Due to the COVID-19 pandemic and stay-at-home orders, consumers turned to online shopping more than ever before. They relied on eCommerce platforms to deliver everything from groceries and toilet paper to clothing and books, with ease and timeliness.
Increased Online Retail Sales
In fact, since the pandemic began, U.S. online orders increased by 56 percent. We may have expected to see an increase in essential purchases, however, there were also double- and triple-digit increases in online sales for non-essential items.
According to BigCommerce, the following categories have experienced an increase:
Gifts & specialty (+18.9%)
Apparel & accessories (+14.3%)
Home & garden (+8.4%)
Food & Beverage (+7.2%)
Toys & games (+7.0%)
In this scenario, no industry is left behind and the unexpected happened to those that did not anticipate such drastic changes in consumer behavior and pressure on their supply from increased demand.
Consumer Behavior Changes Caused Problems
This quick change in consumer behaviors and the rapid swell of reliance on these platforms caused immediate challenges for supply chains. Businesses weren’t prepared and had little time, if any, to get prepared.
More specifically, most eCommerce businesses didn’t have scalable platforms with the ability to process the increased volume of orders. They also didn’t have ample time to procure the needed supplies and stock up on materials and make adjustments to their processes.
With the perfect storm of high demand, low inventory, and lack of time to prepare, consumers with a mindset of instant gratification and receiving orders within hours of confirmation, became frustrated.
From a business standpoint, the influx in orders and lack of employees and automation resulted in falling out of compliance and experiencing an increase in delivery delays. In fact, according to ShipStation, in early March, 20 percent of shoppers experienced a delayed or canceled delivery due to coronavirus.
Even commerce giants such as Amazon, which had to pull its two-day delivery guarantee, felt the impact. Demand increased while production decreased due to slowed imports from warehouses abroad.
Without enough employees to tackle fulfillment-related duties, large companies began hiring. However, this pressure on supply chains exposed the vulnerabilities of human capital and revealed the value of automation.
More Delivery Problems
Retailers experienced issues with deliveries such as an increase in just-in-time (JIT) orders and split-orders. As a result, many are analyzing order fulfillment strategies and considering reconfiguring the fast shipping option.
Delivery also required more money to transform paper and manual processes to a virtual system. It’s likely that this change in how retailers communicate with suppliers will continue changing far into the future.
As a direct result of delays and inventory shortages, customers became unhappy and reported dissatisfying experiences. Often, customer satisfaction is based upon the knowledge - or lack of - pertaining to order status and delivery delays. Dissatisfaction occurs when there is a breakdown in communication and a lack of knowledge from the customer.
Customer satisfaction is imperative since the satisfaction rating and company reputation are synonymous. When customers are unhappy, they can – and will – go elsewhere. Also, they won’t hesitate to share their less-than-positive experience with as many people as possible.
So What Can We Do?
Companies must prioritize customer service and client communication, especially during unpredictable times and those that cause a quick change in customer behaviors and buying patterns.
Customer expectation management is and will always be imperative for a company’s success. Companies must maintain open, honest, transparent, and responsive communication with customers to establish and manage healthy and realistic expectations.
Inventory must also be closely managed. If a retailer does not have the technology to provide real-time inventory data and other stock item trends, they risk customers placing orders for unavailable products. Then, customers will find out later that the shipment delivery time is delayed or the order is canceled, and that will create customer disappointment and frustration.
The Moral of the Story
There are ways to prevent customer disappointment and help keep customer satisfaction levels from dipping when the unpredictable happens. We must learn from these experiences and take a deeper dive into supply chain strategy and management.
While restructuring a supply chain to handle today’s new reality is no small feat, the help of an outsourced provider with connections across the supply chain process can help build an effective strategy and obtain the needed resources.