Turbocharge your warehouse to shift to B2C delivery and prepare for the eCommerce parcel tsunami
In the age of eCommerce, warehouses organized for the traditional linear supply chain, from manufacturer to storefront, must now handle direct to consumer delivery. Fewer goods are needed on physical store shelves, and more are needed on the virtual shelves of online and omnichannel retailers.
The forecasted increase in eCommerce sales over the next 5 years will cause a corresponding rise in parcel volumes that threatens to become a parcel tsunami (if it isn’t already). To prevent resourcing, processes, and technologies from being overwhelmed, warehouses need to implement strong pick, pack, parcel processes and look beyond the warehouse floor to perfecting the customer delivery experience.
Written by our WMS partner, Microlistics.
eCommerce growth and its impact on parcel volumes
According to Statista, eCommerce accounted for almost 14% of total retail sales worldwide in 2019, it now accounts for almost 20%. (Source: Statista) Over the last two pandemic years, retail eCommerce sales increased by 26.4% in 2020, and 16.3% in 2021 – from just over $3.3 trillion USD in 2019 to almost $5 trillion USD in 2021. (Source: eMarketer) A recent Pitney Bowes Parcel Shipping Index for 2021, noted a 27% YOY increase in parcel volumes in 2020 to 131 bn in the markets surveyed. That’s a staggering 360 million parcels every day. Parcel volume is expected to increase to 266 bn per year by 2026. The doubling of parcel volumes over a short period of time would stretch any warehouses’ resources, processes, and technologies.
As fewer goods are needed on physical shelves and more are needed for digital ‘endless aisles’, the traditional retail supply chain (manufacturer to centralized warehouse to regional distribution center to storefront) has given way to an omnichannel model where goods from any of those links in the chain can be delivered direct to consumer. The underlying practices and technology that ‘push’ inventory through the links in the chain are different from those needed to support B2C delivery. In most, cases warehouses are being asked to support both models simultaneously.
With eCommerce poised to deliver 3x and 4x cost-of-living growth over the next 5 years, it makes sense for warehouses to invest in eCommerce omnichannel fulfillment. Because eCommerce shipping is higher volume, lower value shipping, with less room for errors or inefficiencies, getting it wrong can erode margins and bleed profitability. As those warehouses scale with continued eCommerce success and market growth, seemingly small inefficiencies or excessive manual work in order processing, slightly more expensive shipping costs, or occasional order errors that cause failed deliveries or returns will be exponentially exacerbated as parcel volumes increase, impacting the bottom-line and customer retention.
Step 1: Prepare for high volumes by locking in accuracy and efficiency
The first challenge of eCommerce fulfillment is the higher frequency of orders in smaller quantities. Essentially, moving from palletized orders, to shipping several different SKUs in an order or even one-off ‘eaches’. eCommerce fulfillment is also plagued with wilder swings in demand that are less predictable than the seasonality of traditional retail supply chains. In addition, end-consumers have higher expectations and SLA for delivery times are much narrower – leaving little room for errors or failed deliveries. To succeed in eCommerce fulfillment warehousing needs to automate and error proof processes while handling spikes in demand.
Here are a few warehouse tips to get you out the door and on the path towards eCommerce success with a focus on accuracy and efficiency:
- Avoid manual data entry bottlenecks that throttle throughput by integrating all systems in the fulfillment lifecycle
- Add redundant picking and pack out stations that can be activated during demand surges and staffed by shifted or temporary resources
- Add quality control checkpoints that alert staff of errors so corrections can be made before shipments leaves the dock
- Use multi-order batch and wave picking processes to ensure all order line items are included
- Establish replenishment levels based on historical and planned seasonal demand that reduce or eliminate online ‘Stock-outs’ that will cause abandoned shopping carts.
- Organize wave and batch picking based on product location, DIMs and pick equipment
Step 2: Handle eCommerce success with robust pick, pack, and parcel processes
As eCommerce sales revenue increases and eCommerce order fulfillment order volume grows, warehouses need the confidence to handle the impending parcel tsunami. It’s time to build integrated pick, pack, parcel processes and look beyond the warehouse to perfecting the customer delivery experience. Here are some tips that will deliver higher and ongoing returns:
- Prioritize order fulfillment based on customer delivery expectations to first focus on same day orders, then next day orders and then 3-day orders, and so on
- Make order picking aware of carrier pick up windows and deadlines to avoid picked orders sitting overnight or missing a next-day SLA
- Automate carton selection and packing instructions to reduce damage to products and eliminate surprise, post shipment DIM fees
- Integrate with parcel management software to close the data gap between order picking, packing and shipping.
- Expand carrier relationships to give customer more choice and avoid carrier limited shipping volumes
Implementing these tips will give warehouses the confidence needed to embrace eCommerce growth and handle increasing outbound parcel volumes. With the efficient resourcing, automated processes, and integrated, scalable technologies to confidently fulfill eCommerce orders – from the inventory shelf to the pack out station and into the hands of online customers.
Microlistics’ WMS software integrated with Ultra Commerce’s eCommerce platform to provide enhanced warehousing functionality.
Interested in learning more about Turbocharging your warehouse for eCommerce success? Check out our joint eBook “Turbocharge Your eCommerce Supply Chain and Accelerate Omnichannel Retail Success”
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