Blog Posts Scalable Capacity Key to Omnichannel Success
- In the face of record ecommerce growth, retailers and brands must increase their capacity to handle omnichannel orders.
- More space, labor and delivery options are necessary to meet consumer demand.
- A variety of strategies can help order fulfillment operations to improve capacity.
Ecommerce growth accelerated sharply in 2020. Online spending reached 19.6% of total retail sales, according to Digital Commerce 360’s Key Findings from the 2021 Omnichannel Report.
With online momentum expected to continue, retailers and brands are rushing to bolster ecommerce sales channels – often overwhelming their order fulfillment operations in the process. In a Q&A with Digital Commerce 360, Jeff Jones, vice president, business development at Saddle Creek, explains why scalable capacity is so critical for omnichannel fulfillment today and outlines strategies to help ensure optimal performance.
Following is an excerpt…
Moving Omnichannel Retail Forward
DC360: What are the biggest ecommerce fulfillment challenges retailers are facing?
JJ: Omnichannel fulfillment operations face a growing need for scalable capacity to meet ecommerce demand—more labor, more space and more delivery options. Due to the need to piece-pick a high volume of individual orders, ecommerce requires two to three times more space and labor than traditional warehousing. Order volume can fluctuate wildly, making it difficult to plan for fulfillment needs. Record-breaking return volume poses a major challenge as well.
Deliveries also can be problematic. Post-pandemic shoppers want fast, free shipping, but tightening capacity and rising parcel rates make it difficult to meet their expectations. They also want options like buy online, pickup in store (BOPIS), buy online, return in store (BORIS) and curbside pick-up.
DC360: Where is the best place to start to improve capacity?
JJ: In the current market, space and labor are at a premium, so it’s essential to make sure existing operations perform at peak efficiency. Optimize warehouse design to maximize storage density and allow for faster picking. Look for ways to fine-tune fulfillment processes to improve productivity. Consider leveraging automation or robotics to enhance order velocity.
Because ecommerce demand can change quickly, it is important to build flexibility into fulfillment operations. Wherever possible, seek out resources that can scale to meet your changing business needs.
DC360: Why should retailers optimize their distribution network?
JJ: Moving products closer to customers can help to expand your delivery options. With two or more distribution centers (DCs), it’s possible to reach 90% of U.S. consumers in two days or less via ground service. That’s critical when you want to offer fast, free shipping. Using multiple facilities also provides alternate fulfillment options in case of future supply chain disruptions.
Many brick-and-mortar retailers opted to fulfill the sudden influx of ecommerce orders from their physical stores during the pandemic. However, in-store fulfillment is difficult to sustain long-term because it requires extensive resources and can cause congestion in stores. Micro-distribution centers can be an effective option for supporting both B2B and direct-to-consumer (D2C) fulfillment because products can be picked, packed and shipped without disrupting in-store shoppers.
For more on optimizing omnichannel capacity, read the full article on page 14 of the Digital Commerce 360 report.Managing Growth, Multiple Sales Channels, Selling Online