Companies are navigating unmarked territory as they try to ensure business continuity by managing massive volumes, shortened delivery windows and inventory shortages
In such a short amount of time, the Coronavirus has sparked so much fear and uncertainty within families, economies and businesses collectively across the globe. Multiple state-wide shelter-in-place orders only allowing “essential” businesses to operate have taken effect, buckling brick-and-mortar store foot traffic and skyrocketing online shopping in certain industries.
The numbers are pouring in… and they’re surprising.
According to a recent analysis of spending trends, e-commerce spending is up more than 40% year-over-year since President Trump declared a state of national emergency on March 13. The products topping the charts are toys, sporting goods and camping products which have increased in sales by 200% from March 13-24 year-over-year. Additionally, industrial supplies sales have increased by 150%.
Who’s bringing in the big numbers?
“Essential retailers”: As consumers transition to stay-at-home living, the majority are stocking up on products they need for everyday use, such as paper goods and toiletries. Revenue for this category has increased by 124% year-over-year.
On the other hand, businesses that depend on consumer discretionary spending — those deemed 'non-essential' business activity (such as fashion) — are experiencing a decrease in sales. Retailers, such as those big in apparel, are looking at weeks (and possibly months) of store closures and depressed consumer demand. John Thorbeck, chairman of Change Capital and former general manager of Nike says, "What started as a supply shock, is now obviously a demand shock.” Meaning, what started as a shock due to Chinese goods not being made or shipped in the early part of the year quickly turned into a lack of consumer need.
What the industry is noticing…
How your business is affected depends on the industry you’re in.
“Essential” Business challenges:
- Managing an everchanging situation and keeping up with informational updates
- Balancing the safety of the workforce and the needs of the customer base
- Handling the reduction in foot traffic sales due to store closures
- Controlling supply chain impacts such as inventory shortages, parcel volume throughput, and delivery delays
The National Retail Federation also conducted an NRF Member Supply Chain and Retail Operations Survey in March that asked, what type of impact are you currently experiencing or expecting to experience in your supply chain?
For companies deemed “non-essential” businesses (i.e. apparel industry), some trends are surfacing:
- Reduce or halt incoming planned/scheduled inventory
- Optimize ecommerce for customers
- Increase shipping from all inventory sources
- Plan for future excess inventory
What we’ve noticed…
One significant shipping trend we’re seeing involves the carriers, and we touched on this a bit in our recent webinar, Parcel Shipping Hotline: An Expert Q&A Driven by YOU. Carriers are making constant updates every day. For instance, the major carriers have eliminated their time-in-transit guarantees. Now, they’re basically just guidelines – and so far, they are delivering to those guidelines. Even Amazon has retracted its next day/2-day delivery guarantee.
We’re also starting to see international carriers compiling lists of countries they are not delivering to. Some of that might be due to a country’s restrictions. However, even though the carriers have the ability to send a routing file that would actually say “this country is no longer deliverable”, they aren’t doing that right now. So, customers who heavily ship internationally are going to their small parcel vendors in order to quickly put in business rules so they can do this automatically themselves.
For retail specifically, we’re seeing a rush toward ship-from-store. Although stores are shutting down in terms of consumer foot-traffic for social distancing practices, it’s still possible to use those stores as mini fulfillment centers. We’re seeing a lot of major retailers move forward with their ship-from-store strategies and get inventory out of those stores and into their customers’ hands in a timely manner, but many companies don’t have that infrastructure put in place just yet.
Another trend we’re seeing is forming due to a lot of distribution centers being shut down in regions that are hard hit with the virus due to understaffing. We’re seeing companies doing line-hauls to help companies reach their customers. A line-haul is when you send your small parcel packages on an LTL truck or your own truck and drive the packages to a carrier hub. You can then create all, for instance, Purolator labels as if it looks like it is coming from the Purolator hub to the end user, that way when the LTL truck or your own truck drops off the packages at the hub, they are all properly labeled and ready to be distributed on Purolator trucks to the end-customer.
As an example, this was helpful to one of our customers because they could use inventory from their fully-staffed DCs in Texas and still get that product to the Canadian customers. It also can save money because you aren’t paying a small parcel carrier to do that full haul from TX to Canada. Instead, you are using their own trucks and just having to pay shipping from the Purolator hub to the end-customer.
Going multi-carrier may ease shipping operations. Delivery delays are a strong concern for companies and utilizing only one carrier can cause delays due to the service overload of e-commerce orders (much like during peak season). Utilizing a multi-carrier strategy reduces the reliance on one carrier and decreases risk.
Activate all your potential inventory sources. We are seeing that many companies aren’t shipping from their stores, utilizing direct relationships with manufacturers for drop shipping or getting 3PLs set up to aid in their distribution efforts. Most of the requests we’re seeing from customers and OMS partners are regarding rapid deployment of ship-from-store so they can mobilize inventory and reduce the sitting cost of all those goods.
Ask technical vendors for support and advice. The relationships you make with your technical vendors are there for a reason – they are the experts in their industry, hence why you invest in them. You rely on them to support you when something goes wrong, and you trust them to help guide you in making the right decisions for your business. Like stated above regarding carriers and business rules, your small parcel shipping vendor can help you put these into place as updates become available. Reach out and see what they have to say about the situation.
A silver lining: Joining the fight
FedEx is helping the federal government task force by picking up COVID-19 test specimens from more than 50 testing centers in 12 states, while UPS is supporting drive-through COVID-19 test sites throughout the country.
On the retail side, Harbor Freight is donating masks and gloves to hospital workers, while Neiman Marcus and Joann Stores employees are making nonsurgical masks, gowns and scrubs at Neiman Marcus alterations facilities in California, New Jersey and Florida.
Also, Gap Inc. is working with its vendors to deliver personal protective equipment (PPE) supplies to a large hospital network in California, while some of its suppliers will begin making “masks, gowns & scrubs for healthcare workers on the front lines,” the company tweeted.
MLB and Fanatics are shifting production from jerseys to masks and gowns for those on the front lines of the fight against Coronavirus. "We're certainly really excited for baseball and Fanatics to come together and take this incredible factory and manufacture op to a million masks over the next couple of months," Michael Rubin, founder of Fanatics, said. "We can make a huge difference."
Our customers and their continued success have always been our focus - in times of prosperity and, especially, in times of hardship. We extend our wishes for the safety of our customers, their coworkers and their families. Please know that ProShip is determined to help your team in any way we can.
If you’d like to speak with ProShip about how your business is being affected or discuss any business changes or strategies implemented recently in response to the Coronavirus that may affect shipping, please reach out. For instance,
- Do you have any parcel volume concerns you’d like to talk through?
- Can we help you in discussing any carrier updates that may impact your operation?
- Are there any business rule changes you’d like our assistance with?
- Do you want to understand how you can quickly roll out a partial ship-from-store solution?
Please think of ProShip as an extension of your team and do not hesitate to reach out to ProShip for support.
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In this on-demand webinar, our experts answer 8 of our attendee's questions:
- Interested in learning how to approach TMS selection. What is most relevant part of a TMS?
- How do you invoke business rules / logic to block commercial, non-residential shipments as offices are being closed across the country? Any other trends you’re seeing or advice you have for supply chains dealing with the pandemic?
- Can ProShip configure multiple UPS engines? One for UPS book rates, one UPS negotiate rates, and one for UPS custom rates determined by the shipper?
- What are the sweet spots for each carrier?
- What’s the difference between a multi-carrier shipping software that utilizes carrier APIs vs. one that uses on-premise engines?
- What is advanced date shopping and why is it different than regular rate shopping?
- Does ProShip do address validation?
- What % of shippers are doing Front of Line labels vs. End of Line?
NRF Member Supply Chain and Retail Operations Survey, March 2020