Are you grounded enough to face ecommerce headwinds? (Photo credit: Khamkéo Vilaysing on Unsplash)
The new year, typically time for a fresh start, has ushered in fresh ecommerce headwinds, commingled with holdovers from 2022 to create a challenging climate for brand owners.
I was catching up with an old colleague recently, the head of operations for an emerging brand who formerly led ecommerce for a multinational beauty company. I was surprised to hear her say that the atmosphere this January felt even more uncertain – unprecedented, even – than it did in the early days of the pandemic.
Consumer spending has softened, and brands across categories continue to struggle with excess inventory. Coupled, paradoxically, with stockouts from COVID-related volatility in China and carrier moves to extend peak-season surcharges, merchants are feeling the pressures of peak season extend into what should be a relatively calm Q1, without the increased sales volumes that make holiday stressors worthwhile.
While the forecast may be calling for tornado-level ecommerce headwinds, I’ve been in business long enough to know that many brands can – and will – weather the storm, provided they plan ahead and position themselves for success once the turbulence subsides.
Stop fretting and start flexing
As the macro environment fluctuates, merchants must adapt and adjust to these changes as they unfold. But supply chain partners and service providers too often remain rigid, prioritizing their own interests over those of their customers, and hindering opportunities for advancement that are possible even when demand is dynamic.
For example, Covid closures in China have forced some merchants to allocate all available products to wholesale or retail commitments, leaving them unable to stock DTC orders for the foreseeable future. Others are left awaiting inventory entirely – what was set to arrive in Q1 now won’t arrive until the second half of the year. This unexpected situation has forced brands to adjust their business forecasts, necessitating flexibility from partners planning to store, ship, or otherwise handle those products.
Additionally, merchants who have seasonal products or who experience variance in order volume and storage needs throughout the year can find themselves in a difficult position if their partners are not willing to accommodate them. With the increased uncertainty inherent in pandemic-era operations, brand owners are often hesitant or unable to make changes that incur incremental costs unless their partners and providers are willing to be flexible and accommodating.
Accept that there is no normal
If twenty years in this industry has taught me just one thing, it’s this: there is no such thing as a normal supply chain.
In our global, omnichannel, consumer-dominated world, variance will always occur to some extent. Shoppers are fickle, brand loyalty is fleeting, and the preferences and expectations of younger generations are forging a new definition of what it means to master customer experience. To succeed, merchants need to be lean, mean, fighting machines powered-up by partners primed to power them through ever-present ecommerce headwinds.
In 2023, brand success means streamlining shipping and fulfillment, in tandem with expanding omnichannel availability, to reach and delight shoppers. Brands will need to be “omnipresent,” looking to the future and planning ahead while staying connected and delivering satisfying experiences to their customers at all times, across all touchpoints.
Get by with a little help from your friends
No individual person has been able to survive the last three years without support. That’s also true of every brand still standing. In this moment we’re all collectively experiencing, merchants need supply chain and fulfillment partners that deliver on four key areas to stay resonant in the market, now and in the future:
- Flexibility: Look for partners that can meet fluctuating capabilities and constraints. These partners won’t lock you into a specific ramp period and will instead extend the timeline in the event of delayed or log-jammed inventory. Hybrid deal structures for seasonal products—such as storage, then fulfillment, then storage—can maintain a cost-effective fulfillment model.
- Transparency: There are cost and operational transparency advantages to working with fulfillment partners that do not own or directly operate their warehouses. Companies that operate out of owned locations or hubs may not be candid about performance, as they’re incentivized to use their own assets. Fulfillment partners that are connected to, but that do not own, a vast network of tech-enabled and -optimized warehouses can best adapt to both your needs and your budget.
- Reliability: There’s nothing worse than a bait-and-switch in which your brand encounters hidden fees that cost your business more in the long run. Find a partner that engenders trust around how fees will fluctuate, so you can plan accordingly.
- Visibility: Work with a partner that provides visibility into inventory, orders and fulfillment activity in real-time, in addition to the ability to make adjustments as needed, not after the fact.
Brands, set yourself up to survive the ecommerce headwinds you face today, as well as those that may materialize in the future, with partners that support your business – and your success – no matter the economic climate.
Frank Garcia is SVP of Operations for Flowspace