Bear with us.
The phrase has become a common one lately in retailers’ communications with customers during the COVID-19 crisis. Fashion and footwear firms are facing unprecedented issues with inventory and fulfillment, and the delays couldn’t come at a worse time, said experts. With brick-and-mortar stores shuttered around the globe, e-commerce sales have become an essential revenue source for companies. Which is why retailers are altering the way they do business, possibly for the long-term.
Retailers large and small have been impacted by the shifting sales landscape.
“The unique part of this disruption is that no one category is affected the most. Everyone is feeling the impact. From independent retailers to global brand names, all retailers are in a situation they have never been in before,” said Jeff Ball, VP of strategic business development at Manhattan Associates, a supply chain solutions company.
However, he did note that fashion and footwear brands are particularly challenged because of the fact that their inventory is so segmented, by size, color and style.
Watch on FN
A number of issues have contributed to the delays for dot-coms. The first problem is simply getting access to inventory, following the factory shutdowns in Asia early in the year that disrupted the global supply chain.
The second is new safety requirements at distribution centers. “For those retailers handling nonessential products, they’re limited on the number of employees they can have within the distribution center to ensure their health and safety,” said Ball. “This can dramatically slow down or even stop fulfillment of online orders.”
The strict safety measures have caused some companies to temporarily — or even permanently — suspend shipping. Net-a-porter, for instance, is accepting online orders but has told customers it will not ship until distribution centers reopen in the “near future.”
Brands that operated through marketplaces have run into problems, as well, according to Ted Rogers, VP of strategic marketing at Digital River, which provides back-end technology to e-commerce brands. As Amazon has shifted operations to prioritize getting essential items to health care companies and consumers (and dealt with its own warehouse closures), “many brands have experienced significant customer satisfaction issues due to the reprioritization of processes,” he said.
The immediate impact of these issues is a loss in revenue, though Rogers said it’s difficult to measure the exact decline in the midst of the larger falloff in retail sales due to widespread store closures.
However, he added, “what is clear is that traditional retail has been hit hard by this pandemic, and the gap continues to widen between those who had an established online presence and those who did not. Brands faring the best right now are those that have a direct-to-consumer channel.”
Ball also pointed out the need for retailers to be highly fluid in terms of how they fulfill online orders. “Because of the multifold increase in e-commerce orders, retailers are making more of their store inventory available online for purchase,” he said. “This is why true omnichannel systems are so important because they empower retailers with the flexibility to quickly adapt and scale their systems in response to environmental and consumer factors.”
He added, “We fully expect this to be a coming of age moment for store-based fulfillment as retailers need to supplement dot-com activity and find the value in having a more-dispersed fulfillment network.”
In the meantime, it is vital that retailers are transparent about any shipping issues, advised Jessica Ramirez, retail research analyst with Jane Hali & Associates. “Most retailers have a disclaimer at the top of their websites right now stating that there are delays in deliveries. That’s been a precaution on the retailer’s end,” she said.
Experts said most consumers are understanding about the current retail challenges, so by managing expectations clearly, companies can maintain a good relationship with customers and protect brand loyalty, which will be so important as the economy reopens in the months to come.