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OMG If U R Not Implementing an M-commerce Strategy, I Am LOL!

Analyst Insight: In the world today, there are 6.8 billion people; 4 billion have mobile phones. Only 3.5 billion use a tooth brush! There are more U.S. mobile subscriptions than people; 70 percent use their smartphones during their in-store experience! Why should we care in CPG? One fifth of searches are for CPG products. Online-to-offline (O2O) commerce is expected to grow 50 percent over 5 years, outpacing offline commerce and exceeding online ecommerce by over 400 percent (!), according to Forrester Research. – Rich Sherman, Principal Essentialist, Trissential

OMG If U R Not Implementing an M-commerce Strategy, I Am LOL!

At Trissential, we fundamentally believe that the financial health of the company begins at the intersection of demand creation functions (new product development, marketing, and sales) and demand fulfillment functions (procurement, production, and distribution, AKA the supply chain). Nowhere is that more evident than with the growth in mobile and internet technology among consumers.

Don’t get me wrong, from the time I first read a McKinsey study on how Webvan was going to displace Safeway in San Francisco, I was LOL with the thinking (and, unfortunately, investing) that home grocery would ever displace bricks and mortar. If that were the case, Schwan’s would be the world’s largest grocer and not Walmart.

However, we can’t discount that the online and home delivery segments will be major grocery channels, joining Chain Grocers, Food Service, Big Box, Distributors, Convenience/Drug Stores and Military as major supply chain segments to be served. Each requires its own supply chain strategy, metrics, processes, packaging/labeling, transportation, distribution and planning requirements. If you’re treating your supply chain customer base as one and equal, you’re already way behind and it’s time to break some rules.

The mobile commerce segment will be challenging to CPG companies in many ways. Shoppers are using their smartphones to support their shopping experience, especially the under-35 segment. One company I advise is Retailigence. Retailers upload their store inventory and pricing information to Retailigence. They make the information visible to mobile app developers that enable shoppers to search products online and find offline stores with the product in stock and at prices based on the mobile shopper’s location.

This is where the fun begins. It’s point of demand “sensing” at the shopper level. The retailers and brand marketers can now push ads, coupons, price matching, etc., offers to the mobile shopper for demand “shaping” at the point of purchase. The shopper’s purchase can be recorded at the point of sale, inventory decremented and used to trigger a demand “response” signal (based on restock calculations) to set the Smart Supply Network in motion to synchronize demand to supply throughout the channel. All that data, including consumer demographics, is captured.

Lots of data? Big data? Mobile commerce connects the consumer, whether purchasing online or offline, in real time to the demand/supply network creating a new level of data that needs to be converted to relevant information for making the right operating decisions. Business intelligence? Watson, I presume. We are entering the Connected Age. Always on, always connected. OMG if u r not building mobile commerce, business intelligence, and daily integrated planning and execution into your supply chain strategy and plans, then your competition will be LOL. 

                                                      The Outlook

In 2014, expect mobile commerce to emerge as a major force in CPG as internet retailers introduce more grocery offerings, e.g. Amazon Fresh, pressuring traditional grocers to adopt more omnichannel strategies as their consumer goods counterparts have. This will be the wake-up call that pressures grocers and manufacturers to integrate mobile and online strategies to support the store experience driving share. Operations must be prepared to adapt to the resulting changes to supply chain processes.

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