Customers are evolving faster than ever. Truly understand the customer and use this to drive action that pulls the supply chain forward.

 

Latest News
News Feature image

Alistair Balderson summarises four IGD Supply Chain Analysis reports, so you can “bring the outside in” and give your annual planning a boost.

More News

A new report published by the Grocery Manufacturers Association shows that levels of product availability online are well below those seen in physical stores. The headline finding is that online availability is 80% across the markets and categories reviewed. In the USA, the 15% out-of-stock rate online is nearly double the out-of-stock rate of 8.3% for physical stores.

The report looks at six different countries (USA, China, France, Germany, Japan, United Kingdom) and six personal care categories (baby care, fabric care, hair care, oral care, skin care, shave care). Although the report only covers personal care categories, the researchers pointed out that “Ongoing unpublished research on OLA with food manufacturers confirms that they experience similar levels of OLA, that the causes of NOLA are comparable and that the reactions of food shoppers converge with those of non-food shoppers.”

 
Source: GMA Online Availability report, 2018

The report also looked at shopper behaviour when encountering an out-of-stock product. It showed that:

  • Shoppers in the USA are much less likely to switch to a different retailer (most likely due to the dominance of Amazon and the Prime loyalty programme);
  • shoppers in China are much more likely to switch to a different online retailer (indicating high levels of switching between online retailers and high brand loyalty); 
  • shoppers in the three European countries are more likely to switch to a different brand (possibly due to the strength and availability of private label alternatives).


Source: GMA Online Availability report, 2018

“The findings should encourage retailers and brands to collaborate and enhance online availability in the fast-growing area of online retail”, said Keith Olscamp, a GMA director of industry affairs and collaboration. “Greater on-shelf availability of products is already a top priority for our industry, and this report shows the critical importance of reducing out-of-stocks for online sales as well.”

China-based ecommerce retailer JD.com plans to finalise its strategy for entering the European market and open an office in Germany by the end of the year, according to Handelsblatt, a German newspaper.

France, the UK and Germany are the key markets

In early 2018, Richard Liu, chief executive of JD.com has said it would first launch its ecommerce platform and delivery services in France, then the UK and Germany. It has since established an office in Paris with a plan to invest at least €1.0bn over two years to build its logistics network in the country.

In the UK, JD.com has committed to sell £2.0bn of British products to Chinese consumers in the next two to three years. It is also planning to launch its first European research centre in Cambridge in the first half of 2019. The centre will be its second outside of China, with a focus on artificial intelligence and big data.

Although it will own its network of warehouses in Europe, JD.com would consider local partners for last-mile delivery. In China, JD.com owns and operates its own warehouses and delivery services.

For me it’s no longer just about selling products from Germany in China. I would also like to sell products in Europe.” said Liu.

Connecting Germany and China

In May, China Railway Express completed its first JD.com-dedicated journey from Germany to China. The train left Hamburg, Germany and travelled 10,000km to a JD import hub in Xi’an, the capital of China’s central Shaanxi province. The journey took half the time of a journey usually done by sea – up to 35 days. It is also 80% cheaper than air freight. Whilst JD has used rail freight from Europe for some time, it is the first time an entire train has been used. 

What set the journey apart was that the China Railway Express train also functioned as a ‘mobile warehouse’: when goods were logged as loaded on the train in Germany they could be listed for sale on JD’s online store in China. Offering shoppers products whilst in transit shortens waiting times for consumers, whilst also reducing warehouse inventory and improving stock management efficiency for both JD and its suppliers.

Costco Canada is testing a new two-day grocery delivery service in southern Ontario.

Orders fulfilled at Business Center

The new service enables members to qualify for free two-day delivery for orders over $75. They will be able to shop a broad range of grocery, consumable and health and beauty categories, although perishable categories will not be included as part of the initial pilot. The orders will be fulfilled by the retailer’s first Canadian Business Centre which opened last year. Deliveries will initially be available Monday through Friday and the pilot is expected to be extended to additional areas over the next year.

Looking to replicate success of US ecommerce operation

The retailer will be hoping to replicate the success that Costco has achieved with online grocery delivery in the US. Last year it launched two new services, including same-day delivery in partnership with Instacart and a nationwide, two-day delivery service for non-perishable and sundry items, encompassing around 500 products in total. Like the model in Canada, this service also offers free delivery for orders over $75, with orders fulfilled at its Business Centres. Last quarter, US ecommerce sales were up 36.8%, accelerating from an increase of 27.3% in the previous quarter.

Potential to work with Instacart for same-day delivery

This service is likely to be popular with its members in Canada. Costco’s clubs are particularly busy in the country and traffic congestion in Toronto can be a major challenge. However, the lack of perishable products, no store pickup option and a two-day delivery window make it more likely that it will mainly be focusing on fulfilling planned shopping trips. Potentially, it could also partner with Instacart in Canada to offer same-day delivery given that it entered the market in partnership with Loblaw last year. This would broaden the appeal of the proposition and make it more comparable to the services being offered by competitors including Loblaw, Walmart and Amazon.

Presentations

07/08/2018
Chris Tyas is the Global Head of Supply Chain for Nestlé. In this second of two reports from our interview with him, he shares his thoughts on consumer trust and people development. Above all he promoted his passion for industry collaboration and building relationships, saying “You don't collaborate through email; you have to talk in order to collaborate.”
07/08/2018
The Kroger Co. is partnering with Nuro, a maker of fully unmanned vehicles, to pilot on-road, autonomous delivery vehicles.
18/07/2018
Explore how implementing a sales and operational planning (S&OP) process can improve forecast accuracy, reduce costs and transform how a business runs.

Explore how implementing a sales and operational planning (S&OP) process can improve forecast accuracy, reduce costs and transform how a business runs.

Use our benchmarking reports to compare yourself to your peers and as a roadmap for future development.

Get the latest headlines delivered directly to your inbox every Thursday.

A practical one day workshop for all roles in suppliers, to help develop your understanding of the vital part that supply chains play in underpinning FMCG businesses.