For years e-commerce has been on the rise. The decline of the high street and big retail brands falling victims to this structural change have both been signs of this. Now with the Covid-19 crisis, consumer buying behaviours and expectations for online shopping have shifted even more. E-commerce has become a major opportunity to buy or to sell.
The effect of e-commerce is not limited to where someone buys, but also to how the products are delivered and stored. Previously shops also used to function as an interim storage place and as delivery points of the products to the customers, whereas now we have individual delivery to homes. In addition, shops always tried to be able to have enough products in stock, with a local community in mind, e-commerce websites often target the entire country as potential customers. Storage is now more centralised; delivery has returned to the era where the milkman delivered the milk to the door.
Companies need to adapt. As a result, they are looking for ways to expand their e-commerce capabilities and with this, their needs for moving and handling goods and inventory change as well.
Below we discuss how material handling will adjust to the needs of the new e-commerce dominated world.
Investing in Technologies
In shops, the expectation usually is to buy the product and to take it home immediately. In the e-commerce world, customers don’t expect to have the product at the click of a mouse, but a day or so after. In the old retail world, shops need to store products to allow for sufficient availability. However, in e-commerce warehouses, more space is needed to store a higher volume of inventory, but the risk is also that space is wasted due to non-sellers.
A constant re-evaluation of the capacity and utilisation of the storage is required. This task can be carried out by a suitable software that determines the volume of products to be stored, cleared or re-filled.
Developing the optimal e-commerce fulfilment strategy is crucial. For instance, having a system in place that allows the company to deal efficiently with a high volume of return orders, promotional events etc help to better manage inventory.
This software needs to be flexible enough for continued change in a fast moving e-commerce world. Only recently e-commerce providers started to offer to deliver parcels to pick-up points, which can lead to changed labelling; a desire to bundle deliveries and re-organise the material handling in the warehouse.
These changes require the capability to integrate systems and initiate an end-to-end method to e-commerce management that encompasses inventory deployment, carrier choice and warehouse automation.
Need for Efficient Space
Efficient space can mean many things: avoiding empty space in between different sized items, using shorter routes to items that are more in demand. Essentially, allowing the flow and utilization of the layout, including: rack configuration, slotting, receiving, inventory management, replenishment, packing and shipping to work at its best.
High clearance is needed for material handling systems and specialised equipment.
Consider grouping the storage of the same item in one location as time can be saved and better space utilisation can be created.
Cross docking single-line orders or large back orders aims to decrease the amount of inventory requiring storage locations which is another way to have efficiency gains.
The increase of order volume often also requires more parking space and accessibility of truck doors.
Outsourcing to a Specialised Third-Party Logistics Provider (3PL)
Managing a typical brick-and-mortar retail shop is not always easy. The entry barrier for e-commerce business seems to be much lower, and with this there comes a challenge on the logistical side.
Therefore, many e-commerce outlets use so-called third-party logistics providers (3PL). 3PL are not a product of the e-commerce world, but some of them have specialised in e-commerce.
The e-commerce company deals with running the website and sourcing the products, while the 3PL provides the service from warehousing, all the way through to delivery.
The expertise of 3PL providers should ensure the most efficient dealing, using the most up-to date flexible software and automatisation and a well-organised delivery service.
In the past, retail units and department stores did have their own storage place with material handling equipment. However, the tendency now is that this is replaced by bigger units often run by 3PLs.
E-commerce constitutes a shift on the consumer side as well as on the material handling side. With e-commerce, warehousing has become faster, bigger, and more flexible. For companies that run warehousing and storage, the investment in more flexible and automated technologies and more efficient space management have become essential to stay competitive. For e-commerce companies that want to focus on their retail activities, outsourcing to 3PL has become an attractive solution.