Top five trends influencing e-commerce fulfillment

By Johannes Panzer

May 17, 2020

undefined mins

As e-commerce evolves, customer expectations to get what they want — when, where, and how they want it — will only continue to intensify and further...

As e-commerce evolves, customer expectations to get what they want — when, where, and how they want it — will only continue to intensify and further challenge organisations in 2020 and beyond.

The times when search and price were the only criteria for purchasing decisions are gone, and retailers today need airtight e-commerce strategies that promote and sustain domestic and international growth to drive positive results.

Part of the challenge is having effective processes in place to ensure products are seamlessly, quickly and accurately delivered after consumers click to purchase, and the value of order fulfilment optimisation has become one of the most important factors in achieving this. For those retailers that aren’t leveraging fulfilment as a competitive weapon and enhancing their workflows with automation technologies, the risk of losing out to the competition is a growing reality.

As companies continue to identify fulfilment operations as a differentiator to both the customer experience and the bottom line, here are the top five trends that retailers should keep front of mind to remain competitive:

1. The rise of marketplaces: The growth in e-commerce marketplace platforms has given way to new opportunities for both domestic as well as international sales, and more companies are looking to join in — with the overall market predicted to reach $40.1bn in revenue by 2022. The UK online marketplace alone is forecast to rise by €15.2bn over the next five years, with Amazon and eBay set to account for over 90% of these transactions. Collaboration between bricks and mortar retail outlets and online players for delivery collections and returns drop-offs directly at stores is the best approach.

2. Data, data, and more data: E-commerce ecosystems are complex, and with heightened consumer expectations around delivery options and experience, the interchange of data and the required connectivity is increasing exponentially between the different players involved, such as marketplaces, payments, logistics providers, and carriers. This has and will only continue to require more real-time data than ever before, including the analytics that can help companies make meaningful sense of the data and inform decision-making to drive ongoing success.

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3. The opportunity for new technology like AR in warehouses: This isn’t just relevant for a marketplace front-end with image searches and virtual dressing and fitting rooms. In fact, augmented reality (AR) is growing in the warehouse and helping to support intra-logistics workflows and make work processes more productive and decision-making more intelligent. Examples of this include “cycle counting,” or finding bin-locations to count quicker and identify those that are in use, “put away” that helps determine empty bin-locations faster, and “picking” for visual guidance that reveals opportunities to reduce search times and improve accuracy for picking the right item in the warehouse.

4. Automation and robotics: While some may fear that automation and robotics will replace humans altogether, this is not the case — at least for the near future. Rather, the application of these types of technologies in the supply chain will increasingly help companies enhance synergies and improve productivity. Even at Amazon’s fulfilment centres where robots have been introduced, the technology is meant to assist associates, drive faster shipping times, and maximise available inventory – not completely eliminate the need for human effort. In fact, the company says that fully automated, “lights-out warehouses” are a decade away. While the upfront cost of some types of these technologies might deter early adoption, the potential cost savings can benefit the bottom line. This can also be treated as an incremental journey, starting with automating single processes like packing machines and conveyor belts, and gradually moving up to more automated picking process with robotics systems.

5. Rising costs: Between increased minimum wages for employees and rising shipping, carrier, property, and marketplace costs, the concern around margins will not disappear. Many will be hard-pressed to find ways to manage these expenses effectively and lower the risk of bleeding money. By focusing on two major fulfilment components — streamlining and improving logistics processes — e-commerce companies will be better positioned to mitigate extra spend. They may also find new opportunities to sell additional value-added services including more shipping options, such as time-specified or next-day delivery windows, additional set up service for bulky products, free shipping if a customer is willing to wait a few days longer, or an additional fee for two-day delivery. This cultivates greater competitive differentiation plus generates greater revenue down the line.

According to eMarketer, global e-commerce sales are projected to reach $6.5trn by 2023 and the potential for companies to capitalise on this burgeoning market is high. That said, it’s imperative that companies consider the trends that will continue to influence the industry and the technologies that will help address them. With the right technology and approach, retailers can stay ahead of the competition, win consumer loyalty, and drive ongoing business success in 2020 and in years to come.

By Johannes Panzer, Head of Industry Solutions, E-commerce, Descartes