In a year like no other, e-commerce continues to see meteoric growth driven by the pandemic. This holiday shopping season marked record numbers of online shoppers on Black Friday and the biggest online shopping day in US history on Cyber Monday. With the two dominant deal days in our rearview mirrors and the world still largely at home due to the pandemic’s restrictions, the e-commerce onslaught will continue, causing retailers to adjust their fulfilment strategies to stay afloat.
To better understand the challenges and future opportunities for retail and e-commerce leaders, Blue Yonder launched the Future of Fulfillment Research Report. Fielded from October 6 – 13, 2020, the report analysed responses from 300 senior executives in omnichannel retail e-commerce with responsibility for logistics and fulfilment in the US. Notably, the findings showed that retailers saw e-commerce revenue as a percentage of total revenue increase by 33 per cent from before the Covid-19 lockdowns, to today and 27 per cent added fulfilment centres to meet this shift.
Here are three important takeaways from the report on challenges retailers are facing related to the pandemic and strategies they’re using to meet demand – now and in the future:
Growing e-commerce demand, growing challenges for retailers
While rising e-commerce orders present seemingly limitless growth opportunities for omnichannel retailers, the volume coupled with unprecedented demand for rapid fulfilment is generating unique challenges. Stock availability, profitability, social distancing and worker scarcity were cited as retailers’ biggest fulfilment challenges driven by the pandemic, with out-of-stocks topping the list.
Consumers are noticing the impacts. Our latest consumer research that found 55 per cent of consumers are currently stockpiling to avoid out-of-stock products – likely fearing a third paper towel apocalypse. Retailers are being driven to “rationalise” their SKUs by eliminating the lowest movers within most categories and prioritising items that continue to move well throughout the crisis. Inventory accuracy is critical, along with the ability to view enterprise and third-party vendor inventory across locations and suppliers. Retailers that have already invested in the ability to create store-level assortments will be better equipped to respond to future product availability challenges in real-time.
Fulfilment operations expand to meet high volume, higher expectations
These challenges have completely revamped how retailers are approaching their fulfilment strategies, especially those handling essential goods.
Retailers must strategically position inventory close to the consumer to combat increasing costs associated with delivery and rapid fulfilment. Despite the recent rise in the use of micro-fulfilment centres amongst certain retailers, only 15 per cent of all retailers surveyed claimed to have leveraged micro-fulfilment centres in their logistics networks. Micro-fulfilment centres will offer hyperlocal proximity to shoppers, dramatically reducing last-mile delivery costs while helping to maintain consistent, personalised customer and brand experiences.
Retailers lack automation, intelligent order management
Expanded logistics networks and new fulfilment centres will provide the framework to handle booming e-commerce volumes, but fulfilment support via automation and intelligent order management systems will be necessary to efficiently and profitably deliver products and desirable customer experiences. Only 29 per cent of retailers rate their current order management solution as ‘excellent’ for meeting omnichannel fulfillment needs, citing a major need in the market for more intelligent solutions to help predict and fulfill demand.
Advanced technologies like automation, machine learning (ML) and artificial intelligence (AI) will serve as retailers’ strongest allies in their efforts to adapt and optimise their inventories, spaces and workforces, to efficiently and profitably predict and manage demand swings. These supply chain solutions can help retailers streamline their inventory availability and fulfillment offerings, ultimately mitigating e-commerce’s persisting challenges – out-of-stocks, social distancing and worker scarcity – to make more profitable business decisions and deliver optimised customer-centric execution.
As e-commerce continues to break its own records with no signs of slowing down, Blue Yonder is providing retailers, manufacturers and logistics companies with the demand insights and omnichannel commerce fulfillment tools they need to exceed sky-rocketing order volumes and customer expectations.
Blue Yonder will release the second installment of the Future of Fulfillment Research Report in January 2021 and in conjunction with the NRF 2021: Retail’s Big Show – Chapter 1. The second phase will focus on e-commerce fulfillment priorities and investments for 2021 and beyond.
Access the full findings from this research report here, and join us in January at NRF as we unveil part two of the findings!