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 brands 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 “behind the scenes” processes in place to ensure products are seamlessly, quickly and accurately delivered after consumers click “Buy Now,” and the value of order fulfillment optimization has become one of the most important factors in achieving this kind of success. For those e-commerce retailers that aren’t leveraging fulfillment as a competitive weapon and enhancing their fulfillment workflows with e-commerce automation technologies, the risk of losing out to the competition is a growing reality.
As companies continue to hone in on fulfillment operations as a differentiator to both the customer experience and the bottom line, here are five trends that brands and retailers should keep top of mind in 2020:
- 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 brands are looking to join in, with the overall market predicted to reach $40.1 billion in revenue by 2022. We’ve seen this with Wayfair, Target, and CVS, which have all built their own marketplace platform. In addition, more and more vendors are taking the opportunity to sell in these channels. Even Google has started to become its own marketplace and support transactions with the introduction of Shopping Actions.
- 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.
- The opportunity for new technology like augmented reality (AR) in warehouses: This isn’t just relevant for a marketplace front-end with image searches and virtual dressing and fitting rooms. In fact, 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.
- Automation and robotics: While some may fear that automation and robotics will replace humans altogether, the opposite is actually true — 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.com's fulfillment centers where robots have been introduced, the technology is meant to assist associates, drive faster shipping times, and maximize inventory, not completely eliminate the need for human effort. In fact, Amazon says that fully automated, “lights-out warehouses” are closer to a decade away. While the up-front 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 processes with robotics systems.
- Rising costs: Between increased minimum wages for employees and growing shipping, carrier, property and marketplace costs, the concern around margins won't disappear in 2020. 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 fulfillment 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, such as time-definite or next-day delivery windows, additional set-up service for bulky products, free shipping if a customer is willing to wait a couple of 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 $6.5 trillion by 2023. The potential for companies to capitalize 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, brands and retailers can stay ahead of competition, win consumer loyalty, and drive ongoing business success in 2020 and in years to come.
Johannes Panzer is head of industry solutions, e-commerce at Descartes, the global leader in providing on-demand, software-as-a-service solutions focused on improving the productivity, performance and security of logistics-intensive businesses.