In the original supply chains products move from supplier to customer meeting a manufacturer, distributor/warehouse and a retailer on the way. Products are produced in places where it can cheaply be produced and are then shipped to a big warehouse. From there it is moved to retailers, which sell it to customers.
Everybody is familiar with this supply chain. Especially when it is about clothing. But, some changes are on their way. The increased IT possibilities are making this a vulnerable market. To become a vulnerable market, the market must become easy to enter due to technological changes (Granados et al. 2008). Where the classic clothing industry was built upon brands which sold their products through retailers (like ‘De Bijenkorf’ or ‘El Corte Inglés’) there are now retailers selling clothes without owning a single B2C retail shop (like ‘Zalando’). This market is attractive to attack, there is a lot of profit to make. And difficult to defend, online shopping is easy and quick. And thus a vulnerable market.
Because of the shift from offline retailers to online retailers already one step in the supply chain is doomed to disappear. However, that is not where it stops. A new IT improvement can change this market again. At this moment the online retailers are struggling to give customers the right product. Lots of products are returned because it cannot be fitted as customers can in the offline shops.
Start-ups are creating solutions to solve this problem. Apps are being developed where customers can identify their exact sizes so this app can give you an advice about which size you should order. Regardless the sizing method. They even make it possible to order tailor made suits without being in a shop.
In my opinion this new development will change the market again. Another step in the supply chain becomes obsolete, the warehouses. Why store a thousand black ‘M’ size shirts in a warehouse when those shirts can be tailor made and send to the customer directly. This development even creates the opportunity for brands to sell their clothes directly to customers and skip the online retailers like Zalando.
What do you think? Is this development the end of warehousing? And can this already mean the end of newly fast-growing online retailers? Is this a vulnerable market again?
(1) Granados, N.F., Kauffman, R.J. & King, B., 2008. How Has Electronic Travel Distribution Been Transformed? A Test of the Theory of Newly Vulnerable Markets. Journal of Management Information Systems, 25(2), pp.73–96.
