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Retail, B2B and eCommerce Logistics – 4 Best Practices & Learnings from the impact on Supply Chains and Businesses during the Coronavirus Crisis

Published on: 16th July 2020, 10 min read.

Author’s note:

How did everything happen so quickly when the Coronavirus started? We’ve experienced lockdowns, businesses closing down, and supply chains being interrupted. The outbreak has majorly affected our daily lives and the future of many businesses. As of now, we haven’t fully experienced the repercussions of the crisis. Not even to mention: the Coronavirus pandemy is still present in many regions of the world and brings serious concerns over a potential second wave to spread.

These and many more questions drove us to investigate the topic: What’s the impact on supply chains and businesses during times of crisis? What learnings can we derive from these times? Our team at everstox dug deep into the archives of WHO, including other authenticated primary sources, evaluated stock markets and impacts on operational supply chains, and consulted with major industry players to collect four best practices and learnings for how businesses have successfully navigated through this dilemma.

This article will help your business to harness your Retail, B2B and eCommerce logistics for a more sustainable supply chain and logistics set up, both in the short- and long-run.

Overview:

The global impact of COVID-19

31 December 2019: The WHO (World Health Organization) receives notification that cases of pneumonia from an unknown disease have been detected in the Wuhan City, Hubei region of China.

Three weeks later, WHO announces 282 confirmed cases of COVID-19 have been reported from four countries including China (278 cases), Thailand (2 cases), Japan (1 case) and the Republic of Korea (1 case).

Four weeks later, 50,580 laboratory-confirmed cases of COVID-19 have been reported by WHO – over 98,96% of cases originating from China.

And now we’re here (July 16th, 2020): 13,285,640 confirmed cases (WHO, 2020).

Chart 1: Global Situation Report by WHO, 16th July 2020

With first signs of successful lockdown impacts in Europe, country borders have recently opened up again. The flows of industry supply chains and shipments for goods are getting back to working normally.

However, not even three to four months ago, the first impacts on the global economy were visible with stock market prices and indices falling drastically (e.g. NASDAQ, FTSE 100, DAX).

Chart 2: DAX Stock Market Development during COVID-19 by Frankfurter Börse 2020

No wonder – cross-border trade and public travel were being hindered by governmental incentives and lockdowns to avoid the spread of COVID-19. Already at the very beginning of the crisis companies like Apple have warned about the shortage of the iPhone supply and possible impact on revenues for the first quarter of 2020 (Apple).

Clearly, the impact on supply chain and possible shipment to international markets was directly affected by cross-border lockdowns. Amazon and other major retailers have also warned Prime members and those using services like Amazon fresh that possible delays are to be foreseen on products originating from highly affected areas (Bloomberg).

Another eCommerce giant, Aliexpress, had also given notice on global delays of orders and cancellation of product ranges due to fear of constraints on the supply chain and longer processing of orders (Reuters).

KEY Takeaways:

  • as of today, there are 13,285,640 confirmed Coronavirus cases globally
  • the first economic impacts of the Coronavirus were already visible end of Q1 2020

How are eCommerce and Retail affected? Which products are being shopped online?

In the last couple of months we have seen strong demand for eCommerce and online Retail – more and more products were being shopped online. Especially the online-demand for goods of daily use – food, medicine, pet supplies – showed a drastic increase of over 50% in Q2 and over 35% in the first half of 2020 in Germany (bevh, 2020).

The trend seems to continue over the long run, as 53,6% of consumers want to continue shopping online in a post-corona scenario (Logistik-Heute, 2020).

“eCommerce has established itself as an additional supply infrastructure within the second quarter,” summarizes BEVH managing director Christoph Wenk-Fischer, bevh 2020. “This is not only reflected in the absolute figures, but also in the declared will of consumers to continue buying online at least as many, if not more, everyday goods and medical products in the future.”

One can explain this long-term boost in online shopping with consumers adopting the new convenience level of stay-at-home deliveries. However, there is not only a shift in the way that goods are shopped, but also a change in the preferred origin. In fact, the public seems more wary of foreign brands and more fond of locally-sourced goods (Accenture, 2020).

Clearly, this put more importance on local supply chains and locally manufactured products. But more importantly, merchants need to prepare their future business towards a more online-oriented shopping behaviour.

KEY Takeaways:

  • eCommerce revenues for food, medical supplies, pet supplies and drugstore products increased by +51,2% in Q2 and +35,7% in the first half of 2020
  • 53,6% of consumers will continue shopping products online in a post-Corona scenario
  • Consumers are more fond of locally sourced products

Impact on global vs local Supply Chains

During the lockdown phase, national borders were shut down for civil transport but remained open for truck, rail or naval shipments of industrial and consumer goods as an governmental attempt to keep cross-border trade somehow alive. Nevertheless global imports and supply chains were facing major delays to fulfill and deliver products on time (e.g. U.S. CNN, UK Telegraph, German Traffic Review).

Evidently, as first quantitative studies show (NRF, 2020), global supply chains are highly affected – especially imported goods from China, India and other major industrial supply hotbeds. According to a recent study from June 71 % of shipping and freight professionals reported a volume decline resulting from the COVID-19 outbreak (Mazareanu, 2020).

As major international supply chains for imported goods have collapsed during COVID-19, the capacities for shipments and deliveries within closed borders also showed their limits. According to a study in March 2020, the announced delivery delays and cancelations in Germany were at a particularly high level of 55.1% (Koptyug, 2020). For example, Amazon Prime Now members saw heavy delays for goods imported from outside of Europe (CNBC, 2020).

Especially when Amazon announced to prioritize the storage for only essential goods including hygiene, food and medical supply (Bloomberg, 2020), many merchants saw themself being stuck with dependencies, long delivery delays and higher order cancellation rates when using Fulfillment by Amazon (FBA) services or single logistics providers.

As these findings give an overall good understanding of what has been happening to supply chains and product distribution, there is still a lot of uncertainty involved of what could happen next. Now more than ever, merchants, retailers and eCommerce businesses of all sectors need reliable logistics partners and supply chains to deliver their goods on time.

KEY takeaways:

  • 71% of shipping and freight service providers faced a volume declined of global shipping services due to COVID-19
  • 55,1% of national deliveries were either delayed or cancelled in Germany during COVID-19
  • Merchants have been drastically exposed to dependencies from logistics providers and Amazon during the Coronavirus crisis

4 Best Practices for Retail, B2B and eCommerce logistics: Flexible Warehousing & more

So, what are the key lessons from our findings? How can you prepare your Retail, B2B or eCommerce business to avoid shipping delays, stock shortages and maintain a fully operational production for the next few months?

Besides our analysis of external market signals and reports, we dug even deeper and consulted with our own logistics network of warehousing & fulfillment partners, and merchants from various businesses to learn from their experience. From this analysis, we evaluated four best practices and learnings that will harness your business in the best way possible in the short- and long-run.

The following recommendations do not require long implementation cycles. As a matter of fact, deriving from our own business cases, implementation cycles rotate between 5 to 15 days. Here are the takeaways:

01: DIVERSIFY & USE FLEXIBLE WAREHOUSING

By mitigating the risk of central distribution and fulfillment points, our eCommerce, B2B and Retail merchants benefit the most from a bigger portfolio of diversified warehousing & fulfillment partners distributed across various regional areas.

A higher amount of local distribution points in each national market will simply help your supply chain to decrease dependencies from only one provider and, as we’ve seen during the Coronavirus, the risk of being exposed to quarantine zones.

A diversified logistics set-up will not necessarily increase costs, especially when doing it right. Simply click the link to learn more about flexible warehousing.

02: AUTOMATE & ADOPT TECH-DRIVEN SOLUTIONS

In times of uncertainty, real-time data transparency is key to keep a higher degree of control over supply chains and to react promptly to changing demands. As a merchant, using automated ways of data exchange between sales channels and warehousing management systems (WMS) will help your business to reduce manual work, time and costs for all data exchange, logistics and customer service processes.

At the same time, merchants also benefit from an optimized supply chain and stock management by receiving direct alerts and notifications when stock levels reach minimum thresholds.

Using our Logistics-as-a-service platform, our merchants experienced a positive impact during the Coronavirus crisis due to a more dynamic and data-driven logistics set up. Directly re-stocking supplies with one click and keeping real-time operational transparency for all order sources are just two examples of many.

Since our platform uses API-driven technology, it’s agnostic to any operating sales channel and able to automate data flows to create visibility and control over stock, orders and warehousing capacities.

03: EMBRACE THE POWER OF NETWORK SYNERGIES

Many businesses experienced the following within the last weeks and months: fighting for survival by yourself will be impossible to master in the long run, especially when global supply chains collapse. Clearly, your business is dependent on a long supply chain of sub-suppliers and other business partners. That’s why network synergies become so important. 

During the crisis, our logistics partners and merchants benefited from a fully integrated network of close collaboration. By combining the expertise from our logistics partners and merchants, we saw great synergies evolving with the result of creating better user experiences, reducing shipping times and costs, and shortening last-mile deliveries.

All of this was made possible by our network of independent logistics partners. More important is what our customers say – here’s an example of our customer success stories.

04: CONSOLIDATE NOW, BUT DON’T FORGET TOMORROW

Even though this might appear challenging in these times, think also of tomorrow: which strategic markets could become more relevant for your business in the next years; what other distribution channels are now also relevant to further expand revenues and sales; and lastly, how do you aim to provide a reliable and sustainable supply chain to create a better user experience than your competitor?

Many businesses are currently still working at shorter business hours with staff working remotely; partially financed through governmental subsidies. In Germany, more than 12 million short-time workers have been registered in June (Link). As a result, many businesses have gotten into financial difficulties and have been trying to consolidate their current operations. No wonder, consolidating now has been crucial for many businesses to survive this phase.

However, it is even more important that one needs to take a step back and review the long haul. We know from various partners in the logistics industry, including our own experiences and learnings, that supply chain planning and improving fulfillment cycles cannot only take weeks or months into consideration, but rather years. Merchants need to start implementing modern ways, strategies and technologies in order to benefit from a competitive advantage that will help their business to prevail in the years to come.

Learn more about flexible warehousing.

Check also our Resources section and our LinkedIn page to keep up-to-date with our recent news, posts and achievements.

Any questions about the article?
Feel free to contact us!

About the Authors

Maximilian Nenning | everstox

Author:
Maximilian Nenning
Marketing Manager
everstox

About everstox

everstox is a technology and Logistics-as-a-Service (LaaS) platform enabling scalable and data-driven fulfilment for eCommerce, B2B and Retail businesses through a European network of independent logistics providers.

We enable transparent, efficient and ecological logistics solutions by forming Europes first tech-driven network of trusted warehousing & fulfilment partners.

Further information about everstox can be found under: www.everstox.com.

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