E-Commerce Fulfillment and the Future of Distribution Centers
The world of e-commerce has come a long way in the past 10 years. It has evolved from a complete experiment into a sophisticated, prominent and growing channel. And it’s here to stay – online shopping continues to increase in popularity, sporting huge year-over-year growth and cementing its place as a significant contributor to retailers’ overall revenue streams.
Companies like Amazon have blazed the path in terms of e-commerce expansion and innovation. In many ways, their example has set the stage for developments in omnichannel delivery and ever-increasing consumer demands, two factors that continue to shape the evolution of today’s e-commerce distribution centers. In order to emulate the Amazon model, retailers must have an excellent order management and fulfillment system in place that gets products to customers quickly and accurately. Gone are the days when a 7-10-day arrival time was acceptable for online orders. That timeframe is archaic today, with next day – even same day – delivery quickly becoming the norm. As we look to the future of e-commerce, the distribution center will continue to evolve, and – believe it or not – become even more complex. Let’s take a look at some of the challenges for 21st century distribution centers and how e-commerce providers can confront the complexity.
The Fulfillment Imperative
E-commerce distribution centers are up against incredible pressure and demand. Today’s expectation is that employees take action on an order within minutes of it being placed. Within a couple of hours, processing should be done so the order can then be shipped the same day. And order cutoff times are getting later and later – even orders placed late in the afternoon are often shipped the same day.
Luckily, today’s e-commerce orders are often small – one item is common. This means finding just a single item and matching it with the appropriate vessel and shipping label. That said, even simple orders can create problems if companies aren’t prepared operationally. And the reality is that with the growth of the channel, e-commerce orders will only get larger and more complex moving forward. Distribution centers must ensure they’re prepared now. To effectively manage orders, retailers must leverage a sophisticated warehouse management system (WMS) that increases the efficiency of their distribution center. Let’s consider an example where this technology can have a positive impact on productivity.
Imagine that 20 separate orders have come in for a popular shirt – same size and color. A sophisticated system can pull a box of shirts down and easily streamline scanning to generate the shipping documents required for all 20 orders, as well as match them with the appropriate packaging. Significant time is saved by picking in bulk. An advanced WMS can also help drive associates to already opened boxes of goods so they know exactly where to go within the distribution center, which means better and more efficient picking paths. In today’s e-commerce distribution centers, these processes are critical. If brands are not leveraging a toolset that forces batching and other efficiencies, they’re missing out on a huge opportunity today and are not prepared for further complexity tomorrow.
Returns continue to be a challenge for e-commerce companies. Naturally, they are faced with a higher rate of returns than brick-and-mortar retailers, and managing the reverse logistics supply chain is no easy task. Flexibility is key, and one easy step distribution centers can take to facilitate the process is to include a return label in the package when it is sent out, making things easier on the customer side. Another increasingly popular option is offering the ability to return in-store. This carries with it another set of complications, but it is quickly becoming a more common practice and one that a growing number of consumers are demanding. No matter how you cut it, returns are complicated for retailers. Paramount to return success is ensuring flexibility, interconnectivity and that you have a strong set of policies and follow-up capabilities in place.
These challenges only scratch the surface of what e-commerce distribution centers have to contend with. And with orders getting more complex, increasing shipping expectations and overall customer demands growing, further complexity is inevitable. Retailers must prepare for the future by ensuring they have a sophisticated WMS in place today.