Inefficient logistics a major problem in retail

Many brands have products stuck in various parts of the world, leading to imbalances in supply and demand in different markets.

Inefficient allocation of goods in markets will lead to an unproductive retail industry, making e-commerce a more preferred way of shopping due to its accessibility.

Hoong An Wong, Regional Director for Partnerships at VIPSHOP Southeast Asia, said that there have been delays in distribution of goods since they are either stuck in Europe, US, or China.

“I believe one of the major inefficiencies is the inefficient allocation of goods,” he said, “They're not able to get it here on time. They can only make a prediction of what is going to sell, but they're not 100 percent correct.”

He added that there are challenges in predicting consumer preferences accurately in every market, which results in wrong products getting stuck in a particular market.

“Sometimes you're going to order forecast software products that actually may be more popular in the local market, because each market is very different. And then what will happen is that you have an equal amount of goods that are stuck, stuck in countries that cannot be sold,”

Wong said with all the inefficiencies in-store and due to limited space, it is better to post the products online for a bigger variety of products and better price.

“What we try to do is to disrupt traditional retail by offering delivery to your door service for a very good price. So we bring the mall to you, with more than 150 different top brands in the retail space focusing on fashion,” he said, highlighting VIPSHOP’s service.

Online sales have decreased within the last year due to the reopening of economies in a post-pandemic setup. However, Wong foresees a shift in consumer preferences towards online shopping, given the rising concerns of inflation and a potential recession looming.

“The convenience and price is going to be a key factor moving forward. So people are going to be more price sensitive, as we believe that price points are going to be a major factor in the buying decision making process,” he said.

Wong advised retailers to not be afraid to try something new and go beyond the traditional ways of selling to increase the reach of the business.