sc digest
Dec. 11, 2020
Supply Chain Digest Flagship Newsletter


This Week in SCDigest

bullet eCommerce Eats the World bullet SCDigest On-Target e-Magazine
bullet Supply Chain Graphic & by the Numbers for the Week bullet New Stock Index

New Santa Cartoon Caption Contest!

bullet Trivia      bullet Feedback
bullet New Expert Column bullet On Demand Videocasts



A new report from ARC Advisory analyst Clint Reiser lays out the
landscape across WMS, WES and Warehouse Control System (WCS)
software, detailing the WES value proposition, and describing
important changes in the WES market.


first thought


Supply Chain Graphic
of the Week
Supply Chain Cost Reduction vs Optimization

This Week's Supply Chain

by the Numbers

US Restaurants Closing in Record Numbers
Retailers Pushing Up Christmas Order Deadlines
Chinese Exports to US Soar Despite Tariffs


MODEX 2022 Trade Show Almost Sells Out in One Day


Dec. 8, 2020 Contest

Show Us Your Supply Chain Wit!

It' Back! SCDigest's Weekly

Supply Chain Stock Index



The State of Retailer-Vendor Supply Chain Relationships 2020

Are Things Getting Better and More Collaborative - or Heading in the Other Direction? Third Biannual Study - Please Participate


Weekly On-Target Newsletter:
Dec. 2, 2020 Edition

Cartoon, Top SCDigest Stories of the Week

How Technology Is Shaping The Future Of Supply Chain

UN Supply Chain Expert and CEO of Morpheus.Network

Dan Gilmore

Revisiting SCDigest's Framework on RFID Process Change


How many parcels are expected to be shipped in the US this Holiday season?

Answer Found at the
Bottom of the Page

eCommerce Eats the World

We are in a truly astounding time.

Right now, we have two forces that are changing in transformative ways society, business and thus supply chains as well.

The first force is of course the virus pandemic. In addition to now nine months of lockdowns, mask wearing, infections and a huge number of deaths, even with vaccines seemingly in the offing our world is unlikely to be the same.


Many brands will clearly just not make it. But those that do their own transformative consumer direct acceleration programs have a chance.


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As just an easy example, the American Restaurant Association reported this week that 100,000 establishments - one out of six - will be permanently closed by the end of the year. The survey also found that 40% of operators still in business think it is unlikely their restaurant will still be operating six months from now if there are no additional relief packages from the federal government. Will the restaurant sector even remotely ever what we have known for decades?

The second transformative force is ecommerce. The interesting dynamic is that this megaforce has been turned into a super megaforce by the virus pandemic, dramatically accelerating an already powerful trend.

I have heard several commentators speak of the pandemic as having ushered in 10 years of ecommerce growth and change into a single year, or something to that effect.

It was in August 2011 that Marc Andreessen, co-founder of Netscape, one of the first web browsers, coined the famous phrase "Software is eating the world" in a Wall Street Journal op-ed. His point was basically that every physical thing that could be replaced by a digital solution is and would be.

It is now ecommerce that is "eating the world." Here are the main vectors of change:

Astounding Growth: Until the pandemic, US ecommerce sales were growing at a robust 14-16% each quarter versus the prior year. That looks like slow growth now.

On-line sales in Q3 grew 36.7%, according to data from US commerce department, after an almost mind blowing rise of 44.5% in Q2. It won't take too many more quarters like that for there to be a huge transformation in the retail sector.

Impact on Brick and Mortar Retail: The brick and mortar retail apocalypse continues on. CoStar Group, one of the top sources of retail real estate data, said this week that 40 major retailers filed for Chapter 11 protection and 11,157 stores were closed so far in 2020, both numbers representing new annual records.

The enormous growth of ecommerce will inevitably keep the number of store closures at high levels. It appears we are moving down a path where there will be a small number of physical mega-retailers (Walmart, Target, Kroger, Home Depot, etc.) and perhaps not much else.

There is justifiably some thinking that, for example, the department store concept is no longer really viable, outside perhaps a small number of select locations.

I made one of my own rare trips to the mall last weekend for some Christmas shopping. On a Saturday afternoon three weeks before December 25, I easily snagged a close parking spot and found store traffic that looked more like a day in June than peak season. Rather depressing, actually.

Negative Impact on the Retail Ecosystem: Thousands of companies and millions of jobs are dependent on serving the traditional retail stores, from mall and shopping center operators to software vendors, manikin makers, secret shoppers and many, many more.

As malls inevitably close, what will be done with these giant properties? An urban planning challenge for sure.

Technology vendors that provide solutions for store replenishment, point of sale systems, shopper analytics, RFID and more will be under pressure. I am not saying they are going away tomorrow, but many that are heavily dependent on brick and mortar will certainly struggle as store counts decline and chains go away, at least in terms of physical stores.

Changing Consumer Goods Company Strategies: What if you are company, such as those in apparel, which relies heavily on brick and mortar retail segments? You better get a new strategy, that's for sure.

At a high level, you seem to have two choices: sell through Amazon -or go consumer direct.

We saw this coming with Nike, which last year said it would stop doing business with tens of thousands of retail chains and focus globally on just about three dozen. It also launched its Consumer Direct Acceleration program.

Many brands will clearly just not make it. But those that do their own transformative consumer direct acceleration programs have a chance.

Changing Customer Expectations: We thought Amazon was altering customer expectations 10 years ago, when it took a number of days to get your order. Now, you place an order and it seems to be there the next minute. Every day, packages on the front porch.

This summer, I ordered a specific new AC power adapter fpr an HP laptop from Amazon early on a Saturday afternoon. It was delivered on Sunday afternoon. How is that even possible?

What's next, teleportation? We are headlong into the era of instant gratification in a way that not long ago would have seemed impossible or at least outrageously too expensive to consider. But we were all wrong.

The Dominance of Amazon: Setting the pace and ever growing its marketshare is of course Amazon. It still represents a relatively modest share of the total US retail market, but that is changing, and Amazon is likely to see close to $400 billion in total sales in 2020, gaining rapidly on Walmart's $500+ billion.

One often overlooked aspect of Amazon's dominance is its limitless power to control the display of what products appear where on product searches. That is a power to build - or to destroy - vendors increasingly dependent on sales through Amazon to survive.

Will the government at some point decide Amazon has become too big? And what then? I will note in the early 2000s there were were similar and reasonably valid concerns Walmart would take over too much of the retail industry. But Walmart's share began to flatline, and the scrutiny ended.

Where's is it all headed. I don't have a crystal ball, but it's already become a very different world. I'll note that on the CSCMP virtual conference this September, Arthur Vadez, head of supply chain for Target, envisioned a world where retailers became what he called "logistics hubs," collecting consumer direct shipments from all sources, then executing last mile delivery exactly as the consumer desires.


Ecommerce is indeed eating the world.

Is ecommerce indeed "eating the world?" What did you think? Let us know your thoughts at the Feedback section below.



On Demand Videocast:

Understanding Distributed Order Management

Highlights from the New "Little Book of Distributed Order Management"

In this outstanding Videocast, we'll discuss DOM, based on the new Little Book of Distributed Order Management, written by our two Videocast presenters.

Featuring Dan Gilmore, Editor along with Satish Kumar, VP Client Services, Softeon.

Now Available On Demand

On Demand Videocast:

The Grain Drain: Large-Scale Grain Port Terminal Optimization

The Constraints and Challenges of Planning and Implementing Port Operations

This videocast will provide a walkthrough of two ways to formulate a MIP, present an example port, and discuss port operations.

Featuring Dan Gilmore, Editor along with Dr. Evan Shellshear, Head of Analytics, Biarri.

Now Available On Demand

On Demand Videocast:

A Blueprint for WMS Implementation Success

If You Want a Successful WMS Project, You will Find the Blueprint in this Excellent Broadcast

This videocast lays out the keys to ensuring your WMS implementation goes smoothly, involves minimal pain, and accelerates time to value.

Featuring Dan Gilmore, Editor along with Todd Kovi of Radix Consulting and Dinesh Dongre of Softeon.

Now Available On Demand


Feedback will return next week.


Q: How many parcels are expected to be shipped in the US this Holiday season?


A: 3 billion, according to the New York Times, up 800,000 from last year.

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