The media kerfuffle about the ‘Amazon Coat’ last week described the experience of a small manufacturer of ‘puffa jackets’ in China that has experienced success in selling a particular design of insulated apparel through Amazon.
Unsurprisingly a big part of Orolay Limited’s success has been price. Its jackets sell at around a quarter of the price of the larger global brands.
Much of this is not new. The clothing sector has always been driven by fashion, much of which is transitory. Cheap fashions have long been imported from low-cost production locations.
What is new is the ability of small clothing manufacturers to by-pass the traditional retail channels both for the physical sale of the product but also to communicate with customers across the world. It represents the next step in the restructuring of retailing and illustrates the sector’s increasing globalisation.
Obviously, Amazon is by far the largest platform for doing this but there are others. Amazon is distinct in that it offers sellers a limited ability to market directly to customers as well as to use a formidable logistics capability however, a company such as Orolay can establish its own web-presence and has the option to sell through other web-retailers. Orolay itself sells through both Amazon and other e-retailer’s sites.
The Orolay example implies change for the structure of the clothing supply chain and the logistics systems on it. Inventory holding patterns are likely to modify as is the rigidity of production schedules. The incentive to make production more responsive to customer demand is greater in these new supply chains than those of conventional retailers who prize low unit costs and economies of scale. In turn this has implications for intercontinental transport provision, such as container shipping who may be faced with more volatile demand patterns and the desire for more flexible and responsive services. The diminution of the ‘peak season’ has long been predicted, however the likes of Orolay may finally realise it.
Some logistics providers have been anticipating this for several years. For example, DHL Express has structured its business around the growth of globalised e-retailing. However express airfreight is expensive and hard to sustain for volume retail sales. Therefore, other logistics service providers delivering less expensive solutions, including those in the sea freight sector, may be forced to start to address this market change.
Source: Transport Intelligence, March 7, 2019
Author: Thomas Cullen
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