2020 accelerated “Ecommerce sales” far beyond what anyone had imagined before the COVID-19 pandemic. With Ecommerce going from about 12-14% of retails sales to anywhere between 18-25% of all retail sales. While it can be safely assumed that there will be a resumption of foot traffic to retails stores, malls, restaurants and others once the pandemic fully subsides, it is clear that the purchase habits of a large percentage of the population have been permanently altered. How much has changed and how your operations should be positioned to optimize it after what has been a year of just keeping up is worth exploring.
Definitions and Data
First, let’s review some recent data and clarify a couple of definitions that keep us on the same page. For the purpose of THIS article, we’re going to include ALL the forms of direct-to-consumer online ordering made popular
While overall online sales increased drastically in 2020, businesses that were pure Ecommerce businesses saw even bigger jumps in sales. A Forbes interview with the co-founder of Clearbanc, the world’s largest Ecommerce investor, reported over 54% increase in monthly revenues over 2019 during the year. Given that many industries saw flat or declining numbers, it implies those businesses with traditional distribution channels likely suffered losses or were playing catch-up on their online business just to continue running in place. And as we know, overall retail sales did in fact DECLINE by about 1.9% for the year.
While in-store shopping will slowly return as it becomes safe to venture out again, expect Ecommerce to continue to GROW because now there is a much larger percentage of the public who has experienced it for the first time and they won’t be giving it up again. The challenge will be for businesses to evolve the band-aid style emergency fixes to their processes into a sustainable, long-term solution to serve the hybrid fulfullment models some competitors have had mastered for years already.
Getting Up To Speed and Staying There
Here is a short, but by no means comprehensive, checklist of things your business should be looking at deploying if you have not already (with some things being industry-specific of course).
Warehouse Changes – Process
Direct-to-consumer fulfillment is MUCH different than fulfilling orders for retail stores or distributors. If you’ve not
Picking zones designed for single item picking optimized your picking and packing processes for single order fulfillment, you will be wasting hours and potentially losing money on every shipment. Things to optimize would include:
- Picking zones designed for single item picking
- Reserve inventory and a daily replenishment process
- Packing and shipping processes in coordination with your shipper(s) of choice
There are others to consider, but at a bare minimum, you will need to get these processes running smoothly and optimized with a goal of getting items out the door within 24 hours of receiving the order. With Ecommerce comes a much higher expectation for customer satisfaction, so focusing on those processes with the most impact on the customer is the best place to start.
Tools – Software
There are a lot of details that go into making Ecommerce work. Consumers demand – and are USED TO - a large variety of options for not only what they order, but how they ship it, where they send it, gifting, payment methods and other options generally not a concern for retail distribution. You’ll not only need your WMS systems to be up to
date for this type of fulfillment, but have the integrations with your retail intake systems – from your website or call center – working smoothly so that real-time data of available inventory, backorder information and dates and shipping status, etc. can be transmitted cleanly and accurately back through the systems that communicate with the customers.
Tools - Equipment
Finally, your warehouse should LOOK different to serve your Ecommerce fulfillment.
- Racks set up for single-item picking, organized to minimize time and mistakes by keeping like SKUs not in the SAME area, but in very distant areas (i.e. multiple sizes of the same color sweater).
- Picking carts (or picking stations) that are designed to group your orders according to your process design.
- Packing stations set up at the end of the process and close to your shipping dock, equipped with an appropriate selection of box sizes, a printer (or two, for packing lists AND shipping labels), a tape machine and other tools that speed the pace of packing.
And One Thing Even WE Did Not Expect
Finally, one more piece of the puzzle that made itself apparent last year that WE did not see coming was – our own carts. Last year we were very grateful to be able to serve our industry in a time of crisis and keep up with the demand. There were an unusual number of new faces that became customers last year and when we asked them what they planned to use the mobile powered workstation for, the biggest response we got was “Ecommerce”. So yes, get don’t forget to add a mobile workstation to your checklist. It should already be a (not very stationary) fixture on your Receiving dock, but should also be a consideration now for working the aisles in your warehouse, or as a mobile POS station for your in-store fulfillment.
Ecommerce is NOT about how hard or easy it is, but a necessary part of your fulfillment operation that is here to stay.
