LOGISTIC 4MAIVAQEMENT

From bricks to clicks
How growth in online sales is transforming supply chains
BY WILLIAM HOFFMAN

I

f there's a silver lining for retailers anywhere in the economic storm, it's online. While in-store sales sagged in the third quarter, online sales were up nearly 6 percent year over year — an indication that more consumers are hunting for bargains on their laptops or PCs, instead of in department store aisles.
The growth in online business is already reshaping transportation networks as retailers collaborate with manufacturers to ship items directly to consumers, said Brian Kilcourse, managing partner at retail analyst
RSR Research.
"All the supply chain costs go away," he said. "It's a competitive advantage. Can they grow it? I don't see anything but blue sky for that opportunity, when you start to think about the implications of it."
Most retailers' online supply chains largely reflect their brick-and-mortar operations, said Dave Hogan, senior vice president of retail operations and chief information officer at the
National Retail Federation. But that's beginning to change as companies see savings from having fewer fixed assets iñ trucks and warehouses, more flexibility in transportation, lower inventory carrying costs and less costly and risky handling processes, he said.
Although online retail accounts for just 3.4 percent of all retail sales, according to the Commerce Department, its weight in the retail space is almost certainly much greater,
Kilcourse said.

The big unknown, he said, is the extent to which the online channel has become a lead generator for the stores.
"The online retail space continues to grow (though) it's still a minor part of the top-line revenue," Kilcourse said.
It's all a result of applying just-intime principles familiar to manufacturing to the world of