Parents queued at supermarkets, egged on by children who simply had to have the new drink, which was pushed on social media platforms by two former amateur boxers, KSI and Logan Paul.
By Nomalizo Dyili
There are a couple of lessons to be learnt from the PRIME hydration drink craze that hit the world in 2023.
At the time, it was reported that some outlets sold bottles of the cooldrink for up to R800 a bottle.
Parents queued at supermarkets, egged on by children who simply had to have the new drink, which was pushed on social media platforms by two former amateur boxers, KSI and Logan Paul.
These influencers have amassed over 40 million followers online.
Soon after the energy drink was launched, there were reports of stores all over the world running out of supply and customers posted angry reviews online. While some speculated that this may have been a calculated decision to drive prices up even more and increase demand for the “super scarce” product, it did raise questions about supply chain management and whether the manufacturers had considered how popular the product would be. Now that the hype is over, many stores are sitting with loads of stock that they can barely shift at R10 a bottle.
This presents a classic example of a supply chain management problem, wherein the businesses involved were not able to respond to market opportunities and competitive pressures in real time. This presenting an opportunity for a more synchronised supply chain approach as opposed to the traditional model. It hardly makes any difference that it happened on an online platform as a result of an e-marketing campaign. It shows how the Internet and social media platforms have impacted on how customers are reached, the speed of product availability as well as the demands and expectations of customers.
E-commerce has boomed globally since the COVID-19 pandemic. It has changed the way people do business and shop for goods. Some experts estimate that online sales in Africa will hit the trillion-rand mark in the next two years. Leading markets on the continent are South Africa, Egypt, Kenya, Morocco and Nigeria, which are expected to cash in on $72 billion. This requires an ecosystem of collaboration among supply chain partners, where the flow of information, money, good and services are utilised and shared to pinpoint challenges and mitigate risks.
This is considered the foundation of a successful supply chain. At any given point it is the focal area of a supply chain professional or business leader.
A call for more supply chain expertise It does pose critical challenges to any online store or ecommerce business. Demands for supply chain management are increasingly dictating how businesses are run and managed. Meanwhile the world becomes increasingly volatile, and this affects supply chain management too.
This is demonstrated by the effect of the war in the Ukraine, causing a decline in exports of grains like wheat and sunflower oil. It is also estimated to have driven up prices of food and oil by around 10% in several African countries, including South Africa.
The third-party logistics partner is a key relationship in any business. This is how products are shipped, delivered and moved online. A war in the Middle East may affect oil prices and this will affect how products are transported across borders, pushing up costs. Customers don’t want to wait months for purchased items and they also don’t want to pay exorbitant customs taxes.
It calls for more sophisticated supply chain and logistics management. “We have found people in industry calling for more graduates with specialised knowledge of international supply chains and knowledge in the field of logistics,” says Shaaira Sackoor, head of the School of Commerce at Milpark Education. It has recently launched a Bachelor of Commerce (BCom) degree majoring in Logistics and Supply Chain Management. Where it may have been an additional task of a company employee in the past, she says this role is increasingly gaining importance in organisations.
The rise of Shein
This is partly because of the in-depth understanding that is needed at various levels. It includes managing the third-party agents in the logistics field, and signing agreements with couriers and other agents. One example of an ecommerce business that has done remarkably well in this regard, is online fast-fashion business Shein.
The Chinese clothing retailer reported over $2bn in profits for 2023. Looking closely at their business model, smooth supply chain management emerges as the backbone of Shein’s success. Hugely popular in South Africa, the company has no warehouse in the country, yet customers receive their products within seven days of purchase.
Shein has spent considerable resources not only on marketing, but also on third-party agreements. In addition, the company air-ships clothing to the US, for instance, to avoid import taxes. Shein’s customer base consists of a high number of younger Gen Z shoppers with a hankering for cheap fast fashion.
Young(er) people drive consumer trends
It is this younger demographic that stands out when we look at especially the social media platform influence on e-commerce businesses. Marketers have long known that children, for instance, are a key driver in consumer trends.
They are big influencers in spending in households and they also put pressure on parents to buy certain products or brands, as evidenced in the PRIME hydration drink trend. And yet – for many, the explosion of social media platforms is still a bit bewildering.
As US journalist John Herrman says, “The analytics suggest a high likelihood that you’re aware there is an app named TikTok, and a similarly high likelihood that you’re not totally sure what it’s all about.” But with TikTok’s over 1.5bn users worldwide and a demonstrable influence on consumer trends and e-commerce behaviour, the time to get savvy about TikTok, Insta and Facebook, is now. Otherwise, businesses may find themselves facing the age-old adage of youngsters everywhere – you snooze, you lose.
Nomalizo Dyili is a supply chain subject matter expert and a lecturer at Milpark Education.
BUSINESS REPORT