About a month ago, Wal-Mart Stores, Inc. agreed to a monster deal with Jet.com, agreeing to purchase the online retailer for $3 billion in cash and $300 million in Wal-Mart shares.
A sizeable deal, indeed.
From an investor’s standpoint, this was a fearless move by the world’s largest retailer. Jet is a fast growing company that adds 400,000 new shoppers monthly and has an average of 25,000 daily processed orders.
From a business standpoint, this was a logical move for a company whose net worth is now less than one of its largest competitors, Amazon. Jet will help Wal-Mart compete in the ecommerce realm.
From a logistics standpoint, this was the only move that Wal-Mart should have made. Wal-Mart is embracing what many retailers and shippers should: the inevitable ecommerce takeover.
The ecommerce takeover
Thanks to new technology and the habits of millennial shoppers, Brick-and-mortar stores are on the decline. Wal-Mart alone has closed 269 stores in the past year. Not the move you would expect from a company that just shelled out $3 billion to purchase a competitor.
The move made by Wal-Mart is indicative of the future of the supply chain. Over the years, we will begin to see a decline of shipments to large-scale stores, who will begin to close as ecommerce becomes a larger percentage of retail sales.
How shippers can react and evolve
The steady decrease of brick-and-mortar stores leads to the need for businesses to invest in a greater number of fulfillment centers. Amazon now has fulfillment centers within 20 miles of 31% of the population, and they are offering same day shipping to a greater number of their customers.
Retailers now have to adjust their supply chain tactics to deal with a large number of smaller orders, each of which must have a quick enough fulfillment time to encourage return customers.
A greater need for analytics
One of the best things companies can do at this point is identify where their customers are and what they are purchasing. Leveraging logistics data that impact crucial logistics KPIs is the most reliable way to create a fulfillment strategy that is built with customer service in mind.
Seeking better partnerships
From Fortune 500 companies to small businesses, King Solutions has helped business grow through custom logistics solutions. We have formed partnerships with qualified carriers and know how to keep shipping costs low for our clients. Contact us today to talk about transforming your logistics strategy.