OrderWise in October 2020 - v20.10
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From empty supermarket aisles to downward turn in demand for the staple office shoe, consumer demand has drastically shifted with every step further into 2020. As we continue to inch back and forth in restrictive easing, what will these shifts mean for wholesalers and distributors?
As the nation shifted to its new life behind closed doors, a huge switch up emerged in consumer demand. The dramatic restructuring of daily routines and long-term plans alike saw some sectors of ecommerce sales hit the roof. Demand for food, medical supplies and confinement comfort items rose. Extra technology purchases, garden equipment and home entertainment products settled us into our new lockdown realities.
With mass store closures and tight restrictions, normal spending was, for the most part, put on hold. But now, as some restrictions begin to ease and eager promotional efforts attempt to coax us back into the swing of ‘normal’ life, we can see promising signs of recovery. Along with this emerges a hopeful return to pre-lockdown spending behaviour.
In an August report by the Bank of England, aggregate customer spending in July was stated to be “no more than 10% below its level at the start of the year, after falling to around 30%–40% below it early in the lockdown”.
Fuelled largely by household spending, ‘delayable spends’ such as clothing and household furnishings have almost returned to pre-pandemic purchase levels.
Meanwhile, recovery for social and work-related spends as well as for travel, tourism and hospitality is lagging. Though confidence in socialising and holidays will surely return, many people’s work lives have centred at home for the long run.
In the move to online spending, ecommerce never came close to counteracting in-store losses. But, the level of online sales has remained consistently high, even now as our outlets and premises reopen. As some restrictions begin to lessen, customers will expect even smoother ecommerce shopping experiences, from initial browse to final delivery.
Another large shift is the move to more mindful shopping. Beginning before the pandemic, COVID-19 saw this trend become even more popular with consumers.
“COVID-19 – simultaneously a public health emergency and a real-time experiment in downsizing the consumer economy”
Sustainability: Science, Practice and Policy, 16.1, 1-3
Shoppers have sustainability in mind more than ever before. As a nation, we are searching for more ethical and responsibly sourced products. We are also more likely to look locally to support our communities. Research from Brandwatch found conversations about local, ethical, and sustainable online shopping were up 362% when comparing December 2019 to March this year. Now, more consumers are looking to buy once and well.
Demand for warehouse space has remained strong throughout the pandemic, with increasing online orders enabling some goods to keep flowing. However, this hasn’t spelt automatic success for wholesalers. Coping with such fluctuating demand during a pandemic has seen many wholesale businesses struggle holistically across their operations.
Plagued by supply shortages and logistical blockages, wholesalers are finding some warehouses overflowing with unsellable stock. Meanwhile, in others, the stock barely touches the shelves before it’s needed for allocation multiple times over.
Creating ‘covid-secure’ working environments for employees has left many businesses with increased running costs, reduced labour capacity, and lowered productivity. A DMP survey found the average cost of producing one unit of output is expected to increase by 7% this month, as firms work to keep warehouses covid-safe.
Despite restrictions beginning to ease, workplaces must remain ever-vigilant to fluctuations in the rules. The potential for more outbreaks could force a rerun of site closures. For this reason, the ability to remain socially distant and maintain high levels of hygiene in the workplace will likely stick around for wholesalers moving forward.
Besides these sticking points, the need to further improve the overall shopping experience will be an additional pressure point for wholesalers. Many consumers wish for ethical working environments and locally sourced products. Moreover, now some elements of lockdown have lessened, shoppers will also have less patience for delays and abrading ecommerce experiences.
To help fulfil growing consumer demand for faster delivery, more retailers are turning to wholesalers to boost their direct fulfilment capacity without the hassle of increasing their own warehouse and shipping capabilities.
This concept is already prized by many larger retailers, such as Wayfair, Dunelm and Shop Direct. Items are sold through the retailer’s sales channels, then the wholesaler drop ships the order directly to the customer. As a result, retailers can extend their online offering capacities with a larger range of direct drop shipped items. To take advantage of this opportunity wholesalers will need to have quick processing, good communication with their retailers and exacting precision.
Stock and storage capabilities, packaging procedures, multi-channel abilities and supplier terms and methods are all major headaches for wholesales. Not to mention the extra planning they demand for ongoing compliance. A rising number of businesses are using technology to cope with the ‘new normal’ of management as well as shifting consumer demand.
By implementing the right business management software, you can improve your operations holistically. From the way you manage your warehouse to your customer service and multi-channel connectivity, all stages can be smoothed and streamlined.
To take advantage of online retail and the growing shift to direct drop shipping, wholesalers will need the ability to integrate with their retailers’ systems and other electronic data interchange technology. As well as all this, they will need to have an efficient goods processing system to ensure fast and precise fulfilment.
With a range of integrations with supplier, courier and internal systems available, you can remove the need to manually rekey data. Speeding up processing, increasing accuracy and maintaining better social distancing practices can, therefore, also become easier. Companies can even instigate intelligent routing to help one-way systems, or robotic automation to further reduce employee interaction and speed up your pick pack and ship operations.
Greater visibility and control of your supply chain additionally makes it easier to partner with multiple suppliers. Through a purchase order system, you can track your supply chain, and automatically identify your business’s stock demand. With all this control, fortifying your chain against single supplier risks becomes less complex and you can enable smaller, local suppliers to get on board in larger numbers. With automatic interchange of data, you can rapidly load your item components onto your website. A real-time availably of your stock can be gained too, giving your customers access to more information than ever before.
For extra guidance on how to optimise your wholesale business for the ‘new normal’, our expert team at OrderWise are here to help. Contact our team today on 01522 704083 or visit our wholesale solution page for more information.
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