New research from the CMO Council finds that as retailers and consumer products companies scramble to meet customer demand for fast home delivery of products—citing outdated supply and delivery chains, a lack of order fulfillment centers near customers, and the high capital costs of fixing these problems as major impediments—only a mere 3 percent of industry survey respondents surveyed say their companies are very capable of meeting current expectations for fast home delivery.
As a result, the industry is considering new cooperative approaches to supply chain transformation, including joint ventures for creating shared micro-fulfillment centers in urban areas closer to customers. Some 97 percent of respondents say they would consider new joint venture approaches to rebuilding supply and fulfillment, including 42 percent who already expect adoption of these shared models.
The new study, Increase Your Pace in the Ecommerce Race, in partnership with Business Performance Innovation (BPI) Network and Attabotics, a robotics and software company focused on enabling a new generation of automated fulfillment centers, is based on a survey of 153 executives in retail, ecommerce, consumer products, distribution and consulting firms involved in consumer supply chains.
The vast majority of executives (96 percent) say that redesigning supply and delivery chains will be crucial to fulfilling their promise to customers and maintaining business profitability. Greater automation of picking, packing and sorting, closer proximity of fulfill centers to customers, and more efficient last mile delivery are seen as the top three requirements for supply chain transformation.
“The increasing dominance of Amazon and very short list of other retail ecommerce giants is placing intense pressure on retailers and consumer products companies to find profitable and effective solutions to the home delivery dilemma,” said Dave Murray, director of thought leadership for the BPI Network, in a news release. “Our study makes it clear that efficient delivery is now the key to winning and keeping customers in the era of ecommerce.”
“Same day/next day home delivery is attainable for retailers and consumer brands of all types and sizes,” said Julien Seret, Attabotics vice president, network supply chain, in the release. “To make this a reality, a new system of shared, multi-tenant micro-fulfillment centers built in key population centers will be needed. As this study demonstrates, the industry is ready for cooperative, network supply chains.”
Other key findings:
- 84 percent of respondents say they are experiencing increased financial and resource pressures due to consumer demand for fast home delivery.
- 96 percent believe the industry must make dramatic or significant changes to supply and delivery chains to keep pace with consumer expectations.
- More than three-quarters of all respondents (77 percent) point to Amazon as a major competitive threat to their business due chiefly to Amazon’s massive ecommerce infrastructure and wide selection of available products.
- A third of respondents believe they could increase revenues by more than 20% by instituting same day delivery; another 51 percent estimate same day delivery would increase revenue by 10-20 percent.
- Virtually all respondents (99 percent) expect the shift to ecommerce and home delivery of products will continue beyond the Covid pandemic.