The e-commerce market has grown substantially and rapidly since 2020 and is showing few signs of slowing down. This is despite the current pressures on disposable income and continuing supply chain disruptions. The demand is being driven by mobile-friendly order solutions, warehouse automation, drone deliveries, digitisation, and the application of easier payment methods.
The demands of e-commerce are very different from those of traditional retail channels. Warehouse management and distribution operations must be continually tailored to reflect the changes. The key to an efficient e-commerce logistics operation is perfecting the design and process flows to optimise layouts, workflows, resources and systems to support a 24/7 business.
Global trends
The E-commerce marketplace is attracting new and existing investors both to fund start-ups and those already established but wishing to grow. It involves a wide range of services including warehousing, transportation, packaging and value-added services. The global e-commerce market is expected to expand at a compound annual growth rate (CAGR) of 20.4% from 2022 to 2030.
Automation is becoming commonplace. According to a recent Grand View research report, the compound annual growth rate (CAGR) of the warehouse automation industry as a whole, including robotics, is expected to exceed 10% over the next 8 years. Manufacturers’ and retailers’ needs are changing: digital and equipment solutions that only support delivery to retail stores are no longer adequate. Omni-channel fulfilment adds more complexity.
E-fulfilment
E-fulfilment refers to the entire process of fulfilling e-commerce orders. This includes receiving and storing goods, processing orders, picking and packing items, deliveries and returns. The need for quicker throughput and the disparity in order sizes have complicated the fulfilment process pushing companies to automate and therefore become more agile. Depending on volumes, type of product and location of the customer, there are three main styles of e-fulfilment facilities:
- Traditional one-level and multi-level warehouses in industrial and commercial locations
- “Dark stores” are distribution centres that exist exclusively for online order fulfilment. They are large facilities that resemble a conventional supermarket inside but are not open to the public, except sometimes for customer collections.
Micro-fulfilment centres (MFC) are smaller, repurposed facilities that are often located within an existing retail store or warehouse space. They are usually 10,000 square feet or less. Smaller MFCs, also called nano-fulfilment centres, are situated in urban areas to facilitate fast deliveries to consumers who live or work there.
The micro fulfilment trend
Many supermarkets and retailers, especially in the apparel and grocery sectors, are investing in micro-fulfilment facilities at an increasing rate. This is being driven by shifts in consumer behaviour. The 1-hour delivery window is now an expectation, 10-minute deliveries are already here. Small localised automated hubs are part of the future. Retailers are converting unused space in the rear of their retail shops into automated micro-DCs. This means less floor area for in-person shopping but an expanded e-commerce business. These companies can optimise the picking and packing of small-size orders and build relationships with local couriers to guarantee fast delivery.
Automating fulfilment
Many manual processes are slow, error-ridden, and no longer fit for purpose. They are inadequate for retailers experiencing a surge in demand and where consumers require speed. E-commerce companies can increase their efficiency by automating all or parts of their physical fulfilment process. Without automated equipment such as ARVs, the growth in order volumes means more staff are needed, pushing up costs. Recent innovations and more vendors are leading to more choices and lower prices.
Digital solutions
The adoption of new technologies has already proven to be successful. Radio Frequency Identification Technology (RFID) and the use of hand-held mobiles are already improving operational efficiency and reliability. A warehouse management system (WMS) is becoming a necessity to optimise processes. There are many types of WMS in every price bracket that will support your e-commerce operation, whatever the size. Factors such as customer profile, promised fulfilment times and geographic location will impact the level of automation and the chosen solution. Retailers and outsourced 3PL service providers that make the required investment, in the WMS solution most relevant to them, will thrive.
The e-fulfilment marketplace is becoming more complex with the emergence of new vendors. Working with the right partners will help you select the right solution and help your company grow. It is all about the design and process flows to optimise layouts, workflows, resources, and systems to become more efficient.
The Logistics and Distribution Centre Design Specialists at The Supply Chain Consulting Group completed many e-fulfilment projects successfully and have shown the experience gained throughout the years made the company succeed in terms of projects and development.
