July 24, 2018
The wave of ecommerce is here
With Amazon readying for Australian retail operations, e-commerce certainly shows no signs of slowing down. In fact, e-Marketer estimates that worldwide retail ecommerce sales will increase from $2.290 trillion in 2017 to $4.479 trillion by the end of 2021; meaning that retail businesses of all sizes should be preparing and gearing up for survival.
E-commerce has remade the retail landscape forever and requires totally new thinking in the omni-channel, 24/7 shopping landscape. Today, retailers are able to choreograph dynamic pricing and personalised shopping experiences for individual online user-based consumer data.
We live in an age where ‘immediacy’ is no longer a channel advantage for traditional retail. E-commerce players (internationally and domestically) have successfully disrupted traditional supply chain logistics and today a consumer can be holding a product in their hands within hours of ordering online. No longer are consumers forced to shop in store, or even domestically, when they crave immediacy. Unsurprisingly sales data reflects this; with the younger generation continuing to spend more on international online retailers. The data shows that people in the age group between 18 and 34 account for 40.4% of the total international yearly spend.
There is no denying it. Every retailer is operating in an increasingly over-saturated and highly competitive global market.
What hasn’t changed is that shoppers are still seeking choice, value, and a great shopping experience. Meaning that retailers suffer when they limit their stock or variety in the face of shorter sales cycles and unpredictable demand. However, unused space is a burden. Retailers with large swathes of unproductive space, occupied by unsold and out of season stock, will find themselves less able to invest in the customer experience or marketing, making them more vulnerable to newer retailers. Returns is another conundrum. How does a faulty or unwanted product go back through the supply chain in a way that serves and satisfies the customer, but doesn’t squeeze the margins of the retailer, leaving them with the logistical cost of a return, plus an unsold unit?
As retail competition intensifies profitability can decrease when a retailer chooses to rid excess stock via aggressive pricing strategies, heavy discounts and offers; like free delivery or high commissions to intermediary sellers. See, e-commerce has also created challenges for retailers from a logistics perspective. Today retailers typically have a long supply chain that crosses borders, currencies and customs regimes and requires a cost effective and quick solution. The consumer’s repeat business depends on it.
The solution lies in e-commerce. Platforms like Groupon and Catch.com have remade the retail landscape forever, offering retailers a way to shift excess stock with immediacy and without the risk.
Global vendors, Active International offer a solution to excess stock that doesn’t involve hefty logistical costs and aggressive discounts. The innovative business model spans across 17 countries and is targeted at replenishing the marketing budgets of retailers, specifically those that spend more than $500k per annum, in exchange for their excess goods, services or capital equipment as payment for above-the-line advertising trade credit. The business model aims to enable marketers to restore full value of their product and allocate it into media spend that will launch the next sales cycle.
Retailers may be facing a scenario where they have stores that are too big, and not in the right places. In any case, in most mature markets, shoppers are oversupplied by the number of retailers they have to choose from. Shops are abundant, brands are abundant and even confusingly abundant. The retail sector is saturated and the goal for retailers has now become to steal market segment share away from competitors. Simply, brand marketing and user experience is more important than ever. Making Active International the perfect solution for retailers.
Selina Martin, Head of Commercial at Active International explains “Smart retailers need to examine their existing processes for dealing with excess inventory. The time they spend discounting and ridding stock takes them away from more important elements of their business. We [Active International] are a media agency that aims to free up the financial burden of excess stock and reinvest that capital into what they need… better marketing and consumer experience for the next sales cycle”.
Cameron Swan, Managing Director of Active International added “Ultimately, we are buying media in a more cost-effective way for our clients. We are negotiating and paying for the media through a trading system. We allow our clients to part-pay for their media with their excess stock or new product lines or services. We partner with a client’s existing media agency to top up their budgets or keep the budget whole if it is at risk of cuts.”
Traditionally, companies with existing physical inventory have been the ‘bread and butter’ client for Active; but the demand for a reverse logistics continue to grow; Active are expanding their client base and today ease companies of excess gift cards, capital equipment – like unused furniture or cash registers.
Once, the mantra for successful retailing was “location, location, location.” Now, e-commerce is redefining the concept of place, allowing companies to create a virtual identity that can be marketed just like a physical one. Today, every retailer is operating in an increasingly over-saturated and highly competitive global market; and failure to turn over excess stock and reinvest in the next sales cycle is detrimental.