Retailers who put off scaling up their fulfilment capabilities might not only be leaving sales on the table – they could be damaging their long-term business opportunities. 

Katie Budd, sales manager ANZ at Vanderlande, says the single biggest strategic mistake business leaders can make when trying to scale up their operations is to sit and wait. “Then they are in complete trouble mode,” she told Amie Larter of Inside Retail in the latest episode of the podcast series Retail Untangled. 

“They are acting to catch up, and they’re being reactive rather than proactive. Then they are shoehorned into having to react to the market rather than being able to make the choices that they want to lead the market.”

Sitting back, waiting too long to invest in fulfilment capacity can lead to being “crippled” by the peak Black Friday, Cyber Monday (BFCM) and Christmas season. Yet, if retailers had made the commitment earlier, their trading volume and logistics performance during that period could have been completely different; or a “massive failure” in customer experience could have been avoided, she explains. 

Budd explains that a lacklustre delivery and returns process can drive cart and brand abandonment. If your brand is not going to provide a seamless customer experience, someone else will, and your customers will pivot to them. 

“Whether it is about the product being available, or arriving in time, if you are not able to do what your competitors are doing, then the sale is going to go to them.”

For example, most customers faced with an option to receive a purchase the next day from somewhere else, versus in two or three days from your site, would choose the faster option – even potentially if it costs $5 more. Furthermore, she cites research showing that 93 per cent of 10,000 online shoppers in a survey said they would return to a retailer who offered a smooth, easy returns process for online purchases.

Dispelling the myth of size

Budd says many retailers believe the myth that automation is feasible only for large, tier one retailers – a mistruth she loves to dispel. Some retailers she approaches say they are too small to embrace automation, then explain how they struggle over BFCM, using part-time pickers to fulfil orders. 

“We tell people if you have a problem you need to solve, you need some form of automation. That can be on any scale; it does not have to be a big, fancy robotic picking system. We can do really simple software changes that allow small operational functions that have a massive benefit. If you have a problem, want to grow, or need to execute your business in a different way, then automation is a big advantage.” 

However, automation is not about eliminating jobs – another common misconception. 

“If you are going to get the most out of what you pay an operator to do, you want to make it as easy and efficient for that operator to fulfil their role. You are not paying them to do 50,000 steps a day; you are paying them to pick and pack the orders for your operation.”

Implementing automation technology can enable a company to potentially double its volume without having to double its staff count. And the workers can get greater enjoyment and job satisfaction. 

“It’s more fun working in a warehouse with automation than in one without. And if they’re paying just a little bit more per hour, all the workers are going to flood there. It’s about staying competitive and being the [place] that people want to work, as well as the business case of being able to grow without having to go and hire all these extra people. You can keep the team that you’ve got and get them good at what they’re doing.” 

The first steps towards automation

Budd counsels retailers starting the automation journey to reach out to suppliers and find someone with whom they feel a connection.  

“If you cast the net to five or six people, you’re going to find you’ve got a connection … who won’t shoehorn you into a technology that works for them because they need to fill their order books. You’re going to find somebody who’s going to hold your hand and walk with you and be that partner that you’re going to need in the long run, somebody who understands your business as much as you do, because they are going to help grow that business with you.”

One of Vanderlande’s clients, running shoe brand Asics, operates a warehouse in Marsden Park, Sydney. Around a decade ago, the company installed a simple sortation system at the centre of the facility to help staff pick and dispatch products to its retail stores. When the pandemic forced store closures, Asics was able to quickly pivot to e-commerce – adapting the same system to handle a surge in smaller online orders.

Using the technology, Asics has doubled its capacity within the same warehouse space, reduced the cost per unit of each product handled and expanded its range. The company achieved a return on investment within six months, although Budd notes that most small to medium-sized retailers typically expect an ROI of three to five years. 

“Once you get to five years, you’re completely laughing,” she concludes. “That’s money in your pocket.”

• Listen to the podcast as Budd explains the logical path for retailers embarking on an automation journey, with software preceding technology, and what the next evolution of automation will look like.