Things go fine for a while as you deliver to American customers from your Australian manufacturing base. Then you start to notice a nosedive in sales. What's happened?
The tyranny of distance
Your main competitor has snuck up on you. They have an inferior product, but are based in the US. While you continue to pack and send your footwear from Australia meaning delivery times of up to two weeks, your competitor has cornered your market. While your shopping cart offers delivery of a week at best, theirs is boasting delivery in one or two days. In today's 'We want it yesterday' market, speed often wins out over quality.
Time to make the move next door?
Not long ago manufacturers moved their production to countries with low labour costs to compete. Not any more – labour costs have increased even in developing markets. More importantly, highly automated production lines have negated the need for large numbers of unskilled workers on low pay. Basically factories can now operate anywhere with essentially the same line costs. So it makes sense to move into your market's backyard.
Welcome to 'next shoring'
'Next shoring' is, quite simply, moving manufacturing right next door to your market. Again, with automated production and workable labour costs this becomes highly viable. With 'next shoring' you take excessive delivery times out of the equation, a necessity in the cyberspace age. Direct selling via online shopping carts had led to smaller order sizes and faster delivery expectations. Even if a manufacturer supplies to retail, delivery demands are much greater than they used to be. 'Next shoring' takes most of the planes, trains and shipping delays out of your supply chain and brings you within easy reach of the end user.
