from suppliers.
Storing and managing inventory.
Picking, packing, and shipping orders.
The tasks above only name a few parts of the retail supply chain. With everything that goes into managing logistics, it’s enough to make you think: will I ever have time to grow my online business?
It’s true — managing a retail supply chain is a time-consuming process, and it’s only becoming more complicated as the ecommerce industry grows.
In the United States alone, the ecommerce industry grew by 44% in 2020. Online retail was already growing rapidly, but the pandemic expedited its growth and caused a major shift in buying behavior, changing the future of ecommerce — especially when it comes to logistics.
Because of fast industry growth and changes in customer demand (and expectations), managing an effective retail supply chain has become harder for many online brands that don’t have the infrastructure, technology, and bandwidth to keep up with competitors and marketplaces. In fact, just renting warehouse space has become 10% more expensive than in the past.
But thankfully, there are several ways to optimize your supply chain while saving time and money so you can focus on growing your business.
In this article, we will cover what a retail supply chain entails, how the traditional supply chain model has changed post-COVID, and why today’s fast-growing online brands choose to outsource parts of their retail supply chain to logistics service providers like ShipBob.
What is the retail supply chain?
There are several moving parts that make up the entire supply chain, including supplier relationships, warehousing, inventory management, picking and packing orders, shipping and carrier partnerships, managing returns, and more.
The impact of the COVID-19 pandemic on the retail supply chain
The COVID-19 pandemic has quickly changed how retailers operate their business, which means that the traditional retail supply chain isn’t going to cut it.
There is a lot more that goes into a creating an efficient supply chain, including the integration of automation and technology, as well the need to adopt an inventory distribution model to expand customer reach and meet their expectations with fast, affordable shipping options. Even free shipping is becoming more common, but is not doable with an inefficient supply chain.
Thinking beyond the pandemic and looking toward the future of ecommerce, here are just some of the ways that retailers can continue to improve their retail supply chain:
Adapt to changes in consumer demand
Consumer purchasing habits shifted drastically in 2020 as more and more buyers shopped online. While we can expect this effect to lessen slightly as COVID-19 restrictions are lifting and vaccinations are distributed, retailers should be prepared for some of the new buying habits to stick.
Demand forecasting is a business strategy that should always be a priority, as it is the ability to predict, analyze, and understand future customer demand for a product.
Without demand, there is no ecommerce business. And without a thorough understanding of demand, businesses aren’t capable of making the right decisions about marketing spend, production, staffing, warehousing, and more.
“We were already growing quickly when COVID began, then we completely sold out the first week of the pandemic. In three weeks, more than 34,000 customers were waitlisted on Touchland.com. We even did pre-orders to try and meet demand.
Between March and May 2020, we had up to 700 orders per day and sold 10,000 dispensers to industry-leading brands in those three months.”
Andrea Lisbona, Founder & CEO of Touchland
Focus on fast, convenient, and reliable fulfillment
Strategic ecommerce businesses focus a lot of time on finding ways to improve the fulfillment process that will result in higher order accuracy rates and faster shipping — whether it’s transforming brick-and-mortar retail space into dark stores to handle fulfillment, splitting inventory across warehouses, or implementing fulfillment software to speed up the picking and packing process.
Track inventory to forecast demand
As monthly order volume increases, you will need a system in place to track inventory in real time to meet customer demand and expectations around fast shipping.
There are several benefits to inventory forecasting, including the ability to:
- Optimize inventory storage.
- Replenish inventory in a timely, cost-effective manner.
- Avoid stockouts and high carrying costs.
Especially if you’re storing inventory across multiple fulfillment center locations, controlling stock across your distribution network and understanding demand for each geographic location will not only help you fulfill orders on time but also provide insights into how much inventory of each product to keep in each location.
However, real-time inventory tracking and forecasting requires the integration of an inventory tracking system such as inventory management software or other type of tool that lets you monitor real-time inventory levels of each SKU for better inventory control. This includes tracking inventory from your supplier, to tracking current inventory levels in each warehouse.
Automate for efficient inventory allocation
Whether you store inventory in one warehouse or throughout a domestic or international fulfillment network, implementing technology to automatically track and view inventory levels in real time all from a single dashboard is the best way to stay on top of your supply chain.
Automating product allocation removes the need to track inventory manually using spreadsheets, which also helps to reduce human error.
By using inventory automation software, you can create, manage, and merge SKUs, easily forecast demand, set automatic reorder points, view which items are fast-selling or slow-moving, and much more.
“My end goal when I started my business was to create something that was fully automated, so I could focus on driving sales. I didn’t want to have to worry about inventory and distribution as much.”
Josh Hollings, Founder & CEO of Drop FX
How to improve retail supply chain management
Because of its complexity, optimizing supply chain management takes a lot of time and effort. You will need to invest in people, technology, and logistics infrastructure to establish a seamless ecommerce supply chain.
To stay competitive with similar or established brands (and even on marketplaces like Amazon and Walmart Marketplace), an optimized retail supply chain consists of a robust distribution network, best-in-class technology and automation, and a shipping strategy that’s fast and cost-effective.
Here are four benefits that you can expect when you partner with a 3PL to help manage your retail supply chain:
Outsource ecommerce warehouse management
Warehouse management is a crucial component in establishing a proper retail supply chain. Proper warehousing can impact inventory management, the picking and packing process, storage space and costs, shipping, and inventory distribution.
Unlike on-demand warehousing, a 3PL offers not only storage space but also specializes in storing your inventory as well as picking, packing, and shipping your orders from their warehouses or fulfillment centers.
A 3PL also uses a warehouse management system (WMS), software designed to optimize operational processes in a warehouse. A WMS provides full visibility into real-time inventory levels and storage, staff productivity, demand forecasting, and fulfillment workflows throughout multiple warehouses.
For instance, ShipBob’s proprietary WMS allows their customers to search orders by tracking number, destination country, the number of items it contains, filter by sales channel, fulfillment center location, as well as get full transparency into performance such as fulfillment speed, and orders fulfilled on time, accurately, claim-free, and much more all from one single dashboard.
Access real-time inventory data
ShipBob’s software, including its built-in inventory management features, allows merchants to split their inventory across multiple fulfillment center locations and access real-time inventory data from one dashboard. This allows for more accurate purchasing and stock decisions to optimize inventory levels and save on logistics costs.
“We utilize ShipBob’s Inventory API, which allows us to programmatically retrieve real-time data on how many units of each product are currently stored at ShipBob’s warehouses. We currently use this API to generate custom reports to tie this inventory data into our accounting platforms.”
Leverage existing fulfillment center networks
An experienced 3PL will continue to grow their fulfillment capabilities by continuing to introduce new fulfillment center locations not only domestically but across the globe.
When you partner with a growing 3PL, your business will have the ability to expand into new fulfillment center locations as your business grows. This allows you to reduce shipping costs and speed up last-mile delivery by fulfilling orders closer to your customers, no matter where they live in the world.
You have the option to expand into new markets across the world for an international logistics infrastructure, including access to data and analytics and fulfillment experts to help you make the right decisions as you optimize and expand your supply chain.
Optimize your retail supply chain to remain competitive
Staying competitive in an ever-growing industry will involve the continuous need to improve and optimize your retail supply chain.
While a business’s goal is to meet customer demand, it takes a lot more than just establishing a well-run logistics strategy to grow a business (the right product(s), sales and marketing, financials and accounting, and much more).
With a 3PL, you don’t have to worry about investing in new supply chain technology or implementing the latest in automation. The right 3PL partner will continue to optimize their operations with the latest supply chain trends and software in order to make sure your business’s supply chain is well optimized to stay competitive — even as your business grows and the industry changes.
ShipBob retail supply chain partnership success stories
ShipBob works with brands of all sizes and in a wide range of industries to help them succeed online. ShipBob offers a growing fulfillment center network powered by proprietary technology, order fulfillment capabilities, built-in inventory and order management tools, and best-in-class customer support.
Here are just a few examples of how we’ve helped DTC brands improve their retail supply chain and grow their business:
How MANSSION achieved 1,000% growth YoY
MANSSION offers affordable, high-quality jewelry for the modern man to help express his individual styles. Before partnering with ShipBob, the MANSSION team was experiencing retail fulfillment issues that kept them from growing.
Their old 3PL took up a lot of their time and charged costly picking fees while failing to pack orders correctly or deliver them on time. These issues were holding MANSSION back from profitability.
ShipBob offered them personalized assistance and reliability that they could trust and transparent pricing that was far simpler and more affordable than the old 3PL’s.
With ShipBob’s help, they were able to breeze through the difficult Q4 holiday season during a pandemic relatively unscathed, and they ended up with revenue being up 1000% from the last year.
“I had a misconception that if we worked with ShipBob when our brand was still young, we’d get overlooked since they also work with a lot of really big brands. I’m happy to say that is not the case by any means. We’re given so much attention.”
Torii Rowe, COO & Co-Founder of MANSSION
How The Finer Things 1920 tripled their customer subscriptions in under a year
The Finer Things 1920 is a monthly subscription gift service designed for the women of Zeta Phi Beta Sorority, Inc., a Divine Nine sorority with over 800 chapters across the United States.
Founder Andrea Hamilton was struggling with the challenges of self-fulfillment, having to fulfill orders after her day job and on weekends while her business was growing rapidly. ShipBob’s attentive approach to customer service and expertise reassured her that her operations would be in good hands.
“Last time we shipped our own packages, it took us 3 weeks. It took ShipBob less than 2 days. I couldn’t wait to delegate this business over, because the stress level was through the roof. I am just so grateful for ShipBob.”
Andrea Hamilton, founder of The Finer Things 1920
How indie music label SubSubmarine expanded their market with cross-border shipping
SubSubmarine, a music label and artist collective that promotes independent artists in a variety of genres from all over the world, was struggling to ship things from their home base in Australia to their customers in the US.
Founder Lee Nania had to manually fill out customs forms, put together boxes, pack every order, and run to the post office himself, which took a full week for a hundred orders, resulting in a lot of his time spent on logistics.
ShipBob allowed SubSubmarine the ability to reduce shipping costs by storing inventory in a US-based fulfillment center. ShipBob’s technology connected easily with their ecommerce platforms, making it simple to get started with ShipBob right away.
“ShipBob is the only 3PL that had a startup program that allows me to outsource fulfillment without worrying about monthly order minimums.”
Lee Nania, Founder of SubSubmarine
Improve your retail supply chain with ShipBob
By outsourcing retail supply chain management to a 3PL like ShipBob, you save you and your team time, money, and a lot of headaches. You’re able to provide the best customer experience by worrying less about logistics and focusing on the growth of your business.
ShipBob’s team can help you optimize fulfillment logistics with an international fulfillment network, proprietary technology, and a team of experts who can help your business grow. To learn more about how ShipBob works, click the button below.
Retail supply chain FAQs
Here are answers to some of the top questions people have about managing a retail supply chain.
How does the retail supply chain work?
An ecommerce business’s retail supply chain is made up of several processes that create the flow of finished goods from supplier to retailer and/or consumer. After receiving inventory from their suppliers, retailers must sort the inventory, stock shelves, manage that inventory, pick and pack customer orders, and ship orders to their final destinations.
What is the retailer’s role in the supply chain?
Retailers order their products from suppliers or manufacturers and then sell those products to customers. Once customer orders are placed, the retailer is responsible for picking, packing, and shipping orders to customers, unless they partner with a 3PL that takes care of the fulfillment process on their behalf.
What are the different supply chain models?
Depending on your ecommerce store and business strategy, there are a variety of different supply chain models that your business can adopt to keep inventory moving. Some of these supply chain models include the omnichannel, multichannel retailing, and dropshipping. Many times, parts of the supply chain are outsourced to a logistics partner like ShipBob.
What is retail supply chain management?
Retail supply chain management is the process of managing or coordinating the movement of raw materials and finished goods throughout the supply chain to the end user. Retail supply chain management involves receiving and storing products, inventory management, order processing, picking and packing items, shipping, orders, and managing returns.