It has been a difficult time for E-commerce fulfillment operations to keep peace with higher than estimated growth. The COVID-19 pandemic stimulated the development of online shopping, showing to consumers that with a few simple clicks, it is possible to order items online. In order to remain competitive, businesses should consider E-commerce fulfillment trends that are taking shape for 2023 as this industry continues to evolve.
1. Broadening Supplier Base
Delivery problems have plagued the E-commerce industry since the beginning of the pandemic for various reasons. Demand outsized supply for some goods, there were significant worker and truck driver shortages, factories were unable to pivot to serve different markets, and warehouse space couldn’t accommodate changing needs. The labor shortage had a significant impact on the vast majority of fulfillment operations in the past year. Logistics Management indicated that an overwhelming 77% of respondents say that it has affected their operations in some way.
Companies are taking steps to mitigate the impact. To attract more workers, approximately half of respondents are raising wages (51%), offering bonus/incentive pay (49%) and/or hiring temporary workers (47%). They’re also seeking to reduce labor dependency by streamlining processes, cross-training employees, outsourcing warehousing and fulfillment and adding automation/robotics.
This is why companies now realize the importance of having a broader supplier base and contingency plans in place to lessen or prevent delivery failures. Having different shippers and materials or product suppliers in the pipeline makes logistics companies and their business partners more agile.
2. Emphasizing Customer Journey
Customer experience also appeared to suffer. Slower order processing times (50%), delivery delays (46%), and customer service failures (39%) were noted frequently. People who had never hit a “buy” button online or on their phones began doing so with regularity once the pandemic hit. And those who were regular online shoppers for clothing or electronics also began purchasing groceries and household goods through various websites and apps. Over the past several years, consumers have become more vocal about their wants and needs from E-commerce companies.
There is a growing trend among E-commerce providers that emphasizes the customer journey. Specifically, companies are making changes to their online platforms and processes that make it easier to purchase items and track those purchases from shopping cart to doorstep. This includes sending automatic notifications when an item ships and helpful tips for correct product selection.
3. Direct to Consumer (DTC) Fulfillment
In 2022 alone, direct-to-consumer E-commerce is expected to bring in $151.3 million in sales, a 15% year-over-year increase. Some of the brands that are now skipping retail stores and E-commerce outlets include Levi’s, Under Armor, and Nike. In 2010, just 15% of Nike’s revenue came from DTC sales. That figure is expected to increase to 60% by 2025.
What does this trend mean for E-commerce logistics? Some logistics companies handle DTC business for major brands, so they will ship DTC instead of to retail outlets. Otherwise, there’s a chance that fulfillment companies could lose business to brands that decide to take their DTC functions in-house.
4. Real-time Tracking
Today’s consumers and business partners have become accustomed to receiving real-time information about product availability and fulfillment. Most large E-commerce logistics companies have implemented these systems, and the mid-sized and smaller ones are following suit.
Individual products have RFID tags attached, which are resistant to extreme conditions. When products move from the manufacturer to the warehouse, the RFID tags are scanned, providing real-time inventory tracking data for logistics companies and their partners. E-commerce stores can use the data for inventory control and automatically notify customers as the purchased product moves through the supply chain.
5. Last-Mile Logistics
One of the biggest logistical challenges E-commerce companies face is last-mile logistics. This refers to the final phase of order fulfillment, where the item makes its way to the customer’s door. Bottlenecks in last-mile delivery can occur due to labor issues, traffic, remote locations, government regulations, and even special customer requests.
One of the biggest logistical challenges E-commerce companies face is last-mile logistics. This refers to the final phase of order fulfillment, where the item makes its way to the customer’s door. Bottlenecks in last-mile delivery can occur due to labor issues, traffic, remote locations, government regulations, and even special customer requests.
6. Hybrid Order Fulfillment
When ordering items online, there are now multiple options to get them into your home. Services like BOPIS (Buy Online Pick-Up In-Store) and curbside pickup were almost unheard of before the pandemic. But now, 60% of consumers plan on using BOPIS services over the next year, according to a recent survey.
When fulfillment companies branch out to these hybrid order fulfillment options, it takes some of the load off traditional methods and supply chains. However, these types of systems will require the use of a unified inventory system so that stores can pull from their on-site stock to fulfill online orders.
7. Automation
Whether it takes the form of robots roaming the warehouse floor, reverse logistics solutions, or a warehouse management system (WMS), the demand for automation in the logistics industry has soared as a solution to complex supply chains and labor shortages. According to Logistics Management, many are turning to technology. Approximately half (48%) are adding or upgrading their parcel/LTL transportation management system (TMS) while 36% are automating parcel sortation, and/or utilizing software for rate shopping (32%) and parcel analytics (29%).
By 2026, the global warehouse automation market is estimated to be worth over $30 billion. A recent survey by ARC Advisory Group revealed that 79% of respondents were either “likely” or” very likely” to invest in automation within the next 1-3 years. 3PLs can choose the automation solutions that make the most sense, such as automated picking systems or robotic forklifts.
8. Sustainability
The COVID-19 pandemic has dominated the headlines for several years, sometimes pushing things like climate change and social responsibility to the margins. But brands haven’t abandoned their commitment to environmental and sustainability issues. Likewise, consumers still care deeply about these matters.
To meet the growing demands of customers and do the right thing for the planet, more E-commerce companies and logistics providers will make sustainability a priority. This might involve using recyclable packaging, CO2-neutral shipping, and more energy-efficient equipment.
Retail is much different than it was just a few short years ago, thanks to the global health crisis. The E-commerce market has scaled nearly beyond recognition, placing fulfillment companies in some tough positions. But the companies that adopt some of these E-commerce fulfillment trends have an opportunity to achieve greater efficiencies in their operations and better overall business results.
E-commerce fulfillment plays a vital role in your E-commerce business, and it is important to operate it properly if you want to achieve a good delivery experience for your customers. Kyanon Digital hopes this article will provide useful information, and help you have a correct view of E-commerce fulfillment to make rational decisions related to this aspect.
