The New Fulfillment Journey: How Retailers Can Adapt to Changing Demands
2020 accelerated the state of commerce by a decade, permanently altering how consumers choose to shop. U.S. shoppers spent an estimated $201.32 billion online during the 2020 holiday season, an enormous increase of 45.2 percent from $138.65 billion in 2019.
This rapid growth may be most noticeable in the business pages, but where it’s felt most are the various (and increasing number of) fulfillment touchpoints. Leading retailers, whether online, brick-and-mortar or omnichannel, recognize that fulfillment is expanding beyond distribution centers to dark stores and live stores. To meet the unprecedented spike in consumer demand, warehouse automation solutions specialists and full-service fulfillment providers are envisioning a world in the near future that can enable smart “fulfillment anywhere.”
So what does this new retail fulfillment journey look like? Here are four considerations that forward-thinking retailers have on their radar.
It (Still) Starts in the Warehouse
Amid a world of unpredictability, one thing we know for certain is that e-commerce growth will fluctuate and retail operations will need to adapt. There's an opportunity and, for many, a need for retail warehouses to expand beyond case picking to support split-case or eaches picking. It’s critical for retailers to build out fulfillment capabilities to meet this demand — as cost effectively and flexibly as possible.
For smaller retailers exploring third-party logistics (3PL) partners, having a trusted fulfillment partner means they don’t need to focus on packaging and shipping orders themselves. They can count on getting their orders picked, packed, and sent out on time without errors. With the right fulfillment partner, they can focus on building their brands, not shipping boxes.
Implementing flexible fulfillment automation, including collaborative mobile robots, is one way to ensure that your warehouse associates can keep up with fluctuating demand, while also creating a safer and less-taxing physical environment that lends a considerable advantage in the competition for labor.
Traditional Retail Locations Are Being Reimagined and Revolutionized
Retailers trying to get the most out of their physical locations are, in many cases, converting existing spaces to fulfill growing e-commerce demand. Live stores in close proximity to customers can see an increase in productivity through the conversion (or partial conversion) into a dark store that fulfills e-commerce orders. Re-lay the store into a more traditional warehouse layout, and invest in the infrastructure to enable automated order fulfillment on a smaller scale than a traditional fulfillment center.
In-Store Employees Are as Much a Part of the Fulfillment Journey as Warehouse Associates
Fulfillment can easily expand into live stores for retailers with an omnichannel inventory management system. As customers place online orders against in-store inventory, there’s the opportunity to increase inventory efficiency and enable faster delivery (via the local store) or in-store pickup. Store associates can serve both in-store and online customers, using fulfillment optimization software on a handheld or mobile device to pick orders. As volumes increase, big-box retailers are deploying small fleets of collaborative robots in-store to assist associates in picking orders more efficiently and accurately. This can translate into increased profitability and inventory turns, without relying solely on foot traffic.
The Fulfillment Journey Isn’t a One-Way Street
For savvy retailers, the fulfillment journey includes returns. Why? CBRE forecasted $70 billion in returned holiday purchases for 2020. The longer it takes to do those returns, the larger the discount required to re-sell that item. Stores can be used as convenient locations where customers can return online purchases, and retailers can use fulfillment automation tools — within both stores and warehouses — to quickly get those returns back into inventory.
While this past year has brought on significant challenges for retailers, it has also allowed for opportunity to rethink and optimize fulfillment processes to improve both sales and customer experiences. By prioritizing the tactics above, retailers can be in a stronger position to adapt rapidly to future challenges as they arise.
Gillan Hawkes is the vice president of product and analytics at 6 River Systems, a wall-to-wall fulfillment solution provider. Gillan leads product development and management as well as digital strategy and operations to improve B2C and B2B customer acquisition and experience.
Gillan Hawkes is the vice president of product and analytics at 6 River Systems, a wall-to-wall fulfillment solution provider. Gillan leads product development and management as well as digital strategy and operations to improve B2C and B2B customer acquisition and experience. She has 12+ years of experience working at large retailers including Staples, The Home Depot and Marks & Spencer.