How eCommerce Is Changing The Fulfillment Industry
Posted On May 8, 2015 by
eCommerce is the driving factor behind major changes taking place in the fulfillment industry over the past few years. This trend has shown no signs of slowing down as online retail revenues keep hitting all time highs. Multiple channels have opened up with eCommerce and created several avenues to reach customers resulting in a burst of demand for orders that need to be filled quickly. Since this has been a seamless transition to the customer, the same expectations remain, excellent quality and fast customer service. Here are some ways the fulfillment industry has adapted to these changes.
Better Warehouse Layouts
Easy to access warehouse layouts have become an essential part of the fulfillment process as order volume increases exponentially. For some companies, the use of high-bay racking, product placement and an effective alignment of rack storage are basic necessities. Some fulfillment providers such as Amazon are increasing automation and adding robotics as a result to meet these demands as noted by their current acquisition of Kiva Systems, a high technology fulfillment operator which Amazon hopes will increase profits by up to 9%.
Brick and mortar companies are faced with the immediate decision of whether to alter current fulfillment strategies for eCommerce orders or to ship from current warehouse locations, in-store, or separate facilities or even possibly all three to be able to compete with the likes of eBay, Amazon and other online retailers.
Facilities are now shipping directly to the customer and to third party service locations such as FedEx or UPS stores in addition to the physical store locations for pickup. This is creating a new market for IT start up companies to expand into warehouse and transportation management systems and provide other IT solutions to meet the need for flexibility in transportation and order and inventory management. These IT companies are filling a need for physical stores to compete with the online retail world. River Plate, Inc. is a great example of a company that offers global order fulfillment capabilities.
With the eCommerce explosion, customers are even more savvy about shopping around for the best online “deal” which shaves margins to single digits cutting into online retailer’s ability to still offer outstanding customer service. As a result, these companies are turning to 3PL companies who by sheer volume of clients are able to better provide state of the art technologies to help them efficiently compete in this demanding marketplace. Many of these third party logistics providers have expanded their warehousing capabilities to a large network across the U.S. and into other territories adapting to a global marketplace.
One of the greatest strengths of eCommerce is the analytical measurement of the consumers shopping experience, buying patterns and conversion rates. This is a huge advantage over the relationship a company can have with customers who purchase in store. As a result, brick and mortar companies have rushed to establish an eCommerce presence to be able to compete with mammoth online retailers who were established based on a technology results driven business model from the early stages.
eCommerce has played a big role in establishing ongoing relationships with customers through efficient use of online loyalty programs, social media platforms and other forms of technology driven communication. For those who have grown up with technology, this is the norm. For those older consumers who have been used to speaking to a live operator or walking into a physical location to speak face to face with a company representative, the transition has been a completely new experience for them, all driven by eCommerce.
eCommerce has created a paradigm shift in the way companies do business and relate to consumers, for better or for worse. One thing is for certain, with all the money small and big companies alike are investing to adapt to this shift, eCommerce is here to stay for a very long time and more changes will be forthcoming over the next several years.