Brick and Mortar study case
1. Based on the article, what do you think are the supply chain implication on the ‘brick and mortar’ retailers in Australia if Australians prefer to shop online?
New technologies were created whereby consumers started buying products without actually having to leave their houses. Physical stores became an outdated business model and the supply chain as a push-based system were turned into a push-pull based system whereby manufacturers only start manufacturing finished products after a purchase order is placed online by the customer. The product displayed in shelf is no longer considered necessary and a combination of fix real estate cost and inventory became considered as a highly competitive disadvantage to retailers. If Australians prefer to shop online, most of the brick and mortar retailers physical store will struggle to survive considering that only few can cope with a decline in revenue of about 20 or 30%. Brick and mortar companies deciding to make part of e-commerce would adopt a high complex supply chain structure where instead of sending their products to a retail store, they would have to send it to dispersed customers in multi-locations. Retailers could either have their own warehouse and look after their own distribution operations or use a third-party logistics company to run the distribution, warehousing, shipping, customer service, payment processing and internet orders fulfilment like Wall-Mart did with its online store. Amazon for instance, the world’s largest online retailer owns several warehouses across Seattle, Washington and manages others retailer’s products by using an efficient computerized inventory system. Their warehouses use a bar-code system that allow manual workers to identify and match all orders, pack and weight them at the distribution centre efficiently therefore, providing great responsiveness and fulfill orders in short lead times. Their distribution however is outsourced. Amazon uses United Parcel Post and
New technologies were created whereby consumers started buying products without actually having to leave their houses. Physical stores became an outdated business model and the supply chain as a push-based system were turned into a push-pull based system whereby manufacturers only start manufacturing finished products after a purchase order is placed online by the customer. The product displayed in shelf is no longer considered necessary and a combination of fix real estate cost and inventory became considered as a highly competitive disadvantage to retailers. If Australians prefer to shop online, most of the brick and mortar retailers physical store will struggle to survive considering that only few can cope with a decline in revenue of about 20 or 30%. Brick and mortar companies deciding to make part of e-commerce would adopt a high complex supply chain structure where instead of sending their products to a retail store, they would have to send it to dispersed customers in multi-locations. Retailers could either have their own warehouse and look after their own distribution operations or use a third-party logistics company to run the distribution, warehousing, shipping, customer service, payment processing and internet orders fulfilment like Wall-Mart did with its online store. Amazon for instance, the world’s largest online retailer owns several warehouses across Seattle, Washington and manages others retailer’s products by using an efficient computerized inventory system. Their warehouses use a bar-code system that allow manual workers to identify and match all orders, pack and weight them at the distribution centre efficiently therefore, providing great responsiveness and fulfill orders in short lead times. Their distribution however is outsourced. Amazon uses United Parcel Post and
References: Campbell Phillips, Power Retail Newsletter, ‘Expert Predictions: The Demice of Bricks and Mortar Retails’ viewed on 30th August 2013, Amazon Official Website, ‘Why fulfillment by Amazon?’, viewed on 30th August 2013, Emma Aberici, ABC News, ‘Online retailers are losing the race’ viewed on 30th August 2013, Kath Walters, LeadingCompany.,’David Jones is making big chance: is this Paul Zahra’s last chance?’ viewed on 30th August 2013, Kath Walters, Financial Review, ‘Retail Rescue for David Jones’ viewed on 30th August 2013,