In the age of eCommerce, warehouses organised for the traditional linear supply chain, from manufacturer to storefront, must now handle direct to consumer delivery. Fewer goods are needed on physical store shelves, and more are needed in the ‘endless aisles’ of online and omnichannel retailers. In part one of our three-part series, we look at the ‘low-hanging fruit’ changes that warehousing can implement to get into eCommerce fulfilment and/or see some initial success.
Back in 2019 eCommerce accounted for almost 14% of total retail sales worldwide, it now accounts for almost 20%. (Source: Statista) According to eMarketer, over the last two pandemic years, Retail eCommerce sales increased by 26.4% in 2020, and 16.3% in 2021 – from just over $3.3 trillion USD in 2019 to almost $5 trillion USD in 2021. While YOY increases are expected to flatline at closer to 10% this year and into 2025 when ecommerce sales are forecasted to exceed $7 trillion USD and come close to 1/4th of retail sales. (Source: eMarketer)
As fewer goods are needed on physical shelves and more are needed for digital ‘endless aisles’, the traditional retail supply chain (manufacturer to centralised warehouse to regional distribution center to storefront) has given way to an omnichannel model where goods from any of those links in the chain can be delivered direct to consumer. The underlying practices and technology that ‘push’ inventory through the links in the chain are different from those needed to support B2C delivery. In most, cases warehouses are being asked to support both models simultaneously.
As eCommerce looks poised to deliver 3x and 4x cost-of-living growth over the next 5 years, it makes sense for those warehouses to invest in eCommerce omnichannel fulfilment. Because eCommerce shipping is higher volume, lower value shipping, with less room for errors or inefficiencies, getting it wrong can erode margins and bleed profitability.
The first challenge of eCommerce fulfilment is the higher frequency of orders in smaller quantities. Essentially, moving from palletised orders, to shipping several different SKUs in an order or even one-off ‘eaches’.
eCommerce fulfilment is also plagued with wilder swings in demand that are less predictable than the seasonality of traditional retail supply chains. Adding insult to injury, end-consumers have higher expectations and SLA for delivery times are much narrower. Consumers expect their orders in days and sometimes hours, not weeks and sometimes months.
Those same consumer expectations leave little room for errors or failed deliveries. To succeed in eCommerce fulfilment warehousing needs to automate and error proof processes while handling spikes in demand.
Here are a few warehouse tips to get you out the door and on the path towards eCommerce success with a focus on accuracy, efficiency and scalability:
With these processes in place, warehouses can be confident in offering and meeting eCommerce service levels and fulfilling higher volumes of smaller, more frequent, highly time-sensitive orders. Failure to make and meet these commitments will cost you customers or your customer customers. Keeping them will mean happier customers that will keep returning.
Stay-tuned for part two in this series where we address some harder warehouse changes that will provide higher returns and part three where we look at taking your digital commerce to the next with our technology partner Ultra Commerce.
Check out our latest eBook “Turbocharge Your eCommerce Supply Chain and Accelerate Omnichannel Retail Success”