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Retail's secret weapon: Order fulfillment optimization

Johannes Panzer, head of industry solutions, e-commerce, Descartes, explains why now is the time for retailers to implement the right processes and technologies that ensure seamless and positive customer experiences.

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February 12, 2020 by Johannes Panzer — Head of Industry Solutions for Ecommerce, Descartes

The start of a new year is the perfect time to reflect on the past and prepare for the future. While holiday 2019 was another record year for retail sales, brands faced some serious challenges when it came to a shortened shopping window and the ever-growing consumer expectations around timely, accurate, and convenient deliveries (and returns).

Some may believe these woes to be behind us now that the holidays are over, but the potential for spikes in product demands remains throughout 2020 leading into next year's holiday season. And if history has shown us anything, it's that now is the time for retailers to implement the right processes and technologies that ensure seamless and positive customer experiences, or risk ongoing negative impacts to the bottom line.

The ability to efficiently get products into the hands of customers after they click "Buy Now" has become a real competitive advantage, and the value of order fulfillment has become one of the secret ingredients to success. As more companies use fulfillment capabilities as a competitive weapon, it's important that they keep the following four factors in mind to best accelerate and optimize strategies and technologies, especially during any peak season periods.   

1.    Welcome automation: the gift that keeps on giving

As brands keep up with a consumer-driven market with one- and two-day delivery options, along with time-definite delivery windows, there's little-to-no room for error when it comes to order fulfillment. With any sort of spike in order volumes, unprepared warehouse or shipping department can quickly become crippled by the increased demand.

For those that still use manual and paper-based systems especially, they're inherently at risk for order discrepancies and face limitations around speed and agility. By eliminating legacy processes and integrating technology to help scale operations, such as cloud-based, e-commerce-enabled warehouse management systems (WMS) and parcel/LTL shipping automation solutions, brands can much more easily manage higher-volume order processing with greater efficiency.

Warehouse management and shipping systems also enable real-time connectivity with multiple channels, business partners, and online marketplaces like eBay and Wayfair — which Coresight Research predicts will reach a whopping $40.1 billion in revenue in 2022. This window of opportunity can help companies expand their marketplace strategies to access and identify new areas that are ripe for growth.

2.    Discover new opportunities with pick, pack & ship processes  

Through automated pick, pack and ship workflows and with the help of barcode scanners in warehouses, retailers can efficiently and accurately identify the right inventory to pull and distribute to customers, which minimizes time, resources, and overall costs on their end while, at the same time, mitigates the risk of mispicks shipped to customers on the other.

Cloud-based shipping platforms can also help retailers ship orders cost-effectively and quickly by integrating with back-end financial systems, online marketplaces, and parcel/LTL shipping providers. By leveraging technology-enabled rate shopping, merchants can see side-by-side comparisons for carrier rates and delivery options in one single dashboard — which allows retailers to more accurately estimate shipping and control total delivery costs.

3.    Enhance the last mile

While some companies have perfected their last mile strategies, many are still challenged to meet consumer expectations around speed, delivery options, real-time communication, and transparency, not to mention minimizing the overall costs associated with last mile delivery. Without an effective strategy in place to tackle these issues head-on, retailers can incur significant costs, risking their own bottom line results or putting the burden on the customer, which can ultimately backfire and damage brand loyalty.

Those that have found success are the ones that focus on consumer-centric strategies. By automating scheduling and optimizing routing, companies can dramatically strengthen on-time delivery performance and cut transportation costs. Dynamic booking also gives consumers greater delivery choices (such as two- or four-hour window, same-day, next day, etc.) at the point of sale, while automated dispatch and tracking drives successful delivery and allows companies to effectively manage exceptions.

4.    Brace for the returns

Next to last mile delivery, returns can quickly become one of the biggest headaches for retailers today, especially for e-commerce brands that don't have the luxury of a storefront in the event they are inundated with returned items. In fact, according to Statista, return shipments in the U.S. are expected to cost $550 billion by 2020.

Returns can ultimately hurt conversion rates and profit lines, challenge supply chain processes, and, if not handled properly, sour the customer experience. But companies that implement the right technology solutions such as automated, barcode-based reverse logistics processes in the warehouse, are in a much more strategic position to process returns quickly with fewer resources. Leading companies are also including pre-paid return labels with the original shipment. Return labels play a critical role in the return shipping experience for shoppers but are often overlooked. Once returns are received, an integrated classification system can also help speed up shelf restocking and fast-track future picking for retailers.

With each passing year, retailers become increasingly challenged to keep up with savvy and demanding consumers, and peak season is the pinnacle of a complex logistical and supply chain ecosystem. It's important for brands, especially those rooted in e-commerce, to adapt to changing behaviors and introduce the right tactics and technologies to ultimately create memorable experiences that keep customers coming back in the years ahead.

Johannes Panzer is head of industry solutions, e-commerce, Descartes.