The "Amazon effect" is certainly generating a lot of hype around ecommerce and omnichannel distribution in the overall retail segment. However, for most CPG manufacturers, especially operating in the grocery market, the O2O consumer's path to purchase represents greater opportunity. Just remember Webvan; the cost disadvantages lying below the waterline of the iceberg that sunk it have not gone away.
Consumer ecommerce is being supplanted by mobile commerce with shoppers using their smartphone before and during the offline shopping experience. For example, Retailigence is illuminating the “path to purchase” by enabling retailers to upload product, price and location information to make visible to mobile shopping applications that guide the shopper to the best price, and most convenient place to make their purchase. Just as the retailer can “AdPop” incentives to shop at their store, brands can “pop” or text ads/incentives to drive the consumer to their brand, before and during the shopping experience. It’s a marketer’s dream and a chest of data gold for supply chain analytics. Demand sensing, shaping, visibility and managed response can lead to supply chain efficiencies.
There’s also a buzz these days about the Internet of Things (IoT): connected devices sensing, monitoring and collecting data across the supply network. And, government track and trace regulations (FSMA) are accelerating adoption. The concept of an IoT was introduced in 1999 at Procter & Gamble. After 15 years, the industry is beginning to consider its impact.
At a recent conference, a P&G supply chain executive presented how the company benefits from supply chain analytics fueled by data collected across their supply network in near real time. The analytics enable operations of some high-volume, fast-moving products to make production and inventory adjustments in response to demand changes twice daily! While the industry is talking IoT, Big Data, and analytics, P&G is doing it!
In a competitive “connected commerce” market, change is rapid and potentially disruptive. Consumers using their smartphones during the shopping experience and receiving real-time promotions to guide their path to purchase will result in more plan variations than ever before. Manufacturers that aren’t building consumer insight, promotional lift and geographic trending into their demand/supply and network planning will be bull-whipped more than ever.
Tactical modeling tools are becoming critical to supply network operations to respond to rapid changes in demand. Real time data supporting predictive and prescriptive analytics are becoming the requisites to compete in a global market for connected commerce. If they aren’t in your supply chain architecture, you may encounter Webvan’s iceberg!
In 2015, look for consumers interacting with the internet using their smartphone during the shopping experience fueling growth in mobile commerce and O2O versus ecommerce. Savvy brands will use new “point of demand” information illuminating the path to purchase through promotions and to develop more accurate demand/supply plans to sense, shape and respond to demand variability. Technologies that support tactical simulations, provide predictive/prescriptive analytics, and enable collaboration are requirements to stay in the game.
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