The On-Demand Economy & Logistics

Since the Coronavirus outbreak, many things have changed in the world of business. However, even before that, we’ve definitely seen an increase in the past few years of an ‘on-demand’ economy – one shaped by the likes of retailers such as Amazon and services such as “30-minute click & collect”. The ‘on-demand economy’ is the business of delivering almost instantly. Amazon’s ‘same-day delivery’ to a hub locker and the now-abandoned Amazon Pantry in the US helped to give consumers something they now find hard to live without: online shopping that is delivered the same day. The convenience of your goods arriving almost instantly, without the hassle of going to a physical store.

Once an idea is alive, it’s hard to kill it. So, since the ‘on-demand economy’ begun to take shape, many retailers have had to move with it. Brands such as Superdrug have launched a ’30-minute click & collect’ service, whilst Tesco offer same day delivery, so long as your cart is checked out before 1pm. This idea isn’t just exclusive to retail either, the ‘on-demand economy’ has long been present in companies such as Uber, who enable users to request a ride instantaneously, and digital transformation means that when you order concert tickets, for example, they’ll be delivered to your smartphone right away.

The ‘On-Demand Economy’ And Its Impact On Logistics

One thing is for certain when it comes to talking about the ‘on-demand economy’, when consumers want something – they want it quickly. This presents a stocking issue, as it’s important to make sure there’s enough goods in stock to adhere to demand, but also not so much that warehousing space is wasted. There’s no real way to tell when a product might be popular and when it might not, other than speculating, retailers need a plan in place that means when a customer places an order – they’ll get it in good time. This in turn has an impact on logistics, those who transport a product from A to B. Retailers need to make sure that they are working with a trusted logistics provider who can meet timely demands. At The Barnes Group, we operate a ‘Just in Time (JIT)’ method of logistics, to keep up with consumer demand. This means that we avoid deadstock by only transporting goods where and when they’re needed. This might not always mean same or next day delivery, but it does mean swift and reliable transportation that doesn’t result in a lack of or a surplus of stock.

The impact of the ‘on-demand economy’ on logistics, creates the need for a fast turnaround for consumers. This isn’t exclusive to transportation either. Producers need to work to ensure they’ve made enough product to keep up with demand. Then at the other end of the funnel, retailers themselves need to be managing an operation allowing for a service that provides click and collect, or even same day delivery. Not every business can manage this logistically and even where they can – there’s a reliance on every step of the supply chain moving swiftly and efficiently. Though not impossible to service the ‘on-demand economy’, companies need to be able to work quickly without compromising on quality. Naturally, a lot of planning is required to ensure that production doesn’t fall behind and neither does the movement of goods during the next stage.

The important thing with the ‘on-demand economy’, is managing consumer expectations. Companies like Amazon are built around speed and they’ve been offering same and next day delivery for some time. This model will not work for every company and it’s important to keep that in mind.

Does The ‘On-Demand Economy’ Have A Future?

This method of operating isn’t feasible for every company and it would be fair to assume that not every consumer would expect such a speedy service from every business they interact with. For businesses that can adhere to the ‘on-demand economy’ such as Amazon, Superdrug, Uber, online course providers and supermarkets, then no doubt they’ll continue to thrive under this operation. Especially since the pandemic has increased reliability on eCommerce.

However, it would also be fair to say that if a business can’t keep up with the ‘on-demand’ economy, then they won’t necessarily be in trouble. Or at least not for now. For the most part, customers are happy to wait. Only time can tell if this changes in the future.

For more information on Just in Time (JIT) logistics and the other services that The Barnes Group provide, including warehousing solutions, please get in touch with our team on our website.