The forecasted increase in ecommerce sales over the next 5 years will cause a corresponding rise in parcel volumes that threatens to become a parcel tsunami (if it isn’t already). To prevent resourcing, processes, and technologies from being overwhelmed, warehouses need to implement strong pick, pack, parcel processes and even look beyond the warehouse floor to perfecting the customer delivery experience. These changes will deliver ongoing return on supply chain investment and allow them to scale to meet continued ecommerce success and growth.
Global ecommerce sales are forecasted to eclipse $7 trillion USD by 2026. (Source: eMarketer) The sheer volume of parcels shipped is also expected to grow at a similar pace. The recent Pitney Bowes Parcel Shipping Index for 2021, noted a 27% YOY increase in parcel volumes in 2020 to 131 bn in the markets surveyed (Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, Norway, Sweden, the United Kingdom and the United States). That’s a staggering 360 million parcels every day. Parcel volume is expected to increase to 266 bn per year by 2026. A tremendous number of parcels fulfilled by warehousing across the world, whether single or multi-line orders. The doubling of parcel volumes over a short period of time would stretch any warehouses’ resources, processes, and technologies. It’s already stretching the capacity of many carriers, who have responded by throttling shipper volumes and increasing rates.
As we noted in a recent blog, the new IT investment philosophy that is making its way to the warehouse floor calls for the ecommerce supply chain to emphasize rapid deployment, increased agility, continuous optimization, and scalability to ensure that it keeps pace with change and continues to provide progressive return on investment. Warehouses holding 100 SKUs today could be asked to hold 1200 in a year. Seemingly small inefficiencies or excessive manual work in order processing, slightly more expensive shipping costs, or occasional order errors that cause failed deliveries or returns will be exponentially exacerbated as parcel volumes increase, impacting the bottom-line and customer retention.
In part one of this blog series, we looked at some of the warehouse turbocharging “low-hanging fruit” that can be done to get into the ecommerce fulfilment game and/or see some initial success. In part two, we look at harder optimizations that can yield higher returns. Giving warehouses the confidence to handle the impending parcel tsunami as ecommerce continues to grow.
The first challenge of eCommerce fulfilment is the move from handling palletised orders to shipping several different SKUs in an order and one-off ‘eaches’. Warehouses need to automate and error proof processes and handle spikes in demand. With those enhancements in the rear-view mirror, it’s time to build integrated pick, pack, parcel processes and look beyond the warehouse to perfecting the customer delivery experience.
Here are some tips that may be harder to implement, but will delivery higher and ongoing returns:
Implementing these tips will give warehouses the confidence needed to embrace ecommerce growth and handle increasing outbound parcel volumes. With efficient resourcing, automated processes, and integrated, scalable technologies and methodologies to confidently fulfil ecommerce orders – from the inventory shelf to the pack out station and into the hands of online customers.
Stay-tuned for part three in this series 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”