As Tom Standage (@tomstandage), editor of The Economist‘s ‘The World in 2021‘, reminds us, the digital path to purchase is increasingly becoming the customer journey of choice. He explains, “The adoption of new technological behaviors in response to the pandemic, from video-conferencing to online shopping, means usage has already reached levels that were not expected for many more years.”[1] He adds, “Grannies have discovered online shopping.” Although most shoppers find online shopping convenient, the DC Velocity Staff reports, “A year after struggling to find a place to replenish their household stock of toilet paper, consumers are becoming more familiar with the workings of the supply chain and are increasingly concerned about product shortages, according to a survey from enterprise software firm SAP. … SAP polled 1,000 U.S. consumers in February for their perspective on the greatest supply chain ‘pain points’ one year into the Covid-19 pandemic. More than a third (37%) said they have lost confidence in supply chains and nearly half (48%) said they have changed their buying habits to include bulk shopping or restocking household items earlier than they did before the pandemic-induced lockdowns took hold last spring.”[2] Were that survey conducted today, I suspect an even larger number of consumers would report losing confidence in the supply chain. They feel supply chain shortcomings in their pocketbook as prices for everything continue to rise.

Changing Online Consumer Behavior

Although the number of consumers taking the digital path to purchase is predicted to continue its upward trend, McKinsey & Company analysts see it plateauing before it continues its upward rise. They observe, “The COVID-19 pandemic has driven rapid adoption of digital channels across countries and industries, but digital’s growth has plateaued in the past six months and may begin to slip back once the pandemic eases — even as total digital adoption stays well above pre-pandemic levels. … With consumers having reached high levels of digital penetration in most regions and industries, the acceleration into digital channels now seems to have leveled off in both Europe and the United States, with consumers in some industries saying that they will be using digital channels less frequently once the pandemic ends.”[3] They predict most of the growth in digital channels will be from “younger people joining the ranks of digital users.” They add, “The majority of those who continue using [digital] channels will do so for convenience. Other consumers still prefer the experience of going to a physical store.”

A continuing bright spot in ecommerce is emerging markets. McKinsey analysts note, “Developing countries such as Brazil, India, and Mexico have seen higher growth in digital adoption than developed ones, which may reflect a ‘catching up’ effect, since developed countries were further ahead in their pace of digitization, and in the percentage of adults with internet access.” Christoph Ungerer, an economist at the World Bank, takes the assessment a step further. He believes “91 percent of countries” are underserved and aren’t on most companies’ radar. These countries, he explains, “Representing $22 trillion of global GDP, these markets have a combined economic size comparable to the United States, 1.5 times China, or 7.7 times India.”[4] He sees this underserved ecommerce market as a good investment opportunity for companies and a much-needed development opportunity for these countries. “E-commerce may be a key opportunity for economic development,” he writes. “Online sales allow businesses to reach more customers, both at home and abroad. New jobs are also created in supporting sectors, such as technology companies, payment service providers, and logistics companies.” For the near-term, however, most companies will continue to focus on consumers in developed countries and try to relieve the pain points they currently experience.

Supply Chain Response to Consumer Pain Points

According to SAP, “Changing [consumer] behaviors and shifting attitudes are causing retailers, e-commerce companies, and others along the supply chain to rethink their supply chain management and sourcing strategies. Part of the change includes finding alternate sources of supply to meet demand more quickly or keeping more stock of certain items on hand. Agility and end-to-end visibility remain key components of any good strategy as well.”[5] Having goods on-hand, however, is only part of the solution to addressing consumer pain points. McKinsey analysts suggest, “Companies can look to hold on to newly digital consumers by improving digital experiences, investing in ‘phygital,’ and putting consumer trust at the heart of all they do.” If the term “phygital” is unfamiliar to you, McKinsey analysts define it as “the blending of digital experiences with physical ones through unique and often interactive experiences for the user, sometimes requiring real-time interactions with a person — through chat, call centers, or remote advice.” Phygital experiences should complement world-class omnichannel operations.

When consumers are ready to purchase, there are minimum safety measures they expect. Freelance writer Nicole Dieker (@HelloTheFuture) notes, “Online shopping is a lot safer than it used to be. Retailers are using top-level encryption standards to protect consumers’ personal information, and lenders are providing consumers with credit card safety features like the ability to verify a suspicious purchase or freeze a compromised credit card. Plus, new tools like virtual wallets are making online transactions more secure than ever.”[6] Getting to the point of purchase may itself be a pain point according to Richard L. Gruner, a Senior Lecturer at the University of Western Australia.

Gruner believes another pain point for consumers is information overload. He explains, “The modern consumer faces hundreds — if not thousands — of choices every day. What to read. Where to shop. What to buy. And each of those decisions takes a mental toll. And yet, marketers continue to champion more. More choice. More products. More bang for your buck. More features, information and discounts.”[7] Gruner believes many consumer pain points could be relieved if their journeys were made simpler. He writes, “To make sure you’re prioritizing simplicity throughout your customer journey, start by asking yourself the following questions: How can we make it easier for customers to understand and evaluate our offerings? Could we provide fewer products, features, or capabilities without compromising the effectiveness of our solution? How can we create targeted marketing campaigns that speak to customers in their language, at the time and place that is most useful to them? How can we make our pricing more transparent and consistent? Varying prices based on loyalty, season, purchase location, channel, or demographics can increase profits, but they also increase complexity for the customer. How can we optimize in-store layout and leverage point-of-sale technologies (tools such as automated recommendations for related products, mobile payments, etc.) to create a frictionless purchasing experience?”

Another pain point supply chain professionals should never forget is last mile logistics. Delivery is the last opportunity brands have to impress consumers. Sian Hopwood (@sianehopwood), Senior Vice President for B2B Operations at BluJay Solutions, insists customer expectations are increasing the pressure on last-mile logistics providers. She explains, “Value-added services like delivery notifications and package tracking are no longer the reserve of urgent or important deliveries but a minimum requirement in both the consumer and business world. Facing global competition, logistics managers face the double challenge of reducing delivery costs while improving customer service. The increasing commonality of penalties for delays, as used by Walmart in the US, is adding further pressure to smaller providers. This situation is putting the pressure on supply chains to operate at greater and greater scale in order to effect efficiencies.”[8]

Consumers Can Also Reduce Pain Points

Dieker suggests five steps consumers can take to protect themselves when shopping online. They are:

1. Shop with major retailers. “One of the best ways to shop online safely is to stick to major retailers. Companies like Amazon, Target and Walmart have the infrastructure in place to ensure that your transactions are as secure as possible. Not to mention return policies, price matching programs and other benefits that can help you get the most out of your purchases.”

2. Avoid making purchases on public Wi-Fi. “Only shop from a secure, private Wi-Fi connection. If you use an unencrypted, public Wi-Fi hot spot, other people might be able to observe your online transactions.”

3. Use a password manager. “A password manager can help you create, store and retrieve secure passwords for every online shopping account you create. … If you don’t have a password manager in place, you can still practice good password security by choosing strong, unique passwords for each of your online accounts.”

4. Use a virtual wallet. “Consider setting up a virtual wallet. When you use a digital wallet to make online payments, your credit card data is both encrypted and tokenized. This means that no actual credit card numbers are shared during the online transaction.”

5. Set up mobile alerts. “Set up mobile credit card alerts to help you track your purchases and keep an eye out for potential fraud. While most credit card issuers will automatically notify you when a purchase appears fraudulent, mobile alerts provide an extra layer of protection by allowing you to monitor your credit card transactions in real time.”

Ecommerce is here to stay and companies that treat consumers fairly, securely, and simply are going to be the winners in the Digital Age.

Footnotes
[1] Tom Standage, “New technological behaviours will outlast the pandemic,” The Economist, 16 November 2020.
[2] Staff, “Consumers identify supply chain pain points,” DC Velocity, 6 April 2021.
[3] Neira Hajro, Klemens Hjartar, Paul Jenkins, and Benjamim Vieira, “What’s next for digital consumers,” McKinsey Digital, 23 May 2021.
[4] Christoph Ungerer, “The emerging markets e-commerce opportunity,” The Brookings Institution, 26 March 2021.
[5] DC Velocity staff, op. cit.
[6] Nicole Dieker, “5 online shopping safety tips,” Bankrate, 1 March 2021.
[7] Richard L. Gruner, “4 Strategies to Simplify the Customer Journey,” Harvard Business Review, 14 May 2021.
[8] Sian Hopwood, “Getting smart on the last mile,” Supply Chain Digital, 4 January 2020.