Retailers have been anticipating and preparing for this over the last year. It has become the biggest online shopping period of the entire year with expectations for exponential growth over last year.
Further this period is so dramatically busier than at any other time of the year that it has an absolutely enormous impact on the Supply Chain of these companies.
In fact the readiness of the Supply Chain can make or break the success of Black Friday for most any company.
Shippers face many challenges in successfully delivering products to end-users, and last mile logistics will be a core focus of change in the coming months. Consumer demands and expectations are rising, and up to 25 percent of consumers are willing to pay extra for same-day delivery.
Also, same-day delivery will reach a 25-percent market share by 2025. By 2018 alone, same-day delivery and last mile logistics will be valued at more than $1.35 billion.
E-commerce is the driving force behind the sudden uptick in last mile logistics, and as explained by Logistics Management, e-commerce is expected to grow to $2.4 trillion by 2018 as well.
To gain a competitive advantage in last mile logistics, shippers need to understand the top seven trends in last mile logistics.
In February, 2018 it was reported that Amazon was going to launch its own delivery service: Shipping With Amazon!
Effectively Amazon has declared that they are officially entering the logistics business. The “Shipping With Amazon” service, albeit currently on a much smaller scale, competes with the logistics service and delivery capabilities offered by UPS, FedEx, and UPS.
But these are incredibly large, well established logistics companies. And they are also the major delivery service suppliers to Amazon.
The retail company I had joined had just invested $25 million to automate their Distribution Centre. They automated the process of fulfilling orders in individual units, or eaches, instead of case fulfillment.
As I learned more and more about the system and the operation it became obvious to me that the entire paradigm that went into the $25 million investment was wrong. They wasted at least $20 million by perpetuating individual unit.
They could have save a lot of time and money by changing their fundamental operating model to one of case fulfillment – the Retail Holy Grail!
“The receiving docks are backed up. We have trucks in the parking lot waiting to unload their goods. There are even more containers on their way. And we have no empty space left in the warehouse racking.”
That was the actual conversation I had with the head of the Distribution Centre (DC). We had a big problem on our hands to say the least.
The latest advancements in technology have had huge impacts on the world we live in, almost overnight transforming industries such as taxi services, food and grocery delivery, and music. Sometimes this change happens so fast it’s hard to even comprehend the growing expectations and what’s happening for businesses and consumers alike.
Although many of these growing expectations have been positive, creating a more efficient and faster-moving world (can you imagine a world without Uber?), there are many that reach too far, not taking into account the realities of the industry they are frantic to establish themselves in.
Fulfillment by Amazon or Amazon FBA lets sellers in the Amazon marketplace take advantage of Amazon’s giant logistics operation to ship their orders.
FBA items are eligible for Amazon Prime shipping and Amazon handles your angry customers (which Amazon considers its customers, not yours). Amazon has dozens of warehouses all over the country, and more around the world, so your products may be in your customers’ hands quickly.
If you pull back the Amazon curtain, however, you find the picture isn’t always rosy.
“We just spent several millions of dollars on a new Warehouse Management System for our E-Commerce Online Distribution Centre. We do not need to spend any more money on our Supply Chain.” That sounded very intriguing to say the least. At a minimize we needed to optimize storage.
The E-Commerce business anticipated 20-30% year to year growth. I could only interpret, having just joined the company, that all of the steps and planning needed had been taken. We had to ensure that the Distribution Centre could handle Holiday volumes, especially over the Black Friday/Cyber Monday period.
However imagine my surprise when I went to the Online Distribution Centre. All I saw was a very large warehouse with nothing but racks and shelving as far as the eye could see. Employees were pushing carts up and down aisles, across the entire warehouse. They were trying to find each of the products required to fill a particular customer order. The company had just invested in an expensive Warehouse Management System.
Yet no time or money had been spent on process optimization, order fulfillment cycle time reduction, cost reduction, or peak capacity load management.
The Holiday season finished recently. And the next Holiday season may seem far away. But in the area of E-Commerce Fulfillment it will be here before you know it. Now is the time to begin implementing the improvements and strategies you need to make this coming Holiday season more successful than last year.
Having gone through the ups and downs and stresses of several Retail Holiday seasons myself, one January I gave this direction to my team. For the upcoming Holiday our theme was that we were going to have a BORING Holiday season … from a Supply Chain perspective.
Amazon is far and away the leader in the E-C0mmerce space. Their growth continues at an exceptional pace. And they continue to expand their products, services, and capabilities. In short they continue to press their advantage and make it difficult for anyone else to compete with them. You need a Blue Ocean strategy!
But if you are in the E-Commerce space that is your reality. Amazon is the biggest shark in the room. So how do you compete in the face of such an overwhelming adversary?
One technique is to consider creating your own Blue Ocean Strategy to create competitive advantage! If you can define dramatically different space in which to do business you may be able to keep this shark, and others, at bay (at least for a period of time).
In 1994, Amazon.com founder Jeff Bezos read a statistic that the Internet had been growing at 2300 percent annually. He fashioned that changing tide into a business plan that has been breaking barriers across supply chain and e-commerce that has left an indelible mark with the Amazon effect.
Beginning with booksellers, the e-commerce giant has expedited the closure of many retailers and threatens to redefine the standards of shopping in a digital world. Retailers are forced to lower prices, optimize their systems and processes, and reduce profit margins in favor of competition; meanwhile, Amazon continues its trek toward dominance.
Our latest “Featuring” series article covers the topic of Warehouse and Distribution Centre order fulfillment. With the exponential growth of E-Commerce and online shopping the backbone of activity that makes it all happen is order fulfillment.
Every time you place an online order someone somewhere is picking up those items and placing them in a box for delivery to you. Given that hundreds of millions of people are doing the same thing at the same time it is imperative that companies have the most efficient fulfillment process possible, whether they do this work themselves or outsource it.
We have had the opportunity to lead the implementation of some world class fulfillment processes, even surpassing the speed of Amazon. So take some time and check out our very best Warehouse and Distribution Centre fulfillment articles!
In the last decade, the growing adoption of ecommerce has been swift–and ruthless. Huge retail market players like Best Buy and Toys R’ Us are shutting down huge chunks of their physical locations due to plummeting revenue and poor customer experience.
Not only is this a result of not embracing ecommerce early in its wave, they are also now competing with ecommerce giants like Amazon and Alibaba who sell the same or competing products online.
Traffic drought in physical stores could be attributed to the rising number of purchases made over the internet for certain customer and product segments. For some, the revenue drop is significant. And yet another part of the challenge big box retailers face as publicly traded companies is that they have to answer to their investors–and with ecommerce delivering superior results, the patience afforded to big box retailers is just not as generous.
Retailers with Brick and Mortar stores continue to be under tremendous pressure. Competition is intense in the fast growing Omnichannel E-Commerce world. Every week there seems to be news about how one Retailer or another is closing more of their stores when they could be using them as Distribution hubs.
And very few Retailers with Brick And Mortar stores have been able to make a profit in E-Commerce. Competitors who only sell online without physical stores appear to have an advantage with lower overhead costs.
So how can Brick And Mortar Retailers turn their stores into a competitive advantage plus a source of greater profitability?
As supply chains evolve and grow, products are often passed between dozens of hands at factories, shipping vehicles and pallets, distributor warehouses, retail warehouses, shop floors, and delivery fleets. They often travel thousands of miles to go direct to consumer.
And they go through multiple intermediaries, something which has an impact not only on the profit margins, but also on the brand’s ability to connect and communicate with their customer.
With revenue growth remaining a challenge, almost half (48 per cent) of manufacturers are racing to build Direct to Consumer (DTC) channels, with almost all of them (87 per cent) seeing these channels as relevant to their products and consumers.
