Smart 3PLs were already moving into the eCommerce fulfilment space, but for most, their expertise lies in delivering larger orders of fewer SKUs delivered downstream to a retailer, distribution center, or directly to stores. Many retailers are not in a position to make big capital expenditure investments in omnichannel fulfilment. Consequently, they are turning to a pay-as-you-go fulfilment model by asking 3PLs to leapfrog the traditional supply chain and drop ship directly to consumers. It is a big opportunity for 3PLs to expand their offer, if they can address the inefficiencies in onboarding and fulfilment processes naturally presented in eCom fulfilment.
The Changing COVID-19 eCommerce Order Patterns
First and foremost, consumers are buying items that they did not traditionally purchase online. Products like pharmaceuticals, perishables, and every day household items. This is pushing more physical retailers online. 3PLs won’t be able to expand into eCommerce without the ability to add new products – and new customers – quickly and easily to support the value-added services a retailer requires.
Secondly, the make-up of each order is changing. Smaller order sizes and more singles, or ‘eaches’, are now the norm. Often with odd product mixes and multiple individual SKUs per order. These variables can give 3PLs headaches and increase their costs per order executed substantially.
Lastly, the smaller orders are coming in at a higher frequency with a heightened demand for varying timeliness to meet same-day or next-day delivery commitments. The volume and velocity of these orders will often exacerbate service level shortcomings and per-order profitability. For retailers, order turnaround and fast shipping is a key competitive criterion.
The Areas of Operational Efficiency Needed to Expand into eCommerce Fulfilment
Increase speed of adding new products, services, and customers: Repeatable customer templates and technologies which are off-the-shelf solutions with the necessary functionality in support of eCommerce, while maintaining speed to market and reduced total cost of ownership.
Improve picking and packing to meet the needs of the new ordering and the different order types: multi-order wave picking combined with optimised pick routes within the fulfilment centre will make smaller, more varied order fulfilment tasks highly efficient. Close integration to upstream (ERP) and downstream (TMS) systems with real-time, intelligent task assignments will reduce the time needed to action an order and get it out the door to meet delivery speed expectations. Not getting it right will threaten per order profitability, service level agreements, and adversely affect customer satisfaction.
Full accountability for all costs-to-serve activities to maintain brand profitability: It isn’t enough to simply execute different types of order fulfilment, you need to be able to account for each effort and costs involved and tie those tasks back to invoicing a customer. Failure to do so will mean revenue leakage and reduced customer profitability.
Rise to the Challenge of COVID-19 eCommerce to Increase Revenue and Maintain Profitability
Adopting these operational strategies will allow 3PLs to handle the surge in demand now and be prepared for the post COVID-19 normal. It will increase revenue per customer, ensure customer profitability and customer retention. It will also allow them to be ready for the customer of tomorrow. Microlistics 3PL WMS is the ideal WMS for 3PLs looking to wade into the eCommerce fulfilment waters.