How to Build a Future-Proof Retail Supply Chain

As we enter 2022, it’s tempting to predict what the future holds, although making predictions is especially hard amid the unprecedented COVID-19 pandemic. I like what the American writer William Gibson once said:

“The future is already here – it’s just not evenly distributed.”

The pandemic has changed how retailers engage with consumers. From the increased adoption of social commerce to the rise of ‘direct-to-consumer’ model (D2C), the modern retail experience has dramatically evolved. Of course, there are followers, leaders, and trendsetters. Quite often, it is digital know-how and innovation that sets them apart.

When e-tailers ramp up their digital offerings, one commonly overlooked area is their supply chains. Yet, it is these supply chains that form the backbone of the e-commerce ecosystem. An agile, resilient, and efficient supply chain is critical to bring seamless online experiences to customers in the physical world.

In a newly-released white paper, three megatrends can help e-tailers modernize their supply chains and succeed in the ever-digitalized retail world.

Providing Integrated Delivery Services for Time-Starved Consumers

With increased disposable income, consumers nowadays are willing to outsource services to save time. The rising popularity of food delivery, grocery shopping or even home cleaning is driving up demand for ‘on-demand’ services. This on-demand economy is projected to reach a whopping US$335 billion by 2025.

Uber, for instance, swiftly transformed from being purely a ride-hailing service provider to an on-demand delivery company, delivering food and groceries to customers.

Businesses need to think more holistically about providing value-added services to help customers save time – that includes providing easy-to-use delivery services with speed, flexibility, and convenience.

For small businesses with limited financial means, building integrated, on-demand delivery services from scratch is not realistic, nor is it economical. So how can e-tailers capitalize on this ‘on-demand’ trend and better serve customers?

They can look to integrate robust delivery services into their e-commerce platform by collaborating with established logistics players. It’s a win-win for both. With such backend integration of logistics services, e-tailers can enjoy easy and automated access to process bulk orders on a single platform, and save time.

Logistics players can also leverage an expanded partner network to harness the power of supply chains, bringing innovation within the e-commerce ecosystem.

Customers want to be wowed. VR/AR Technologies to the rescue

Selling products online has evolved beyond putting a simple catalogue on the website. Consumers living digital-first lifestyles expect new and innovative experiences from start to finish.

Take JD.com, the Chinese e-commerce leader, as an example. The company has aggressively transformed its e-commerce model to a 3D-enabled immersive shopping experience. By using JD’s VR Shopping Galaxy app and the AR-enabled app, shoppers can enjoy an immersive virtual reality shopping experience to browse and buy products or preview how a piece of furniture, for instance, would look in their own homes.

The VR-and-AR powered retail market is set to soar from US$3,790 million in 2021 to US$17.8 billion by 2028, globally. In Asia Pacific, the growth pace is even faster. It expected to grow at a 38.4% YoY and reach $172.8 billion by 2026. The transformation from ‘what you see is what you get’ to ‘what you experience is what you get’ presents new opportunities for businesses within the e-commerce ecosystem.

VR technology may soon be built into delivery services as consumers place a heightened focus on sustainable and ethical shopping. It’s quite possible that in the future, with a pair of 3D glasses, consumers can see how a product is being packaged in the warehouse, or have clear view into what makes the last-mile delivery processes sustainable.

Unlocking New Opportunities in Untapped Markets

Consumers in remote areas long for convenient and seamless e-commerce experiences. Such demand has only intensified with the rising middle classes in tier-2 and 3 cities and the availability of advanced digital infrastructure. The Asia Pacific, Middle East and Africa (AMEA) region is already taking the lead.

In India alone, the growth of e-commerce volumes in tier-2 and tier-3 cities has outpaced that in tier-1 cities. Online spending per customer in these lower-tier cities have also shown strong momentum, contributing nearly 50% of e-commerce sales in India.

As more businesses see opportunities in lower-tier markets, competition will intensify. To win the competition, retailers can lean on established logistics providers to connect with more customers across remote cities or even countries while increasing supply chain efficiency.

With over 5,000 facilities, 680 aircraft and more than 200,000 motorized vehicles across its global network, FedEx has been connecting people and possibilities across 220 countries and territories worldwide.

With technology being a powerful engine behind the e-commerce boom, logistics players are banking on innovative solutions to support businesses to expand with more elevated and personalized experiences to consumers in remote areas.

Already, FedEx is collaborating with Neolix, a leading company in autonomous technology, to test driverless delivery services in China. Successful implementation of unmanned delivery services could help e-tailers solve the riddle of reaching customers in far-flung areas without incurring high delivery costs.

The future is now. Winners will be those who have the foresight to build a tech-infused retail experience. Are you ready to take the leap?

For more insights on how businesses can harness technology and lean on logistics to thrive in Asia Pacific, visit FedEx Business Insights.

Written by: Kawal Preet, president of Asia Pacific, Middle East, and Africa (AMEA), FedEx Express