Some important lessons for the supply chain in a mobile-first era

MUMBAI, INDIA: AT Kearney estimates the mobile first economy is $1.6 trillion; and IDC reports a staggering 27.7 percent YoY growth from 2013 in sale of smart phones. This sure is an opportunity to up the game for all concerned. The key for companies is to understand and maintain an evolving mobile strategy and quickly respond to the impact to their downstream processes.

Based on consumer markets, two different scenarios can play out for companies wanting to use mobile as a sales channel. Omni-channel consumers navigate through multiple channels including mobile in their shopping journey and often switch channels in their purchasing process. Irrespective of high/low mobile conversion rate, it is vital for companies to analyze the conversion path of these cross-channel shoppers, in terms of number of touch points and the interactive time spent on these channels. In the more prevalent global scenario of users with no access to desktops, mobile commerce will leapfrog e-Commerce.

And sure enough for now, it has the same effect on the supply chain. The backbone to enable this is the same–to ensure channel integration (if required), capture demand signals, get forecast accuracy right, design the optimal distribution network, have end-to-end visibility, servicing with right inventory levels from the right locations and logistics-savyiness (including reverse logistics) to fulfill perfect orders and pick up returns. Logistics becomes exponentially critical to survive, sustain and grow profitably.

Few factors that will pose heavy stress and test system and technology capabilities in the emerging mobile commerce era are:

Shift in demand pattern: With more impulsive shopping patterns predicted, the average order value is expected to shrink further. The weekend shopping pattern has moved to a wider spread of across the week. If we delve one more level down into this pattern–the shopping hours of consumers will be difficult to predict with mobile commerce gaining traction. This will result in an unpredictable demand pattern which will put ordering and fulfillment systems to test.

Mobile form factors: In a single order, mobile form factors do not easily enable multiple items and this results in once again in small but frequent orders with direct impact of increasing shipping costs and driving a need to optimize shipments.

Agility in fulfillment: The dynamics has shifted to fulfilling a far higher number of frequent and smaller orders. To be agile in this m-commerce scenario, the right technology tools need to be in place to help with the changes required in the logistics and warehousing space–to address infrastructure, location network design, smaller vs bulky picking/kitting (batching)/consolidation/palletizing, and shipping, partnering with players like postal delivery networks or mom and pop stores and managing smaller sized shipments.

Inventory management and last mile logistics over a period of time need to become very nimble–having been pampered with shortening delivery hour options, consumers want to start collecting/have goods delivered at their home, office, or in-transit, which could be anywhere, any time and now with the added complexity of location and context of the consumer.

Share of real-estate on mobile desktop: Very soon, consumers will be challenged by the time-consuming browsing effort required through multiple apps to make their purchases. Scanning across various apps on a mobile is not as easy as switching between multiple tabs of websites on a computer. Mobile desktop will quickly get crowded with a plethora of apps that will eventually lead to jostling for ‘share of real-estate on the mobile device’ and a resultant impact on demand and on brand loyalty.

Marketing: For mobile commerce, it is not enough if the UX is seamless, it needs to be a lot more visually appealing and engaging that enables real-time responsiveness. In this highly competitive and challenging discounting culture, marketing efforts becomes very significant – to be able to cater to segmented customers with time-sensitive, compelling, and customized communication and offers.

An India perspective: From a developed markets perspective the reach afforded by ecommerce and mobile commerce would have a huge overlap. However, in emerging countries, mobile commerce is going to open up larger hinterlands to shopping, and will necessitate organizations to gear up to the dynamics of consumers shopping from locations that they have not traditionally served. Even now, we have a 70:30 curve for e-Commerce shopping with the top 7 – 8 cities responsible for 70 percent of the sales; which means that having fulfillment centers outside of these cities will cater to servicing these markets. In the mobile commerce journey, we expect this ratio break-up to turn much more flat, which will drive a push to wider distribution network. The nature of the service will remain the same, but what will be highly disruptive is the accelerating speed.

The article is authored by Ram Machiraju, Senior Director, Product Management Group, JDA Software, and opinions expressed are personal