Introduction
For the past weeks we've been looking at Shopify’s Commerce Trends 2023 report – and transforming this cutting-edge industry report into a series of actionable guides that will help your business to get the jump on 2023.
We already unpacked what the report had to say on Money and Marketing…
Now this week let's dicuss what 2023 looks like for your Supply Chain.
The Supply Chain Problem
We live in unpredictable times. In the past few years alone we have seen a global pandemic, massive economic turbulence, a cryptocurrency crash, and tremendous hits to fuel and energy prices driven by global political conflicts. Many businesses in the UK have found that Brexit had an enormous effect on their supply chain too, impacting both the availability and prices of EU-sourced goods and services.
In simpler times, a traditional business supply chain might have looked something like this:
Manufacturer > Brand > Distributor > Wholesaler > Retailer > Customer
But any chain is only as strong as its weakest link.
You might have an awesome brand that customers really connect with… but what happens if your distributor suddenly gets hit with insurmountable import taxes? Or your manufacturer simply goes out of business?
A long and narrow supply chain features a lot of moving parts – and many of the challenges it faces will be beyond your power to control.
So in order to grow a robust business in 2023…?
We need to rethink what a supply chain looks like.
The Solution: Move Data, Not Products
Here’s what the Commerce Trends report had to say about the supply chain problem – and how to solve it.
“Business owners are responding to supply chain challenges by rethinking single-sourcing and how much inventory they keep on hand. Such shifts might cost more in the short term, but they create more robust supply chains that can adapt to a turbulent logistics landscape. Brands are also digitising more of the supply chain so they can catch disruptions as soon as, or even before, they happen.”
Commerce Trends 2023 – p.8
At Alvio, our model is all about moving data, not products.
While a traditional retailer network might purchase stock from a single manufacturer, ship it at significant cost to an intermediary warehouse, and then aim to sell enough to make back a profit, Alvio lets you sidestep a lot of this process.
With Alvio, your ecommerce store can feature listings for products available from all of your partner brands. You don’t need to physically stock the items yourself.
In fact, an Alvio-powered store might feature goods from a whole range of different suppliers and brands, diversifying your shopfront at the same time as stabilising your business against potential supply chain issues.
Our blended model for collaborative commerce means that instead of buying in your own stock, inventory sits in one central pool. If demand is low, you’re not left with a warehouse full of unsold items. And even when demand is high, you can never go out of stock…
An Alvio partner will never miss a sale due to supply chain issues.
It’s a game changer.
Partner retailers can sell each other’s lines, while suppliers are no longer shipping 1000 units at a time to a warehouse somewhere – they’re monitoring and fulfilling orders in real time.
Everyone benefits from Alvio’s collaborative model for transparent, digital supply chains.
Supply Chain Trends for 2023
Shopify made some big predictions for the state of supply chains in 2023. Here are their key takeaways:
“Consumer expectations are getting higher: Fast and free shipping is the new standard, but supply chain issues make that hard to meet.
“Brands pivot to meet consumer demands: Resilient brands are holding more inventory, diversifying product sourcing, cracking down on return rates, and leaning into digitisation.
“Adapting now could lead to stronger logistic networks: Slower and less consistent supply chains are transforming how brands think about and strengthen them in the future.”
Commerce Trends 2023 – p.15
For a little more insight, we turned to Rita Jenkins at Shiptheory.
Shiptheory are an Alvio partner company, who provide an innovative cloud-based shipping management platform. Rita told us that the unique challenges of 2023 make it “crucial” to work with a shipping partner able to “manage expected delivery dates or offer cost-effective solutions.”
She also stressed the importance of working with partners that align with “your business goals and values.”
“As a result of the current economic conditions, consumers are becoming increasingly discerning with their spending and have elevated expectations when it comes to service. With limited discretionary income, consumers are looking beyond just the product they are purchasing, and expecting added value.”
– Rita Jenkins, Shiptheory
Consumers Don’t Care About Your Problems
We hate to be so blunt – but let’s be real here.
Shopify's report tells us: “Fast and free shipping is the new standard.”
Your customers have expectations. Either you rise to meet them… or your customers will begin looking for someone else who will.
Yes, business is tough right now. But rather than expecting the market to slow down for us, we need to overcome challenges and rise to meet demand.
The Shopify report explains:
“Brands face the challenge of providing reliable shipping even beyond the current supply chain crisis. Significant disruptions to production—like pandemics, trade tensions, cyber attacks, and climate-related events—happen every 3.7 years on average. Global brands need logistics practices that can adapt quickly to a continually changing ecommerce landscape and attract the buyers of tomorrow.”
Commerce Trends 2023 – p.16
Did you spot the single most important word in that paragraph?
“Adapt.”
“Merchants should take advantage of this situation to reflect on their relationship with consumers, explore innovative methods to enhance their value proposition, and embrace automation to streamline operations – don't be afraid of change.”
– Rita Jenkins, Shiptheory
The tough reality is that there will always be hard times in commerce… so rather than worrying about answering any one crisis, you should be thinking bigger than that. Alvio wants to help you build a business that is truly, universally, adaptable. Future-proof.
We do this by putting the whole supply chain into your hands.
Alvio helps you grow your presence, while shrinking your supply chain. By moving data not products, you’ll have fewer links in your chain – from production to distribution to customers – while those same products can appear in more storefronts than ever.
In this way, Alvio helps grow light and nimble brands, ready to adapt to anything the future can throw at them.
A Lot of Businesses Won’t Survive 2023
Here’s a figure that should frighten some brands: according to the Interos Annual Global Supply Chain Report, supply chain disruptions in 2021 caused businesses an average of $184 million dollars in lost revenue.
Just let that number sink in for a moment.
“We have observed the significant impact of supply chain disruptions on the global consumer experience, both during and after the Covid-19 pandemic. These disruptions have resulted in challenges in maintaining optimal product availability and delivery performance, leading to increased cart abandonment rates and longer shipping times, resulting in lower sales.”
– Rita Jenkins, Shiptheory
The retail businesses worst affected by this, of course, were those that worked on a JIT (just-in-time) supply chain model… those businesses constantly hauling stock from point A to point B on tight deadlines.
According to the Commerce Trends report, in 2023 and beyond, businesses with slow, clunky, gas-guzzling supply chains are going to have a hard time staying afloat.
“The compounding crises of the 2020s have shown just how costly JIT supply chains are when they break. Nearly six out of 10 companies report lost sales from products being out of stock, according to a survey of global Shopify Plus merchants. Not to mention the damage to reputation and customer relationships that 23% of merchants report is even harder to recoup. Consumers are tired of being patient. Brands need updated solutions to succeed in the next era of commerce.”
Commerce Trends 2023 – p.17
We’ve said it before, but let’s repeat it once more:
The Alvio model is about moving data, not products.
But how does that actually look in practice? And what will it mean, to be an Alvio partner in the “next era of commerce”?
Let’s break it down, with a four-point guide to building a future-proof logistics network on the Alvio model.
Your Future-Proof Logistics Plan for 2023
The 2023 Commerce Trends report highlighted four crucial steps to keeping up with the evolving challenges that face business supply chains:
At Alvio, we have a plan for each of these – let’s show you how we do it.
1. Hold More Inventory
The Commerce Trends report noted that JIT supply chain models tended to be the worst hit by crises. However, on the other hand, they also stressed the importance of having enough inventory to always be able to meet demand:
“More available stock makes it easier to meet customer needs, but there’s a balance: Cushioning inventory doesn’t mean overstocking. Brands that increase inventory holdings little by little (depending on cost, space, and demand) lower their risk of trapping funds in inventory they can’t sell.”
Commerce Trends 2023 – p.18
This is an extremely fine balance to maintain. In uncertain times, how can you ensure that you always have just the right amount of stock for demand, without going over?
Collaborative commerce provides an innovative solution to your inventory challenges.
Companies partnered through Alvio will be able to drastically reduce the risk of either over- or under-stocking. Alvio empowers you to:
- Build secondary retail networks: Dispose of excess stock with ease, through end of life (EOL) or end of sale (EOS) promotions.
- Diversify: Explore collaborations with other brands who cater to similar consumer demographics, and sell to a wider audience.
- Create a blended wholesale model: Never run short of stock, when you team up with other retailers to fulfil orders via a collaborative commerce model.
- Grow a print on demand (POD) supply chain: Make your production meet demand, when you switch from a just-in-time (JIT) to an On Time Delivery (OTD) model.
2. Diversify Product Sources
Remember what we said about long and narrow supply chains? They’re brittle, by design. And if your business is going to rise to the challenges of 2023 and beyond, you are going to need to build a broad and robust network.
Consider this quote from the Commerce Trends report:
“Nearly one-third of Shopify Plus merchants are building shock absorbers into their supply chains by diversifying their product sourcing: 30% have found new suppliers and 29% now get their products from multiple suppliers or countries.”
Commerce Trends 2023 – p.19
So let’s talk about diversifying…
Alvio enables retailers to build supply networks with a wide variety of suppliers – with a hassle-free, no-code solution which can be up and running in hours, not weeks.
This makes it easy for multi-brand retailers to fill their storefront with enticing products from a wide range of suppliers… and it means suppliers can get their goods into a huge number of different online shops.
We have more developments coming in this department too – follow us to find out more when the time comes!
3. Shrink Return Rates
Another supply chain pitfall identified in the Commerce Trends report is the issue of product returns.
“Whether the returned item ends up being resold in a brick-and-mortar store, repackaged in a distribution centre, or sitting in a landfill, it matters as much to the modern consumer as it does to a business’ bottom line.”
Commerce Trends 2023 – p.19
Are you wasting your time dealing with returned products? Well we have ways of helping you with that.
Alvio provides a streamlined and environmentally responsible solution to the issue of returned stock. With the Alvio model, you can easily resell your over-stocked or returned items at reduced rates, without making your store look like a discount warehouse in the process!
You know the Amazon Warehouse model? They have a whole separate branding that offers returned or ex-display items through its own discrete sales funnel.
Alvio lets you do the same thing – just spin up a separate warehouse sale site, and hook it into your existing Alvio-powered store. In this way, Alvio lets you streamline your returns, re-sales and discounts, and keep them apart from your main storefront.
But we also like to think proactively…
What if consumers simply didn’t want to return your goods?
“To minimise returns, customers need to be confident what they see online is what shows up at their door.”
Commerce Trends 2023 – p.19
That’s the key, isn’t it? If your customers always got exactly what they thought they paid for, it would go a long way towards eliminating the issue of returns altogether.
This is something we’re working on in our collaboration with Prove Anything.
Imagine it: a blockchain-backed commerce model that provides immutable proof of authenticity and ownership.
The power to track the entire life cycle of a product… from manufacturer, to delivery, to use.
With this kind of next-level transparency, miss-sold items can become a thing of the past.
4. Digitise Supply Chains
It is incredibly difficult to manage something you can’t see.
Maybe you’re a retailer, who buys stock from a distributor… but you have no contact with the manufacturer.
Or you might be a manufacturer shipping out cases of 1,000 units at a time, but with no real idea whether those units are flying off the shelves, or getting dusty in a warehouse at the other end.
The Commerce Trends report had this to say about it:
“Few companies have visibility into the deeper tiers of their supply networks, even though greater insight would help businesses anticipate disruptions and demand.”
Commerce Trends 2023 – p.20
Alvio won’t leave you flying blind here.
We believe that data is key, and that’s why the Alvio collaborative commerce model empowers you to build a broad, robust and transparent supply chain – rather than a narrow chain so long that you can’t even see the ends of it.
When you switch to an Alvio distribution model, you’ll enjoy greater insight into both your supply and demand…
We will help you build a network better able to deal with whatever challenges 2023 can throw at it.
Teamwork Makes the Dream Work
Before we sign off, we want to tell you what some of our partners are bringing to the table too – because we’ve teamed up with some groundbreaking companies who are set to revolutionise logistics in 2023.
First there’s Huboo – the 3PL fulfilment experts, who are already streamlining commerce for more than 1000 clients with their smart, intuitive services. Huboo are able to completely oversee your logistics operation, fulfilling your orders with speed and precision, while leaving you free to focus on managing and growing your business.
And take a look at what Shiptheory are doing… providing complete digital integration between your data systems, and your carriers. Shiptheory take care of all the moving pieces of a highly successful commerce business – from automatically generating your shipping labels, to providing carbon neutral shipping to your end customers.
Shiptheory’s Rita Jenkins explains that new challenges make it ever more important to have “a flexible supply chain with warehouse networks expanded across different countries to cater to local markets through differentiated and optimised product availability strategies.”
Most of all though, she stresses that “Automation is Key.”
So isn’t it time to outsource and automate your supply chain in 2023?
Why waste time and fuel managing your own on-site stock and warehouses, printing labels and dealing with packing notes, when you could put that energy into constant forward momentum and growth instead?
Teamwork is faster, smoother… and it’s better for the environment, too.
Here at Alvio, we’re all about making mutually-advantageous introductions – so get in touch, and we’ll be happy to get you talking with clever companies who’ll help you boost your business efficiency and growth.
Sign Off
So there we have it, our complete digest of everything the Shopify Commerce Trends 2023 report had to say on the subject of Supply Chains… along with some practical solutions to these challenges, using the Alvio model.
We hope you enjoyed this guide – and if you haven’t already seen them, do check out our previous Commerce Trends guides on the topics of Money and Marketing.
If you want to chat about any of the ideas that came up in this article, then get in touch! You can reach us through our website or via LinkedIn.
In the coming weeks we will continue to break down the Commerce Trends report, with two more guides to follow in this series – exploring the topics of Retail and Ecommerce. To make sure you don’t miss those, just subscribe here and we’ll deliver the whole series direct to your inbox.
See you next time!
