How is Corona virus Affecting the Supply Chain – and What Can eCommerce Brands Do?

Ecommerce companies facing down the realities of a COVID-19 supply chain know that this moment is unprecedented and that long-lasting changes will be hard to predict. No one knows the future, so it’s up to leaders and business owners to plan for multiple situations to help ensure their e-commerce shops survive.

You’re going to need to look at every aspect and need in your supply chain and prepare for the current e-commerce increase to disappear, while still being able to adapt in case the increase continues through the rest of 2020.

There’s no time for hindsight. Everything is prep work now, but it can pay off big. Here’s how you can start.

Look for problems

warehouse cardboard box mockup

You are going to face supply chain concerns, and it’s time you start ranking the potential issues and coming up with plans to tackle them. Here are a few good places to start:

  1. Where is my inventory now, and how can I move it?
  2. Am I sharing the right inventory data with my sales channels and upstream partners?
  3. When problems arise, how do I communicate with partners? How do they communicate with me?
  4. How have shipping partners kept to contracts and promises during COVID-19? Who is still struggling?
  5. Do my partners empower me to tell customers about problems in a proactive way, or are we reactive to customer inquiries?

Answer what you can and then turn your attention to what you can’t. You want to get an understanding of the current gaps in your supply chain communication. This will help you start to understand the threats you face, especially around stock-outs. At the same time, you’ll be able to judge partner strength by working with them. It allows you to start asking questions about their ability to scale up and down, and how that will impact your costs.

Prioritize transparency in your supply chain

Some of the most significant e-commerce issues occurred when companies didn’t know what was happening in their supply chain.

If you aren’t able to predict an issue and don’t have transparency to see it a few stages upstream, you can’t prepare for it or mitigate the damage. Problems become more difficult to control and risk greater for layer or tier the go back up the supply chain. Collaborate with all partners and look for digital ways to share data starting with production and raw materials.

Build out a single, responsive system that allows your entire supply chain to work from the same set of data. Everyone benefits from understanding both your supply and demand.

In some instances, this might mean speeding up your deployment of innovative technologies and automation solutions. If you were planning on pushing a digital supply chain that included a broader set of visibility tools and dashboards in 2022, see what you can accelerate now. Automation and visibility are essential to understanding what you have and using it.

Look across your entire chain for automation capabilities, from resupplying stock to tools like Mothership that can help you move freight between ports, warehouses, or other locations via same-day service.

Study your customers and their potential

Customers are essential to your success, and thankfully they’re buying more from eCommerce than ever before. Last year, e-commerce sales rose by just under 15%. This year, the pandemic led to a significant spike for nearly half of e-commerce stores, and some report sales eclipsing the 2019 year-end holiday.

In many instances, we’ve moved past early shortages and stockpiling behaviors. Customers are buying more online still, but various parts of the U.S. and global economy are opening back up. This means competition in new areas, but also a chance for us to determine what habitual changes are going to be permanent.

Will home-based workout equipment stay up? Are people going to seek the convenience of pre-planned restocking for essentials and heavy items such as dog food? Will bread machines see a stark decline after their 652% jump?
Product categories have undergone significant shifts, and e-commerce companies must wait out changes. Read up on your customers—track competitors. Do what you can to find information relevant to your audience.

When the COVID-19 changes start to dissipate, you want to be ready. Planning now for how things may change will help you address demand shifts. The sooner you’ve spotted relevant trends, the sooner you can reach out to vendors, suppliers, and fulfillment companies to adjust and be prepared.

Diversify sources and strategies

The COVID-19 crisis showed us how regional issues could lead to significant supply chain disruptions. China, India, Italy, and many other countries have faced significant challenges. And, as often is the case, there was no clear answer. For example, some touted India as a possible replacement for China as a manufacturing hub shortly before major plants shut down due to infections.

The lesson to takeaway is that no one source is absolute. If you’re reliant on a single partner or region to provide raw materials or finished products, you have a single point of failure in your operations.

Start diversifying strategies. It will not only help to avoid losses related to possible coronavirus resurgences but can protect you against some impacts of the next global or regional disaster. Digital tools will make this easier, especially if you can put your vendor onboarding online.

Automation helps many companies work better with third-party logistics providers as well as sources and manufacturing partners.

Rethink fulfillment and marketplaces

Unfortunately, during the pandemic, some e-commerce companies were left out in the cold. Their Amazon fulfillment options were halted, and the company temporarily suspended restocking and other FBA efforts. It created significant fear that layoffs or worse were right around the corner.

Third-party fulfillment services (3PLs) were able to step in for some brands, but only when they had other channels to sell or if the 3PLs were approved by Amazon to make Prime shipments. The loss of one marketplace put many, many businesses at risk of closing. While the number of brands that did fail is likely low — based on conversations with vendors and Amazon sellers and not ‘official’ data — the change caused significant harm and worry.

Ecommerce brands should look to avoid Amazon FBA issues at least in part. Splitting inventory between Amazon and a 3PL can protect you if one service goes down — just like having two warehouses means you don’t face a total loss in the event of a fire. Ecommerce companies must start working diligently to mitigate and remove risks.
The good news is that splitting inventory or moving to 3PLs with multiple warehouses can protect you from the worst. When a partner isn’t involved in the marketing and selling side of your operations like Amazon is, their focus is purely on your fulfillment.

Changing how you approach fulfillment, and the ways you shore up alternatives and options can be a positive guide to how you address the rest of the COVID-19 realities. We don’t know where it will end up yet, but you can start building ingrained practices and policies to address some potential futures.

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