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Ecommerce’s New Normal: A Digitalized Supply Chain

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Due to ongoing social distancing measures brought on by the COVID-19 pandemic, it’s anticipated that ecommerce will keep control of its increased share of the retail market over the next year. This means that the digitalization of the store will be crucial for retailers to successfully adapt to the “new normal.” But a thriving ecommerce business must begin with a strong foundation.

Retail supply chains have been thrust into the spotlight amid COVID-19, as many inefficiencies have been uncovered through major disruptions caused by the pandemic. A recent study from WMG, University of Warwick found that most retailers are not able to react to fluctuations in demand in real time, but they want to: A staggering 74% of respondents indicated they’d like to switch to prescriptive or autonomous technology in the next five years. This suggests technologies such as artificial intelligence (AI) and machine learning (ML) will see significant growth in the next few years.

It’s crucial that retailers start focusing on investing in AI and ML now so they can strengthen and future-proof their supply chains through greater flexibility, visibility and automation. With consumer behavior changing seemingly day by day, it has never been more important for retailers to implement a fully connected end-to-end supply chain plan, as organizations must be able to meet their customers’ needs while reacting to changes as quickly and profitably as possible.

Eliminate Supply Chain Complexity

Intelligent supply chains powered by AI and ML give retailers the ability to respond to ever-changing trends in consumer behavior in real time. These technologies can produce extremely accurate forecasts based not only on the weather, local events and day of the week, but also on thousands of other data points that can illustrate exactly what is driving customer demand at any given moment. By understanding the interrelationships between many complex factors, retailers can then turn the data into actionable insights and react accordingly.

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Supply route complexities, which cause challenges for all ecommerce businesses, can also be remedied by AI and ML. By aligning demand with supply, retailers can better evaluate assortment decisions at every location on a risk and reward basis. Furthermore, by understanding the variability of demand, AI and ML can be applied to maximize sales while minimizing costs and returns. Retailers that can coordinate across a connected supply chain will be in a much better position to ensure they have the right level of inventory in all locations at the right times.

Optimize Pricing

Though setting the right price has always been a complex question for retailers, efficiently managing margin is one of the most important elements of creating a profitable ecommerce business. A high price could risk losing customers (according to McKinsey, customers will not return to a retailer if prices are over 30% higher than competitors), whereas a low price could leave them with dismal profits, if any at all. Retailers can certainly use promotions to drive more sales, but they must find the right times to run them. This is where AI and ML come in: The technology can sift through many different factors that impact pricing, helping retailers make quick, intelligent decisions. By understanding true price elasticity, AI and ML can ensure the right pricing decision is made — whether it be promotions, markdowns or everyday pricing.

Streamline Operations

Speed and efficiency are key to scaling an ecommerce business. Technologies such as IoT and robotics, which tend to rely heavily upon AI and ML, will undoubtedly play a growing role in meeting increasing demands for ultra-fast delivery — from automated robot pickers to flying drones to driverless trucks. However, the importance of the human workforce is not to be understated. Since the beginning of the COVID-19 pandemic, ecommerce businesses have needed to quickly onboard new warehouse and delivery staff, so task prioritization will become crucial as employees juggle multiple tasks. Ultimately, the harmonization between humans and technology will be what enables online retail operations to flourish.

It’s difficult to predict what’s to come in the next year, as the COVID-19 pandemic has proven that major disruption can occur in the blink of an eye. However, what is clear is that recent events have accelerated digitalization in the retail industry. If retailers wish to remain competitive, they must focus on building their ecommerce operations and ensure their supply chains are robust and flexible enough to adapt. With the right supply chain platform and technological foundations, retailers can grow booming ecommerce operations and, most importantly, meet customers’ needs.


Wayne Snyder is VP Retail Strategy for EMEA at Blue Yonder. He has worked in retail for more than 20 years and is a recognized expert in merchandise planning and supply chain operations. Snyder is responsible for Blue Yonder’s retail strategy across EMEA, working closely with leading retailers to ensure they maximize full value from their technology and supply chain investments. Prior to joining Blue Yonder, Snyder founded ACT Retail, a specialist merchandise planning consultancy that developed leading business solutions and processes for many of the UK’s leading retailers including Marks & Spencer, John Lewis, Tesco, Mothercare and Vodafone.

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