When you hear the phrase “online retailer,” one of the first websites to come to mind is usually Amazon.com. There is validity to the argument that Amazon is making it harder for brick-and-mortar stores to survive. However, the effects of online retailers has a much deeper impact – especially on manufacturers – than the obvious few factors that regularly surround this conversation. The largest influence that has made waves and profound changes to the CPG industry is Amazon: these changes have been both good and bad.
Faster Shipping Times Are Stressing Manufacturers
Manufacturing sectors are being forced to adapt to the quickly forming landscape of online commerce. They need to speed up order turnaround time to remain competitive and in business. The necessity to move goods to market faster has profound affects on how manufacturing companies strategize the management of their business. Remember when standard shipping times were five to seven days? Now the free shipping options are being forced through the smaller window of one to three days. While consumers are happy, manufacturers are stressed.
New Ways of Forecasting Warehouse Stock by Keeping Enemies Close
When a business sells through Amazon, the business is not allowed to contact the customer if the customer found the products through Amazon. What they do with the customer data is the clever part. They use the data to compete with the businesses that sell through them. If a seller’s product line is successful, then Amazon takes notice. Merchants who sell through Amazon help Amazon discover which new categories and trends are profitable helping them forecast which products they will need to stock more of in their warehouses.
Customer Rapport and Repeat Sales Means More E-Commerce Business
Amazon is a highly progressive business and is always adapting and improving its strategies. One aspect Amazon has nearly perfected is its customer service: no matter the issue its representatives are pleasant, helpful and efficient. This superiority elevates the quality of its brand which contributes largely to Amazon’s ability to generate repeat customers. These returning customers who bought a product through Amazon will search through its website to find a related product: there is no guarantee this will be from the same business. These customers are adding more business to the e-commerce sector which is putting more strain on manufacturers since there is a larger amount of orders with lower shipping times. Speed is the primary factor that manufacturers are having to cater to in order to stay afloat.
The bottom line for suppliers is that they need to increase the rate of which they operate or they risk falling behind and out of business. The rise of Amazon and e-commerce has led to cheaper and faster order fulfillments which affects a large amount of manufacturers — from textiles to heavy equipment. Amazon has forced other retailers to adapt to their online shopping standards.
We’d like to thank Charles Nicholls for his insights.
