Supply Chain Chaos Portends a Grinch of a Christmas For Ecommerce Brands
Vertical integration never more important to combat fulfillment disruption this holiday season
Omair Tariq, CEO and co-founder of Cart.com
I’ve got good news and bad news for online sellers. The good news is that Christmas is coming early this year. For that matter, so are Channukah, Thanksgiving, Black Friday, and Cyber Monday. All over the country, consumers are reaching for their credit cards and shopping, early and often, to make sure they can get the goodies they want for themselves and their loved ones this holiday season.
The bad news, of course, is that this surge in early holiday shopping is being driven almost entirely by uncertainty, and by the largely justifiable fear that this year’s sales are going to be marked by logistical logjams and product shortages. There are currently half a million shipping containers stuck in a floating traffic jam off the California coast, and 50% more cargo than usual piled up at the Port of Savannah; more broadly, the IMF is warning of pandemic-related disruption to global supply chains. Even after products arrive in the country, companies face delays and price increases when shipping via USPS, causing chaos that’s having a knock-on impact on private shipping companies too.
What’s the solution? Well, shoppers have figured out that this year it pays to place orders early. For ecommerce brands, though, the answer is a bit more complicated. With online orders surging so early in the holiday season, and the chaos likely to last well into the New Year, companies need to rapidly build out the infrastructure they need to serve their customers even amid widespread disruption.
This perfect storm may already be upon us for the current holiday season, but it underscores the need for vertical integration as we chart a new way forward. Relying on a patchwork of outside services — each overburdened and liable to slip up during the holiday rush — just creates multiple potential points of failure for your brand. To take back control and minimize confusion, ecommerce brands need a new approach — and that starts with bringing their operations, including logistics and fulfillment, under a single unified umbrella.
Integrated services offer economies of scale
The congestion and chaos that’s rocking global supply chains and national distribution networks are a reminder that when it comes to ecommerce, the hub-and-spoke model simply doesn’t scale. In fact, the bigger companies grow, the more hub-and-spoke ecommerce models are exposed as overly complicated and inherently failure-prone.
If you’ve ever sat through meetings where you’re trying to get external sales and marketing teams up to speed on your brand, your products, and your customer base, then you’ll know that even during normal times, juggling outside partners is a drain on your time, and often leads to substandard results. During periods of turbulence, though, a failure anywhere in that patchwork of providers can easily ripple out to cause lost revenues.
Of course, ecommerce brands can’t typically bring all their business functions in-house; you’ll still need to rely on global manufacturing and shipping networks to get your inventory to you on time. But that’s all the more reason to eliminate uncertainties where possible, by using unified ecommerce services that allow you to streamline operations such as distribution and fulfillment.
After all, when you outsource the process of getting products into customers’ hands, you’re entrusting an outside party with one of the most critical pieces of your entire business. Managing those outside providers, along with a hodge-podge of other third-party relationships, can quickly become overwhelming — and that’s when miscommunications and costly mistakes start to happen.
Vertical integration doesn’t mean DIY
Fully integrate your operations, on the other hand, and you’ll be in a far better position to manage your inventory, ensure that your customers get their shipments on time, and weather the turbulence of the coming holiday season.
To be clear, I’m not suggesting that you should try to start your own shipping company in addition to running an ecommerce brand. Instead, I’m suggesting that you start looking for “Ecommerce 2.0” solutions that bring your entire ecommerce stack under a single umbrella, and let you manage your business with a minimum of friction and no need to tangle with a sprawling mishmash of outside partners.
By working with the right Ecommerce-as-a-Service (EcaaS) provider you can manage your fulfillment and shipping needs seamlessly, with all the benefits of true vertical integration, without needing to worry about licking stamps or mailing packages. You’re effectively getting an in-house shipping service, run by a team who understands the challenges of ecommerce fulfillment, and who know your business and genuinely care about your success.
Better yet, an EcaaS solution doesn’t just handle your shipping and fulfillment needs — it also gives you visibility into how those needs are being met. Stop wondering whether your products will make it to the customer in time: with Ecommerce 2.0, you can see instantly how your logistics and distribution functions are operating, and use that centralization of data to inform everything from managing customer relationships to optimizing your pricing and inventory strategies.
Unification across the entire value chain
There’s no way to eliminate holiday-season headaches altogether, of course. You can’t ultimately control whether global supply chains or local delivery services work correctly. But that’s all the more reason to find a unified solution that lets you stop worrying about whether a network of outside providers are doing their jobs properly.
If you’re a fashion retailer, for instance, you shouldn’t be struggling with this season’s logistics — you should be figuring out next spring’s hot trends. You can’t do that, though, if you’re spending every waking moment trying to figure out how to get your garments from your warehouse to the consumer’s mailbox.
So if you’re feeling the pressure this holiday season, start thinking about how you can eliminate the countless distractions and multiple points of failure that bedevil hub-and-spoke organizational models. The status quo isn’t sustainable — and vertical integration is the best way to futureproof your brand against whatever turmoil lies ahead.
Omair Tariq is CEO and co-founder of Cart.com, the first end-to-end Ecommerce-as-a-Service (ECaaS) company. He previously served as Chief Financial Officer and Chief Operating Officer at Blinds.com where he played a key role in scaling the high growth eCommerce startup prior to its acquisition by Home Depot.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.