Trends—October 2015

Trends—October 2015

Amazon Dash Turns the Tide

When Amazon debuted its Dash Replenishment Service (DRS) and buttons in spring 2015, it gave consumers a taste for how the Internet of Things (IoT) can simplify even mundane tasks. The underlying DRS architecture enables connected devices that measure consumable usage to automatically order physical goods from Amazon when supplies run low.

“Customers don’t have to do anything; they can simply rely on the connected device to automatically reorder the consumables that keep their homes running smoothly,” explains Peter Larsen, vice president, Amazon Devices. “For device makers, DRS makes it easy to add re-ordering functionality to deliver a helpful and differentiated experience for customers.”

From an inventory management perspective, DRS embodies just-in-time replenishment. While ensuring that laundry detergent and razor blades never deplete beyond a certain threshold may be important to some, the application presents huge potential outside the home.

For example, predictive demand sensitivity for replacement parts, batteries, or fluids can have significant advantages for companies operating mission-critical vehicles or equipment where downtime is a costly proposition.

As Amazon builds out its industrial product marketplace—which will help buyers benchmark prices among different vendors—DRS may become procurement’s new best friend. That’s the direction IoT innovation is trending. Replenishment stock will arrive at the dock or door before users even know they need it.

Dash in a Flash

A rundown of brands using Amazon’s Dash Replenishment Service:

  • GE’s high-efficiency washer offers Wi-Fi capability and an app that allows customers to manage detergent replenishment from their smartphones.
  • August Smart Lockprovides intelligent, secure access to a home—customers can use a smartphone to control who can enter and who can’t—without keys or codes.
  • Petnet’s SmartFeeder manages feeding times, portion sizes, consumption, and food supply for pets from a smartphone.
  • Samsung’s laser printers and mobile print app allow customers to accurately monitor toner usage over time, and automatically order new toner cartridges.

Private Label Price Pressures

Over the past decade many retailers have followed the private label sourcing model to build brand affinity, differentiate products, control pricing, and reduce costs—all of which help increase margins.

The private label industry now represents one in every $6 of spend in the United States, according to Deloitte’s new sourcing survey. But retailers also face some headwinds. Deloitte recently surveyed nearly 400 apparel, general merchandise, and grocery retailers to illuminate some challenges they face managing costs, turning inventory, and increasing transparency.

Among key trends:

  • More than cost: Retailers report they are focusing efforts on product quality, speed to market, and mitigating risk to satisfy consumers. The majority rank quality assurance programs as the top strategic response for the second year running.
  • Fewer, deeper manufacturer relationships: With three in four retailers already integrating or planning to consolidate vendors, the industry is placing bigger bets on fewer manufacturers. This is creating potential ripple effects that could upset the current sourcing landscape.
  • Mixed success on reshoring: Moving production to domestic vendors is the top response of retailers to market pressures, with nearly one-third planning to reshore in the future. However, across categories, only 50 to 70 percent of those attempting to reshore have succeeded.
  • The evolving sourcing organization: Retailers are significantly investing in technology to manage private label sourcing, in addition to evolving the operating model, governance, and tax strategies.

TMS: All in a Day’s Work

The evolution of transportation management systems (TMS) over the past several years has been fast and furious. Software-as-a-Service paved the way for a new approach to deployment. Applying a traditional outsourcing model to logistics IT implementation afforded users an economical and scalable option. A “free” TMS, or managed service, where buyers pay in accordance to transportation savings, opened the door to small shippers with fixed IT budgets.

Now Cloud Logistics is taking TMS to another extreme. In the latest gambit to attract more small and mid-sized businesses, the West Palm Beach, Fla.-based solutions developer has debuted its Same-Day TMS.

With the continued growth of e-commerce, and the emergence of omni-channel fulfillment strategies, immediacy has become an expectation. That’s certainly the case for online consumers. But now transportation buyers can tap into a similar urgency.

“When we created Cloud Logistics, our goal was to compress the average project cycle time from months to weeks to days,” says Mark Nix, CEO of Cloud Logistics. “This new offering shows that we surpassed that goal and can now help customers start saving on the first day.”

Same-Day TMS provides communication with nearly 1,000 carriers already on the Cloud Logistics network and features many functionalities that shippers expect from a transportation solution, including freight rating, carrier selection, load tendering, and visibility— all of which can be deployed shortly after go-live.

Auto Parts Unlimited

Even when it comes to auto parts, e-commerce is radically changing rules of engagement for consumers. Gone are the days of simply trusting your local mechanic to requisition the right oil filter for the best price.

New UPS research reveals that 56 percent of shoppers buying automotive parts and accessories make their purchases online—an eight-percent increase over the previous year.

“Research suggests consumers want a seamless experience from their local auto parts supplier, whether a large chain or local independent, across websites and apps, email, and physical store locations,” says Brian Littlefield, UPS director of marketing for the automotive industry.

For example, online comparison-shopping increased 12 percent since 2014, with 95 percent of online automotive aftermarket consumers now comparing products and prices before they buy. A majority (63 percent) use digital coupons, and 52 percent are more likely to shop with a retailer if they receive email offers with discounts, according to UPS’ What’s Driving the Automotive Parts Online Shopper study.

Shifts in purchasing behavior are also reflected in the role of the store. Online shoppers buying auto parts use ship-to-store 55 percent of the time, which is a 14-percent increase from 2014, as part of a growing trend toward increased convenience and no-cost ship-to-store pricing. And 86 percent of consumers strongly prefer to return items to a store compared to the prior year.

Shipping Preferences Shift Gears

Shipping preferences for automotive parts and accessories are evolving. From the rise of ship-to-store to a growing interest in alternate delivery options, consumers are increasingly open to having their packages delivered to locations other than their homes.

Trends Inline1

SOURCE: What’s Driving the Automotive Parts Online Shopper, UPS.

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