In a recent blog post we discussed how micro-fulfillment begins to level the playing field for small and mid-sized companies competing against mighty retailers like Amazon and Walmart. In this new post, we’ll explore what many in the retail, logistics, manufacturing, supply chain, and e-commerce sectors are calling the “New Economy.” We’ll also discuss implications for the companies that are expanding into new revenue streams via servitization and equipmentization while managing it effectively in Salesforce with Ascent Solutions.
The New Economy
What is the New Economy? It’s been called many things—from the fourth industrial revolution to retail 2.0 and supply chain 4.0—it’s massive in scope and expansive by nature which makes it exciting to discuss after decades of modest productivity gains in industrial manufacturing, supply chain, and logistics. We’ve been heading towards an economic inflection point over the last fifteen years driven largely by technological innovation and new business models like SaaS. However, once the pandemic struck we were immediately thrust into this New Economy as massive shifts in consumer behavior left companies racing to catch up. Couple these factors with record levels of venture capital investment flowing into hungry startups that are willing to test radical new business models, and the New Economy finally took shape.
Let’s first ground this discussion and talk a bit about the implications for business leaders that are trying to get ahead in the New Economy. Keep in mind we’ll come at it from the vantage point of the ERP technology enthusiasts we are at Ascent Solutions. It would be naive to ignore the absolutely massive impact the pandemic had on triggering the New Economy. With consumers looking for alternatives to in store purchasing, omnichannel ordering has risen to meet this demand and is quickly becoming the preferred way to purchase products. One example illustrates this point—e-commerce only accounted for 2-3% of overall sales prior to the pandemic within the grocery sector and even less in rural areas. Many retailers are now seeing numbers in the high 20% range with some over 30% (source) with most purchases being made over mobile devices.
Progressive companies have responded in kind with large strategy shifts and investments in digital transformation, CRM, ERP, supply chain, logistics, fulfillment, servitization, equipmentization, micro-fulfillment, etc. to meet the New Economy demand. However, the shift has put tremendous pressure on leadership and operational teams as consumers now expect a plethora of product options and same day delivery or they’ll simply move on to the next brand with the swipe of a finger. In fact, 92% of online grocery consumers want same-day shipping, and 65% would consider switching from grocery retailers without same-day delivery or curbside pickup, according to Fabric.
Fortunately, technological innovation and flexible business models have risen to enable this rapid shift in consumer behavior. With regards to technology, companies are able to unlock opportunity as they expand into new areas of the value chain. Trends we see include:
- Adopting cloud technologies to manage omnichannel orders, customers, inventory, and suppliers at scale, with little downtime.
- Increased visibility and control over inventory from a manufacturer’s warehouse to a fulfillment center and on to the end customer. If there’s a customer return, the additional ability to seamlessly manage reverse logistics to improve lifetime value and profitability for each customer.
- Establishment of micro-fulfillment centers and “flexible logistics” that enable faster last-mile delivery of products straight to the customer’s doorstep to keep them loyal.
- B2C, B2B, and B2B2C consolidation of inventory and order management into a single source of truth system via integrations with Salesforce and several eCommerce platforms including Shopify.
The net of these trends is a company’s ability to unlock value in the New Economy simply wasn’t possible with older economic approaches. Here’s a visual with the role Ascent Solutions plays in omnichannel commerce:
What’s Next in the New Economy
How can business leaders capitalize on the shift to omnichannel within the New Economy? If you’re on Salesforce or considering it, the omnichannel tools built natively into the platform are powerful. Ascent Solutions helps extend the value of Salesforce for omnichannel and ERP with inventory management, order management, and reverse logistics applications available on AppExchange. Plus, customers are able to integrate ecommerce platforms such as Shopify with Salesforce and Ascent Solutions to provide a flexible and extensible omnichannel solution.
Check out this video which shows our inventory and order management solution called Ascent IOM. If you’re just getting started on the omnichannel journey, that’s ok too. We have a deep bench of consulting and implementation partners that can provide insights and help select the right technology for your business.