LAKELAND, Fla., Nov. 15, 2018 /PRNewswire/ -- A tectonic shift in consumer shopping habits is rocking the retail landscape, and the economic implications are staggering. As more and more people worldwide have traded mall-walking for web-surfing, the seismic growth in global e-commerce sales is shaking up the marketplace—and the upheaval shows no signs of abating.
Consider this: Drawn in by the promise of lower cost and cashless transactions—with product comparisons and reviews as easy as a couple of clicks, online shoppers have spurred e-commerce growth by 25 percent per year since 2012. In the U.S. alone, e-commerce now accounts for nearly 10 percent of total retail sales, and 80 percent of American consumers have made an online purchase in the last 30 days. In 2017, worldwide e-commerce generated close to $2.3 trillion in sales. By 2021, that number is expected to reach $4.5 trillion.
Despite those figures, it's fair to say that the rise in online retailing took some companies by surprise. Losing ground to online competition wasn't the only thing that led to an astonishing number of brick-and-mortar businesses closing in 2017—some 7,000 stores shuttered that year and the trend continues today—but it certainly was a significant factor.
At the same time, throngs of businesses with brick-and-mortar roots are developing digital storefronts. That move may be essential for survival, but that doesn't make it easy, especially when it comes to the unique system requirements of e-commerce warehousing and distribution. If running an e-commerce site is light years apart from the traditional retail concept of waiting on customers and keeping shelves stocked and tidy, so is the difference in distribution approaches. Storing, picking, and shipping to individual consumers is vastly different from storing, picking, and shipping to company-owned stores. Yet, with solid planning and guidance from an experienced material handling systems integrator, it is possible accommodate the rising wave of e-commerce shoppers. Here's how:
Think Small, Design for Efficiency
Most distribution centers have bulk order fulfillment down to a science: They have the large, specialized equipment—such as forklifts—needed to lift, move, and stack large pallets of items. Their shelves, walkways, and conveyor belts are purpose-built to make it easier for industrial-sized orders to get from point "A" to point "B" in the warehouse as quickly and efficiently as possible, while minimizing errors and maximizing throughput.
The thing is, it doesn't take a forklift to pick a pair of earrings and a scarf from the shelves of an e-commerce distribution facility. Which means retailers must think small: smaller shipments of smaller packages, delivered directly to single customers instead of in bulk to stores or downstream regional distribution centers. Additionally, e-commerce also requires retailers to better understand their order profile, have an accurate and real-time inventory, include each SKU's dimensions and weights, and be able to receive and fulfill an order within a day to keep up with competition and consumer expectations.
Warehouse size, equipment, and material handling systems are only a few of the challenges and requirements companies face when they open for business online. Others considerations include:
- A wider variety of shipping options. Unlike bulk shipping, where trucks haul multiple pallets to a single destination, e-commerce allows individual customers to choose their own preferred shipping provider. The result: Retailers should negotiate with multiple parcel carriers, from UPS and USPS to FedEx or other providers to get the best rates. They also have to comply with each provider's unique standards, restrictions, and manifesting operations.
- More complicated packing and manifesting needs. In addition to requiring distributors to work with more shipping providers, fulfilling individual e-commerce orders means more labels, more packaging options and tracking numbers, and more invoices and paper trails. It also means more room for error -- especially if distributors are not using an automated system to assist with packing and shipping.
- Greater emphasis on packaging and presentation. Retail stores and distribution centers may not be especially concerned about how a shipment looks, as long as it arrives on time and undamaged. Individual customers, on the other hand, do care about presentation -- and packaging that appears careless or haphazard can create a negative impression. What's more, individual consumers are typically less tolerant of broken or damaged items -- so improper packaging can, literally, be a make-or-break issue.
Optimize Your Distribution Center Design
Accommodating the unique distribution requirements of e-commerce can be a logistics nightmare—especially for retailers trying to make it work in space originally designed for bulk shipping. But it's not impossible. There's no reason to put a "For Sale" sign on your current distribution center or to start raising cash to build or buy a new one. You can modify existing warehouse space to be more e-commerce-friendly by making changes such as:
- Maximizing cubic space. Distributors can make the most of their warehouse space through the use of storage and picking structures such as pick modules, which can serve as central storage, picking, and shipping centers for all order types. In addition, distributors can maximize their space with scalable components and equipment that is easy to move, expand, or reconfigure as needed.
- Automating packing, picking, and other repetitive tasks. There are multiple benefits to investing in software and machinery to take over tasks such as picking, packing, manifesting, and applying labels. Automated systems reduce the risk of errors, minimize the need for paperwork, and typically require minimal training, which means it's easy to bring on and train new employees during peak times, such as holidays.
- Using software to find the best shipping rates based on dimensions, weight, and destination. As noted earlier, shipping to individual e-commerce shoppers is much more complicated than shipping bulk orders to retail stores. There are several software-as-a-service (SaaS) shipping solutions available that can help distributors manage shipping data, print labels, calculate accurate shipping rates, and track orders. In addition to ensuring that distributors find the best prices and shipping options, software shipping solutions help reduce the need to store and keep track of shipping-related paperwork.
- Reducing or eliminating the need for excessive worker travel. A bulk order to a sporting goods store might consist of 500 pairs of athletic shoes. To fulfill this order, a worker would move to one location in the warehouse and use a forklift to pick up one or two pallets of shoes. An individual e-commerce order, on the other hand, might include one pair of athletic shoes, a water bottle, a pack of protein bars, and a digital fitness tracker. Instead of driving a forklift to one location, a worker fulfilling this order might have to make multiple trips to several different locations of the warehouse. Automated picking tools can cut down on unnecessary searching and travel time. This might include high-tech solutions such as voice picking, a put-wall, or put-to-light systems which can guide workers from item to item along the fastest route possible, eliminating the back-and-forth and streamlining the fulfillment process.
- Sorting by shipment type. Warehouses and distribution centers that pre-date e-commerce may not be optimized to process today's variety of orders. An updated sorting system at the shipping dock can help distributors easily manage multiple customer outbound shipment types such as e-commerce, internal stores, wholesale, and will-call. By finding a way to process orders of all types in one facility, distributors can save time and money and make the most of their available resources.
Find the Right Integrator
The key to reengineering your existing distribution operations or designing a new fulfillment center that supports direct to consumer fulfillment is working with an experienced and reputable systems integrator. An integrator can identify the unique challenges and opportunities associated with e-commerce fulfillment -- and help provide solutions to optimize and streamline every step of the process, from picking and packing to shipping.
To ensure that distributors have the tools and space they need to compete in the e-commerce world, your integration partner can:
- Assess current and future needs and recommend ways to maximize use of space. Integrators can work with distributors to update and improve efficiency in an existing space or help design new spaces from the ground up. Conducting a thorough needs analysis is imperative: It can help distributors identify problem areas as well as the equipment, software, and processes that will help ensure fast and accurate e-commerce order fulfillment and shipping. An integrator can also help distributors make sure that they are using their warehouse space in the most efficient way possible.
- Reengineer existing operations to accommodate increasing e-commerce demands. This may include updating warehouse layout, finding automated solutions, and choosing material handling equipment purpose-built for high volume orders with low line items per order, which is typical for direct to consumer fulfillment.
- Choose the right labeling systems and shipping software. Software solutions can help dramatically reduce labeling errors and save distributors valuable time shopping for the best shipping providers and rates. A good integrator can help distributors sort through the wide range of available options and choose the right solution for their products.
- Design a multi-purpose sortation system. One of the biggest challenges for distributors is figuring out how to successfully handle multiple types of orders in one location along with multiple types of packages. For many distributors, the ideal sortation system provides the ability to process bulk orders destined for brick-and-mortar stores to individual e-commerce shipments from a single facility.
- Maximize packing operations. Keeping up with e-commerce orders means working efficiently. An integrator can help distributors make important changes to optimize packing-related operations, workspaces, and processes.
- Improve packaging to keep costs down. E-commerce packaging presents a difficult balance: Because items are going directly to the consumer, it is critical that orders arrive quickly and in excellent condition -- skimping on packaging can result in unhappy customers, refunds, and bad reviews. At the same time, though, overly bulky packing materials and oversized boxes can result in excess waste and added weight. An integrator can help distributors identify packaging that offers the right combination of protection and cost-effectiveness.
For companies still adjusting to the shift away from brick-and-mortar, it's easy to feel overwhelmed by the e-commerce revolution. But a thoughtful, well-designed distribution center design can help ease the transition to the virtual shopping cart. E-commerce is a challenge, to be sure— and companies that can't adjust will be left behind. But by partnering with the right systems integrator, identifying opportunities, and investing in the proper equipment and software, it's possible to survive— and even thrive— in today's new e-commerce landscape.
CONTACT: Anne Cochran, 1-863-577-2220, [email protected]