Recent world events like the COVID 19 pandemic and government support of an accelerated digitalization drive has given a boost to ecommerce. With millions of people facing movement restrictions and often being confined to their living spaces, online shopping channels have steadily grown in popularity and replaced in-person shopping for many.
This can be only good news for every ecommerce retailer whether big or small, selling through the marketplace, any online platform or even their own website, established or a new entrant, operating in the B2B or B2C segment.
In short, no matter what you are selling, fulfilment of any transaction requires Product Sourcing which is simply the process of finding products to sell.
Product Sourcing has always been important
Every merchant needs to have suppliers who would fill in their inventory or otherwise the merchant is probably manufacturing it themselves. In that case, they need a supplier to provide the raw materials for the product.
In the past, product sourcing and procurement for the business typically involved looking out for the quality products at attractive prices (from all around the world) that allowed businesses to make a good markup and hence larger profits. Apart from the price factor, the usual other considerations were those of quality, reliability, stability, and location when making this important decision.
But times have changed.
While merchants still look for good quality products and a reliable and stable supplier with attractive pricing, there are a few other evolving trends that they should be aware of while making their procurement decisions. Such awareness and consideration will not only help in aligning their offering to contemporary market trends, it also helps increase overall efficiency and productivity of the business.
So what is different now?
There have been a series of world events ranging from the ongoing Covid pandemic to social unrest in certain areas of the world, political developments, extreme weather conditions or even the recent episode of the Suez Canal being blocked and unpassable by container ships for a few days that has made businesses realize that sourcing and procurement strategies need to be relooked and reconsidered.
Such external events have also caused a perceptible change in buyer behaviour and preferences which the merchants need to take into account while making their sourcing and procurement plans. For a start, there is a lot more awareness and consideration about matters relating to the environment and sustainability issues.
While attractive pricing still remains a draw for some customers, there are many others who would not mind paying a slightly higher price once it is justified by causes that they believe in and support.
Here then are a few such highlighted areas that are currently favoured by customers.
Sustainability Issues matter to customers
Sustainable sourcing involves the consideration of social, ethical and environmental factors during the process of selecting suppliers. This is the need of the hour as most stakeholders including customers, employees and governments expect businesses to take responsibility for the supplies they bring in.
With the dangers of climate change looming large, saving the earth and the environment for future generations is important and more and more people expect businesses/ companies to show responsibility in their sourcing and procurement policies and are ready to support such endeavours by purchasing from them.
Infact, becoming more sustainable and letting your customers know about the steps that you have been taking to promote the cause can help improve the brand image of your product/ business. Customers in general and millennials in particular are known to care for products that are organic and certified as created from ethically sourced ingredients.
Ethical Sourcing and Transparency is valued
Ethical sourcing is something that all merchants should be ideally pursuing.
These days, most customers are looking for transparency- they want to know more about the process of how and where the products that they are buying are being sourced in a responsible and sustainable way. Environmental and social impacts of the sourcing process along with human rights issues like the safety and treatment meted out to the workers involved in making the process is important to the user.
Procurement from multiple suppliers safeguards supply flow
Placing large and repeat orders with the same supplier has its advantages in terms of being able to receive preferential pricing options and also in building up a stable and long term relationship. Such benefits have led many merchants to develop and nurture relationships with their suppliers over the years.
However, the risks and drawbacks of such an exclusive association have been felt by many merchants in these recent times. Disruptions in production due to the prevailing covid 19 regulations or even supply chain bottlenecks arising from the transportation and logistics issues have led to inventory challenges and unfulfilled transactions which is unacceptable.
Such experiences have led to a change in the way most businesses would plan their sourcing of products going forward. There is a need to diversify their procurement and sourcing from multiple alternative sources that could supplement each other rather than place all their orders with a single supplier.
Local Sourcing can bring many benefits
Localization of suppliers is another theme that is gaining prominence in these contemporary times. Despite the benefits of sourcing from cost effective (but far away) locations, merchants have now realized that sourcing decisions need to be made in a more comprehensive manner and that there are merits sourcing from local suppliers.
The growing popularity of “Farm to Table” food is a case in point where there is a drive to bring locally grown food to restaurants, stores and homes. Apart from being fresh and delicious, such sourcing helps in supporting the local farming community.
Product sourcing in contemporary times must adapt
Choosing the right product sourcing method is important and can go a long way in reducing the expenses and increasing the profitability and efficiency of any business.
These are some of the contemporary trends that merchants should keep in mind while making their product sourcing plans. This, along with the flexibility to adapt to changing situations and ability to make more holistic decisions could make the supply chain of any business more resilient.
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