From physical to e-commerce: marketing and logistics principles for supermarkets

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Supermarkets and retailers around the world began distributing merchandise through order channels over a decade ago, often as a future-oriented addition to a minor business segment, supplementing standard services. As such, ordering online and receiving groceries by delivery is nothing new. Caught off guard by the COVID-19 outbreak, however, supermarkets and food retailers today face the challenge of shifting their business model from physical retail to online ordering and delivery with urgency. unprecedented. With physical distancing measures in place across entire countries, people increasingly prefer to avoid buying groceries as walk-in shoppers to protect their health and well-being.

In this situation, the mass distribution industry finds itself in a fundamentally changed market environment. The changes requested of them are profound. Their typical infrastructure, such as buildings and storage centers, has been strategically designed to guide customers through a supermarket, positioning products on the shelves according to the logic of marketing and product placement, factors that become obsolete in a world of online retail. What matters now is the safe, reliable and timely supply of customers’ online orders through dedicated distribution services. Logistics is at the heart of these challenges and the interface between marketing and logistics is indeed becoming vital for rapid implementation in the current scenario.

For rapid change in the short term, the preconditions are twofold: on the one hand, the supply of the selected products must be covered either by local production or by available imports. On the other hand, a functional online ordering front-end must be made available to customers. Yet, especially for supermarkets, it is the transparent and efficient operation of the “Pick and Packing” functionality that has now become the bottleneck.

This has several consequences that can be resolved: First, online supermarkets cannot provide the full portfolio of products to their customers, at least for now. Sales analysis is necessary to significantly reduce the portfolio of products available online, and therefore decrease the complexity of assembling orders later. In the present circumstances, food and canned products will be of higher importance than non-food products, and all the latter to adhere to should be chosen wisely. While customers may have less choice, reducing the portfolio will significantly help maintain capacity for faster and more reliable physical delivery.

Second, the abbreviated product portfolios can be divided into two categories: the best and the worst. Large runners are regularly purchased in large volumes and they have a quick turnaround time. Low runners can be attractive in the physical retail world, but make less sense in today’s landscape. Third, the best performing products within a simplified offering must be stored differently for the time being. Usually, they would be placed in a decentralized fashion along strategic points in the supermarket to attract attention. In a recalibrated configuration, identified top-level riders should be stored centrally in a dedicated area of ​​the market where employees have unhindered access for rapid “pick and pack”. Fourth, the commissioning time required for workers to assemble an incoming control should be kept as low as possible by minimizing the physical distances required to walk.

Fifth, when packing online orders received and preparing them for shipping, standardized packing box sizes can be used to further reduce complexity. Just like in a game of “Tetris”, using uniform cubic sizes will allow packages to be stored in delivery vehicles in the most efficient manner. This is particularly relevant for food retailers who do not use third party logistics providers for quality assurance and food safety reasons.

Sixth, the physical delivery of ordered orders must be prioritized and planned in a calculated manner. Typical linear concepts such as “first order in, first delivery out” will not be effective under current circumstances. Seventh, due to the reduced product portfolio, the products offered should not be static, but optimized regularly. In other words, the short-term change now needed shouldn’t limit the industry to short-term thinking. Requiring customers to order in excess of minimum order quantities, imposing high delivery charges, expecting customers to accept long delivery times, accepting blocking of orders, among other pitfalls – including us are currently witnessing internationally, can be avoided by focusing on the principles of marketing and logistics.

While it is clear that supermarkets are central to the supply of consumer goods during the current pandemic, it would not be reasonable to compare them with established online giants like Amazon and others. Their business model and logistics configurations are different from the start. This naturally calls for customers to be patient and goodwill with their supermarkets for a while. Supermarkets are logistics hubs, run by people, for people, by people, although at the moment they can only appear as an anonymous online screen.

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Frank Himpel is a faculty member in the Engineering Management and Decision Sciences Division of the College of Science and Engineering at Hamad Bin Khalifa University in Qatar. Before moving to Qatar with his family in 2018, Frank was a professor of business administration and logistics in Germany, where he also obtained his university degrees. His research on aviation and air transport management has taken him to several countries around the world.

About Hamad Bin Khalifa University

Innovate today, shape tomorrow

Hamad Bin Khalifa University (HBKU), a member of the Qatar Foundation for Education, Science and Community Development (QF), was founded in 2010 as a research-intensive university that acts as a catalyst for transformative change in Qatar and the region while having global impact. Located in Education City, HBKU is committed to developing and cultivating human capacities through a rewarding academic experience, an innovative ecosystem and unique partnerships. HBKU delivers multidisciplinary undergraduate and graduate degrees in its colleges and offers research and scholarship opportunities through its institutes and centers. For more information on HBKU, visit www.hbku.edu.qa.

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