Ecommerce supply chains are facing unprecedented disruption, from manufacturing and production to shipping and movement, shifting customer priorities, and changing marketplaces. You’re being asked to respond to things you’ve never faced and predicted a future that is anything but certain.
It’s tough, but there are some things you can start to do to manage your supply chain risk and respond to build greater resiliency. Let’s look at three areas where the coronavirus pandemic is generating new demands, and how your e-commerce business can respond right now.
A quick note, many e-commerce organizations will fall into the small business designation. As you review your options to address and resolve supply chain risks, be sure to take care of your people. A good place to start is the U.S. Treasury Department’s specific page for Assistance for Small Businesses to learn about the Paycheck Protection Program (PPP).
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Diversify your marketplaces and distribution
One of the biggest surprises so far in the e-commerce space didn’t come from the CDC or governments, but instead from a move by Amazon to drastically alter its FBA program as part of its coronavirus response.
Just after midnight on March 17, Amazon announced that it would be temporarily disabling shipment creation for non-essential products coming from third-party sellers. This effectively meant that many companies could sell what they had within Amazon’s stockpile but would then be unable to replenish items to continue to sell — cutting short a lucrative market for many.
The move was swift and sudden, catching many unaware and creating a significant role in business models. Those that relied on FBA as the primary sales channel, as well as fulfilment for orders on their own sites and other channels, potentially faced a shutdown of their business model once their Amazon supply ran dry.
We’ve long said that companies should seek to diversify their marketplaces, and this is perhaps the starkest example of how diversity protects your business. At the same time, diversifying fulfilment — such as having inventory with multiple 3PLs — can protect your business for when any marketplace or region sees a disruption to operations.
Seek new customer bases
Many e-commerce companies are losing customers as those people face unemployment and more economic uncertainty. You’ve got to keep your business afloat and employees on, so it may be time to look for new customers or different opportunities.
Businesses selling shoes and clothing may start looking to B2B markets instead of traditional B2C outlets as hospitals and care centres need to provide more equipment and materials to essential staff. If you create crafting materials, such as fancy papers or tools, consider reaching out to e-commerce businesses and small sellers who might need ways to stand out from the crowd. Containers and packaging makers are starting to engage with restaurants and local services who need more to-go options.
Many companies that provide toys, games, and other materials for children are partnering with schools and local charities so that someone online can buy something fun that is then delivered to a local child in need.
Communities are changing and many are looking for local, internal partners at this time. Now is when you can build relationships that will outlast the coronavirus.
Fill gaps with nearby resources
For some e-commerce companies, it’s possible to perform production or final assembly in multiple locations. Or, if you’re buying finished products, you might be able to find a local manufacturer who is able to meet regional needs, instead of relying on a single supplier for all of your goods.
Ecommerce companies can minimize supply chain disruptions by identifying suppliers and manufacturers located near their biggest customer bases. Sometimes, this may mean having a supplier in China as your dominant provider but having backups in the U.S. or Mexico. In other cases, it could mean having different suppliers for every state where you have 5% or more of your orders go.
The trick here is understanding where their supplies come from. If all your partners rely on the same manufacturing plant for inventory or the same forest for raw lumber, then you still have a single point of failure in your supply chain. You want to protect yourself with a diverse selection of partners and use local resources to address gaps that can occur when your main supply chain is disrupted.
Start sourcing alternatives now, even if you don’t need them. We don’t know who is going to be impacted or how in the coming months. It’s the best time to become more prepared.
Now is when relationships matter most
Ecommerce businesses are facing significant peril. It’s hard to look beyond just putting out the current fires and trying to keep the lights on, but that’s what we’re all being called to do at this time. Managing your business in a crisis is about more than just keeping your head above water.
To survive and come out the other side with a business that’s protected and secure, you’re going to have to lean on many partners and providers. Those who you have a good relationship with are the most likely to come through for you at this time. That means the people you pay well (and on-time), those who are central to your business, companies who rely on your spending, and everyone up and down the supply chain who views you as reliable.
While you can’t go back and make up for past issues, now is the time to think about who is most likely to be an avenue of support. Which companies in your supply chain are willing to help and which are you willing to help?
Vendors, suppliers, distributors, 3PLs, and customers are all potential partners in keeping operations going. If you’ve been a good tenant, your landlord might be willing to support you and reduce rent or defer payments. Beyond the SBA programs, a positive relationship with your lender can help speed you along in getting recovery financing.
At the end of the day, we’re all doing what we can to keep running. We’re all helping the people we respect. The difference for staying afloat might be as simple as being on a first-name basis with partners in your supply chain or having done past work with charities so that they can speak well of you to their community.
Right now, lean on the relationships you have. When this storm is over, start building new ones and strengthen those that were supportive in this time of need, and you’ll be best prepared for whatever comes next.
About the Author
Jake Rheude, Vice President of Marketing, Red Stag Fulfillment