According to E-commerce Europe, e-commerce sales in the EU have risen to €477 billion in 2015. This evolution is due to a new context, where any smartphone owner can shop online and be delivered anywhere in the world.
The e-commerce boom represents a concrete opportunity for retailers, who need to maintain and improve the customers’ experience (delivery times, track & trace, customer service, etc.). Nevertheless, JDA Software Group has recently released a report where the results show that 30% European shoppers buy online more products from manufacturers than they did five years ago. This means that manufacturer’s supply chains need to be adjusted and remodeled in order to seize the direct-to-consumer market opportunity.
What are the reasons for shopping directly from a manufacturer? What are the most used retail channels for buying from a manufacturer? What are the challenges the reshaped manufacturers’ supply chain will have to face in the years to come? Here is an extract of a direct-to-consumer article that will give you an insight on the topic.
In its Manufacturing Pulse 2016 report, JDA, looked at the relationship between consumers and manufacturers in France, Germany, Sweden, and the UK, and found that almost one third of European adults who shop online buy more products directly from a manufacturer now than thy did five years ago.
Over the last 12 months, 42% of European adults had bought goods online directly from a manufacturer.
The JDA report also highlights research from Frost & Sullivan which predicts the online B2B market will grow to $6.7tn by 2020. Frost & Sullivan further predict that e-commerce relationships will shift from ‘one one-to-many, to many-to-many’, illustrating that manufacturers are only at the beginning of this huge growth curve.
While the JDA assessment of the state of the direct-to-consumer market indicates there is a significant market opportunity for manufacturers, manufacturers’ supply chains must be reshaped to be able to handle many more fulfillment locations, increased singles picking for customer orders, while at the same time offering choice and convenience. This echoing of the B2B delivery market transformation – where, for example, a single delivery of 500 pairs of contact lenses to a high street optician, has become 500 deliveries of contact lenses to people’s homes – brings with it the same balance of risks and rewards based around optimising networks on product volumes and the number of delivery destinations.
Being able to process returns without fatally wounding margins will also be an issue. Returns are widely reported as one of the key considerations customers base decisions on when it comes to placing orders. In JDA’s Customer Pulse 2015, 78% of respondents in Germany, 69% in Sweden, and 68% in the UK, said the ease of being able to return items factors into which retailers they shop online with. Manufacturers will need to take note of findings such as these. As they grow their online channel, it is crucial they ensure their supply chains have the capability to manage costly, resource-heavy returns processing.
From a standing start manufacturer wanting to cultivate sustainable relationships with buying customers is facing high barriers where customer expectations are concerned; from speed or choice of delivery and collection, through to returns, customers are unlikely to settle for second best without a considerable incentive to do so.
Currently, price is clearly the main reason shoppers consider going direct to a manufacturer. However, JDA found that across Europe shoppers can be easily dissuaded from buying direct if the right delivery and collection options aren’t available.