If you look at the traditional business operations pillars, there has been one that has been a standout differentiator the last few years, separating companies not by small margins, but by industry shocking lengths. This pillar is, of course, logistics. It’s not in marketing, human resource, product, or financials. It’s logistics that has seen the most exciting and technological leaps to change from a somewhat dull topic to a kingmaker that has propelled some companies to the very top. The opposite is also true, companies that neglected their logistical processes or, even worse, outsourced this completely, have found themselves so far behind the curve we can see examples of them struggling and even going under.
The Little Bookstore That Could
The business cases aren’t even obscure. We are talking about Amazon, for example. A small online bookstore that grew into a certified brick-and-mortar retailer killer of the modern age. Products that Amazon makes? Zero (let’s not count Amazon’s Basics range).
How can a company that only sells products from other supplant traditional retailers? The answer is simple: better logistics. It almost seems like a magical process, but Amazon will offer almost an endless list of products that can be delivered the next day (granted the order is placed before the cut-off). Amazon even took that a step further by offering a Prime Now service, that offers same-day delivery, sometimes even on Sunday. And there is no sign to Amazon stopping there, with news messages of them exploring drone delivery and much more.
Changing Consumer’s Expectations
The reason why Amazon is so successful is that they have changed the consumer’s experience. Where online retail in the early 2000s was mainly small, dodgy-looking sites, Amazon worked diligently on the backend of it all. Even large traditional retailers would just have small e-shops as an extra addition, not as the primary purchase channel. Most retailers treated it like a fad. But not Amazon, as they learned and evolved, they turned Amazon into an online store that 1) had products you could get tomorrow, 2) you could trust with your money, 3) has products at a reasonable price point, 4) worked exceptionally well. Amazon became the measure others had to compete with. And it’s tough fighting with a company who had well over a decade worth of a head start (and now all the money they could possibly need stockpiled).
Amazon’s dominance is so well established that there has been a trend of retailers who had gone online, eventually folding their own webshop to start selling their wares online via Amazon as a seller. On the outside that might look like folding, but it could also be more than that. It might just be companies making sure to participate now and keep a positive revenue flow, while trying to play catch up with Amazon, mainly in the logistics department. This means getting experts in to review and improve all logistical processes, including supply chain automation, purchase to pay solutions, inventory management and demand/supply forecasting. Investing to improve seems to be the only way forward, with the other option folding altogether.