In the Age of Amazon and Online Shopping, Expectations Have Changed Dramatically
As Amazon and online shopping rose in popularity over the years, consumers came to expect that everything from groceries to furniture could be delivered to their door with the click of a button. While the pandemic introduced many people to online shopping for the first time, it also resulted in unprecedented challenges for global supply chains over the past 18 months: supply shortages and delays. It was frustrating to not receive items immediately. Whether it's waiting for a milkshake at McDonald's or buying a coat in February, it can be a challenge depending on where you are.
Now, shoppers are diving headfirst into the holiday shopping frenzy, only to face potential shortages and delays despite strategies such as early product ordering, chartering ships, and air freight from major retailers.
"Delays during the pandemic have demanded a significant tribute to immediate gratification and efficiency," said Ashwani Monga, Marketing Professor and author of "Becoming a Consumer Psychologist" at Rutgers Business School. "Consumers are now adjusting to the new reality."
Long-term, climate change could lead to products becoming available later in the daily lives of consumers. Even after a decrease in Covid-19 cases, climate change will aggravate natural disasters and extreme weather events that can disrupt supply chains globally.
"This will continue to create differences in where people shop, how they shop, and the expectations they have," said Deidre Popovich, Assistant Marketing Professor at Texas Tech University. "This will not disappear."
Experts studying consumer psychology believe that the shift in the pandemic era from immediate gratification to uncertainty over when products will be available has lasting effects on shopping habits.
Stockpiling and Rising Inventories
Last year marked a fundamental shift in consumer expectations as people flocked to stores to buy essentials such as food and household items. Toilet paper was scarce, and finding hand sanitizer or Lysol was like winning the lottery.
At the beginning of the outbreak, customers stockpiled as they feared not having enough to buy during the next store visit, and many continued to buy in large quantities. Store shelves today are not as bare as they once were. But Monga believes that stockpiling will become the new norm.
Memories of the shortages and delays over the past 18 months will prompt consumers to continue planning ahead and stockpiling more non-perishable items such as canned goods and household supplies at home.
"As long as consumers do not trust the functioning of the market, they will continue to stockpile," Monga said.
Buy Now, Replace Sooner
While the demand for toilet paper and cleaning supplies stabilized in some areas of the supply chain, there were problems in other areas, such as certain laptop models, grills, and furniture.
Consumers often do not wait until their existing appliances like washing machines or refrigerators break before replacing them due to a lack of space or funds to buy them. But Monga expects customers to be more willing to replace these items earlier than before to avoid running out if they need them most.
"Consumers want to replace products as soon as something fails, rather than waiting until something actually fails," Monga said.
Both trends – inventory management and early replacement schedules – are good news for retailers like Amazon and Home Depot, as demand is expected to remain high, Monga predicted. However, it will also put pressure on their supply chains to continue producing products.
Second-Hand Clothing and the New Age of Online Shopping
The second-hand clothing market, driven by consumers' desire for luxury goods and growing concerns over environmental sustainability, has seen significant growth in recent years. Online shopping has made it easier for people to sell their unwanted clothes to thrifty buyers.
Popovich from Texas Tech University said that consumers, when they cannot find what they are looking for long-term, may be more likely to shop in stores or on platforms they've never tried before, such as online websites for second-hand clothing or on the Facebook Marketplace. This could offer opportunities for new and emerging companies to gain popularity.
"A consequence of this is that consumers are willing to consider alternative options that they had not considered before, which affects secondhand versus new items," Popovich said.
Consumers may even be more likely to try out anticipated products sooner rather than later.
"If I know I have to wait six months to get that sofa, it will make me like it more immediately, rather than if I get it in two days," Popovich said.
Enrichment Insights:
- Inventory Management Strategies to Adapt to Long-Term Supply Chain Challenges:
- Supplier Diversification and Nearshoring: Switch to multiple suppliers across various regions to minimize dependence on any single location and reduce vulnerability to disruptions[1][2].
- Leverage Technology for Visibility and Risk Prediction: Implement AI-driven models, blockchain, IoT, and real-time tracking to predict disruptions, enhance transparency, and monitor supply chain conditions[3].
- Strategic Inventory Management: Maintain robust safety stock, establish alternative distribution centers, and use demand forecasting tools to optimize inventory levels[3][5].
- Enhancing Demand Forecasting through Data Analytics:
- Predictive Analytics: Use AI-powered models to analyze historical sales data, market trends, and external factors to anticipate demand fluctuations and optimize inventory planning[5].
- Collaborating with Suppliers and Logistics Partners:
- Strengthen Partnerships: Maintain open communication, develop joint risk mitigation plans, and create flexible contracts that account for potential disruptions[3].
- Regular Audits and Assessments: Regularly monitor suppliers' stability and assess their risk management frameworks to enhance partnerships and bolster supply chain resilience[3].
Source: edition.cnn.com
Fostering Flexibility and Preparation in the Face of Uncertainty
As the pandemic continues to impact global supply chains, businesses must adapt their strategies to account for increasing uncertainty in product availability. This may include investing in more reliable supply chains, diversifying sources, or leveraging technology for better visibility and risk assessment.
One of the ways businesses can adapt is by focusing on inventory management and forecasting. By maintaining robust safety stock levels, using data analytics to enhance demand forecasting, and exploring emerging technologies such as AI and IoT, companies can better anticipate potential supply disruptions.
Another aspect of supply chain resilience is strengthening partnerships with suppliers and logistics partners. This can be achieved through regular audits, open communication, and collaboration on risk mitigation plans to create flexible and adaptable supply chain networks.
By implementing these strategies, businesses can effectively navigate the long-term impact of the pandemic on global supply chains.
