eStar sales director Patrick Gaskin puts fulfilment in the spotlight.
Fulfilment may seem like a dry topic in eCommerce, despite its critical role in determining success. Effective fulfilment is essential in the customer journey, influencing whether a customer becomes a repeat shopper. Delays, partial deliveries, or cumbersome return processes can all impact on the customer experience and hurt loyalty.
A report by Digital Commerce 360 highlighted that 39% of online shoppers want faster delivery and that it is a top driver for users to buy more often, so offering faster fulfilment options is an immediate gamechanger. Moreover, efficient fulfilment processes do not improve the customer experience, but unlock significant cost savings, such as reduced staff and packaging costs, and minimised freight expenses through smart order routing.
Historically, logistics focused on bulk deliveries to retail networks. Today, it involves picking single items for a network of locations with shorter lead-times, complicated further by customer expectations around same day Click & Collect and weekend delivery.
Improving fulfillment is complex, with factors like product range, geography, store network, product characteristics, customer profiles, scale, and seasonality influencing the optimal approach. Regardless of the environment, successful fulfillment models focus on three areas: Process, Technology, and People.
Process
Key considerations include:
- In-Store vs. Distribution Centre (DC) Fulfilment - DC Fulfilment typically has lower pick costs due to automation and efficiency, while In-Store Fulfilment leverages existing stock and lower freight due to proximity.
- Pick Strategy - Batch picking minimizes walk time but requires order consolidation before packing, whereas cluster picking is effective for smaller items supported by suitable technology.
- Packing Environment - the physical space is crucial for scaling. Adequate space for pick trolleys, consolidation bins, and accessible packing materials are key factors.
Technology
Key considerations include:
- Order Routing - for multi-location fulfilment, factors like proximity to the customer, stock availability, and fulfilment location capacity must be considered. Technology should optimise routing decisions based on these variables.
- Stock Integrity - systems should ensure real-time stock level accuracy, checked at product detail and checkout stages. POS systems need frequent communication to reflect in-store sales.
- Automation - High volume can justify automation investments like goods-to-person systems, sortation systems, and pick-to-light technology, enhancing efficiency in a DC environment.
- Digitisation - Save paper, improve accuracy and speed up processes by using digital pick and pack technology versus paper-based.
- Innovations in last-mile delivery, such as crowd-shipping and smart hubs, are improving the efficiency and security of the final delivery stage. Subscription-based fulfillment models are also on the rise, providing consumers with regular, predictable deliveries.
People
Key considerations include:
- Incentives - align incentives across the business to support online channels. For In-Store fulfilment, store managers' incentives should align with eCommerce goals to prioritize fulfilment.
- Specialisation - specialising staff in specific fulfilment tasks can enhance efficiency but may reduce flexibility. Staff with a holistic view often provide valuable insights for process improvement.
- Visibility - make fulfilment performance visible to staff, not just managers. Real-time dashboards in picking areas can display queues and throughput, potentially gamifying performance to motivate staff.
There is also a growing demand for sustainable fulfillment practices. Retailers are optimising packaging sizes, using eco-friendly materials, and reducing waste. Many consumers, particularly millennials, are willing to pay more for sustainable products. Retailers are also exploring alternative package pickup points to reduce the environmental impact of home deliveries and curbside services.
Retail stores are evolving into experiential spaces and extensions of the online experience where customers can engage with brands through unique in-store events, interactive displays, and immersive experiences. Moreover, retail environments need to perform a role in the fulfillment process. Stores should be delivery hubs, collection points, try before you buy locations and a returns point.
These considerations illustrate the complexity of designing and implementing an effective fulfilment model. Investing in expertise, time, and technology to scale fulfilment processes to meet and exceed customer expectations is becoming a necessity for bricks and clicks retailers. The winners are integrating physical and digital retail experiences, leveraging technology to meet customer demands for speed, convenience, and personalisation, while also focusing on sustainability and efficiency in fulfillment operations.
It's time to put your fulfilment processes in the spotlight because, for your customers, they already are.
Visit eStar for more.