Moving From Bricks To Clicks: Keeping Pace With Consumer Behavior
Around the world, there are big-ticket online promotions that capture the headlines and our attention from Singles Day to Cyber Monday. These peak days for online sales highlight a massive shift in how, where and even when we purchase goods.
Singles Day, an unofficial Chinese holiday that celebrates unmarried individuals, has become synonymous with shopping. This year’s Alibaba’s Singles Day sales hit a record $30.8 billion, up 27 percent from the year before, dwarfing the $4 billion estimated sales on Amazon’s Prime Day in July.
On the other side of the globe, Black Friday in the U.S. resulted in an online sales record of $6.22 billion. And Cyber Monday is estimated to reach $7.8 billion, a nearly 18 percent increase from 2017. By comparison, in-store shopping is expected to increase just 2.7 percent, and mobile is predicted to be the most popular device for these purchases.
With the growing sales numbers – and consumers’ increased preference for clicks over bricks – comes increased risks. Retailers’ shift to direct-to-consumer delivery brings increased challenges across the entire supply chain, while the e-commerce model has to deal with the almost continual threat of cyber crime. Meanwhile, as consumer shopping preferences move in a digital direction, organizations will continue to assess whether they have the talent in place to stay ahead of the competition.
Making It The Final Mile: Supply Chains Evolve Alongside The Retail Transformation
Online retailers are critically dependent on their supply chains, from the manufacturers to logistics providers, and increasingly, the “final mile” delivery companies that ultimately get the goods to shoppers’ homes. Weather, theft and even automotive liabilities – especially for third party logistics providers – are among few of the perils that can disrupt how goods get from point A to point B.
From Amazon to Alibaba, goods are increasingly bypassing brick and mortar locations and going direct from the online retailer to the consumer’s doorstep. In this shift, a risk – including liability questions – is gaining prominence: final mile delivery. Peak shopping seasons such as the holidays typically mean a higher density of shipments in highly residential locations and serve as a reminder of the larger shift in the overall supply chain.
Aon’s Tom O’Donnell, U.S. logistics practice leader, explains that for many companies the liabilities are no longer confined to their own facilities or their own fleet. Instead, they can be outsourced to a subcontractor, the party that ultimately delivers the final product. Losses that occur in that final leg of the shipment, O’Donnell states, can really affect an organization’s bottom line as lawsuits can become the liability of the third-party logistics provider as well as the retailer even though they may not ever touch the shipment or operate the motor vehicle that caused the loss.
To mitigate those risks, companies should understand the various vulnerabilities along their entire supply chain, including third-party exposure – such as a suppliers’ supplier and the company or individual doing the final delivery. Once the risks have been identified, organizations should plan for how they’ll respond to any disruptions to avoid major balance sheet disruptions.
Increased Digitization, Increased Cyber Risk
As the Internet of Things connects more devices and more non-cash financial transactions take place, the greater the opportunity for cyber crime.
While the decentralized, connected nature of blockchain means that some systems are harder to hack, vulnerabilities continue to surface. Events such as the WannaCry attack and NotPetya heighten the importance of cyber risk not just for retailers and financial institutions but for any industry – including logistics.
Understanding the cyber vulnerabilities across the entire spectrum of the enterprise is critical. Across industries, as cyber becomes an increasingly important priority for the C-suite, tackling the threat of a hacking attack is no longer limited to the IT department – it’s the responsibility of the entire organization.
“There is a growing acceptance that cyber risk is an unavoidable cost of doing business – a necessary consequence of the benefits derived from technology. The logical extension of this acceptance is a shift towards an “assume breach” mentality for organisations, an approach to cybersecurity that recognises the inevitability of some degree of intrusion, and emphasises incident response and protection of critical assets once the perimeter is compromised,” says Andrew Mahony, regional director of Financial Services and Professions at Aon Asia.
There are four key steps to achieving cyber resilience:
- Identify critical assets – Decide what data is critical, how it flows across the organization and who needs access to it.
- Conduct a comprehensive risk assessment – Organizations should identify cyber vulnerabilities across all key areas of the enterprise.
- Take a holistic approach to cyber governance – Involve the key individuals from across the organization. Employees and leaders should be educated on the scope of the risk.
- Sharpen defenses – Organizations should evaluate their cyber risk mitigation efforts on a regular basis to ensure systems are not vulnerable to cyber attack.
Digital Transformation Alters The Talent Equation
“As organizations prepare for continued digitalization, we’re seeing a shift in the way humans create value at work and it is crucial that business leaders put their workforce transformation at the core of their business strategy,” said Aon’s Michael Burke, CEO of Aon’s Talent, Rewards and Performance solution line.
Burke highlighted four key priorities for organizations to align talent with the changing needs of the business:
- Rethink the architecture of jobs to ignite innovation and better meet customers’ rapidly changing expectations.
- Attract and retain the right talent for critical jobs through intelligent and efficient assessments.
- Identify employees whose skills may become obsolete and provide training and development to prepare them for new roles.
- Implement a rewards and recognition program that strategically compensates employees for their help in achieving the transformation your business needs.
Preparing for Tomorrow’s Consumer
While the volume of holiday shopping highlights the ever-increasing trend toward digital, the bigger picture requires making sure a business is ready for tomorrow’s consumer. “People are looking for an improved customer experience,” states Randy Nornes, executive vice president, Aon Risk Solutions. From speed of delivery to a technology-first shopping experience, “customer expectations are driving these changes and transforming nearly every industry.”
As consumer behavior evolves, businesses evolve as well. To stay relevant and maximize success in such an environment, organizations should balance the opportunities with risks and work to address them 365 days a year.