How tech is helping the consumer goods industry ride the e-commerce rollercoaster

It is impossible to ignore the growing importance of online shopping in the landscape of contemporary retail. Accelerated by COVID-19, online sales as a percentage of overall retail sales grew in the UK from 19.2% in 2019 to 28.9% in 2021. Thus, it is more important than ever for retailers and manufacturers to have an effective and robust online growth strategy to not miss out on an ever-growing segment of the market. Coupled with rapid growth, there has also been a significant proliferation in the number of operators working across consumer product organisations, from delivery aggregation services to new payment providers, increasing routes to market. This complexity has led to an explosion of new ways to purchase our favourite goods, leading to greater difficulty in getting visibility of customer demand.

Although growth is positive, scaling operations online can also encounter challenges given the intensely competitive landscape that typifies this area. Technology is the key enabler in addressing these challenges – but what opportunities and challenges do organisations face when expanding their online operations and what role should technology play in helping accurately predict and service customer demand?

1. Reduce risk

Technology can enable organisations to better meet new consumer demands and thus grow their businesses. Customers are increasingly demanding shorter lead times, with same day and ultra-rapid delivery becoming a key facet of contemporary logistics strategy. Grocery in particular has spearheaded this movement, with industry disruptors like Getir and Gorillas forcing traditional grocery giants to rethink their home delivery and online offerings.

But this disruption extends beyond simple delivery models and has fundamental implications on the wider value chain. Gorillas has partnered with local businesses in London by selling products from bakery chain Gail’s and local Barons Court butcher H.G. Walter, combining high quality local produce with ultra-rapid 20-minute delivery times. These partnerships have augmented Gorillas’ ordinary product offering with local premium goods, allowing the company to tap into new customer segments and also shorten its supply chain, reducing both risk in its supply chain and also offering sustainability benefits.

2. Localise data aggregation

Delivery aggregators can use their order history data to optimise the locations of their dark stores and strategically place them in their busiest regions, further optimising and reducing their lead times through creating spheres of influence around each dark store. In response to the success shown by their new competitors, grocery giants are responding with ultra-rapid delivery offerings of their own, with Tesco’s Whoosh and Sainsbury’s Chop Chop both guaranteeing delivery within the hour. Time will tell if these initiatives are able to wrestle market share back from the new players in the market.

3. Make friends and partner

Outside of grocery, industry giants have begun thinking outside the box and adopting new fulfilment strategies to satisfy consumer demands. One such strategy involves partnering with new fulfilment platforms to enable ultra-rapid delivery. For example, consumers can now use Deliveroo to place orders at JD Sports and receive them within hours, expanding into new territories and opening new revenue streams at both organisations. Other strategies involve rethinking fulfilment technologies to incorporate new delivery methods into the organisations fulfilment portfolio, such as Amazon and Walmart’s use of drones to enable ultra-rapid delivery. But despite the clear organisational benefits that can be realised from increasing online presence, there are several challenges that organisations can face in the journey to becoming multichannel retailers.

While for some retailer’s such as Gorillas, online sales can be a driver of sustainability, others struggle to adopt sustainable practices into their online offerings, given the ever salient fact that cost is king to the consumer and sustainable practices often incur greater costs than traditional ways of working. Equally, returns management presents challenges for online retailers. Given the wide product range that online offerings can enable, this also can cause high returns volume from consumers through consumers making less considered purchases.

To alleviate this issue, it is crucial for retailers to adopt clear and effective strategies to minimise their returns volume and to streamline their returns processes given the lack of business value associated with them. Automation and robotization are two key tools that retailers can use to achieve these goals and are both becoming increasingly important in a retailers’ arsenal. Thus, despite the challenges that come with scaling business growth online, technology can serve as an enabler of new business models, shorten lead times and help overcome the challenges with integrating an online operation into the organisation.