Thanks in no small part to pandemic-fueled upticks in online shopping, e-commerce grew at a staggering pace over the past two years. As a result, retail is evolving at breakneck speed, causing as many challenges as opportunities for brands. One of the biggest retail pain points today is fulfillment. A perfect storm of rising shipping costs and increased consumer demand have made meeting expectations an uphill battle – and it’s only going to get harder.
Traditional fulfillment solutions are not future-facing and are often slow to adapt to today’s rapidly changing supply chain landscape. You need to solve your pressing fulfillment challenges of today with a strategic partner already building the technology and infrastructure of tomorrow.
But how do you know if your partner is future-proofed? Here are seven things to look for:
1. Automation is a priority
Manual labor in warehouse settings is on the verge of extinction. The need for warehouse workers is on the rise, up 30% from 2019, but there is a critical staffing shortage. In July of 2021, the warehouse transportation industry had a record-breaking 490,000 openings. Despite major companies offering perks like pay raises and sign-on bonuses, things show no sign of improving.
Brands are realizing how bad things are getting – 1 in 5 brands we surveyed listed labor shortages as a top threat to their e-commerce business. It’s time to face the music – manual labor is not a tenable means to an end when it comes to warehouses.
Automation is the key to keeping the supply chain alive without relying on an increasingly small pool of prospective hires, but it isn’t just about mitigating the impact of the labor shortage. For many warehouse duties, automation simply works better than manual labor; it streamlines your e-commerce operations and guarantees accuracy by eliminating the chance for human error. If your fulfillment partner isn’t leveraging automation, their operations won’t serve you well now or in the long-run.
2. They enable fast shipping
We’ve talked before about how brands and consumers have a different definition of free shipping. 61% of consumers we surveyed define “fast delivery” as next-day or same-day, while 77% of retailers consider free shipping two days or slower. Acquiring new customers is tough, especially with the recent explosion of e-commerce.
Consumers have thousands of options available with just a few clicks. They won’t hesitate to take their business elsewhere if they can’t get exactly what they want exactly when they want it.
Amazon is often finger-pointed as the main culprit here, but we’re well beyond the Amazon Effect at this point. As of 2022, 80% of the top 10 biggest US retailers offer free two-day shipping, transforming free two-day shipping from an appreciated perk to table stakes. It’s only a matter of time before one-day and even same-day shipping becomes the expectation.
Can your fulfillment partner provide fast shipping? If not, you need to take your business elsewhere. If you’re unable to get your products to a customer’s doorstep at the speed that they now demand, your business will be left in the dust of speedier brands.
3. They’re local & distributed rather than centralized
Distributed fulfillment is a logistics system where businesses utilize a network of warehouses and micro-fulfillment centers (MFCs) to strategically get inventory closer to customers. Local and distributed fulfillment has a multitude of benefits.
A network of MFCs drastically reduces delivery costs – which have skyrocketed in recent years – by getting products closer to customers. With distributed fulfillment, fast shipping is not an insurmountable financial burden. It’s critical to providing fast deliveries, now a must-have to stay competitive. MFCs also de-risk the supply chain, allowing you to get orders to customers in the event of disruptions at specific locations. Finally, it mitigates brands’ shipping carrier problem, allowing them to overcome the restrictive capacity limits and cut-off dates that kill sales, especially during holiday peaks.
In short, distributed fulfillment is a smarter, more reliable logistics solution that any future-proofed fulfillment partner will have in place.
4. Sustainability is a core company value
Sustainability isn’t just good on an ethical level – it’s better for business. Customers now harbor a strong preference for environmentally-friendly brands. 77% of consumers are concerned about the environmental impact of the products they buy. In the past five years, online searches for “sustainable goods” have increased by 71%. Plus, 34% of consumers would pay more for sustainable products. Companies that fail to prioritize sustainability are going to lose out on market shares in the years to come.
MFCs don’t just help with expediting shipping – they’re more sustainable than centralized models. Hyperlocal warehouses dramatically reduce shipping distance, cutting carbon emissions. They also require less packaging, as parcels travel a shorter distance. Plus, MFCs can often be built in existing retail locations, eliminating the need for environmentally-taxing new construction projects.
Sustainability is a huge brand priority that isn’t going anywhere. In fact, as environmental concerns get more pressing, sustainability will become only more important to consumers. Brands that do not incorporate sustainable practices as a core component of their operations will lag sorely behind the competition in the coming years.
5. Scaling as your needs change is no problem
It’s a cliche, but it’s true – the only constant is change. A good fulfillment center will be able to scale with you as your needs evolve. Traditional third-party logistics companies are either at capacity or rely on rigid centralized fulfillment strategies that require expensive and slow additional construction to scale.
This problem of insufficient, inflexible fulfillment capacity is hitting brands hard right now. 99% of retailers have lost sales due to a lack of fulfillment capacity, reporting a 22% loss on average – a number that is likely to grow. It isn’t just about thinking ahead a few years, either. It’s about thinking ahead a few months. Brands notoriously miss out on sales opportunities during peak seasons, when cut-off dates and capacity constraints result in thousands of lost sales.
With a distributed network of micro-fulfillment centers, on the other hand, you can expand as your volume increases and enter strategic new markets when it serves your business best. MFCs are built to fit into any space, regardless of its structure or size, which means real estate is not a barrier to scale. Get started with a two-day delivery window now, and be ready to offer next-day and even same-day delivery as consumer demand grows.
6. They’re solving the inventory problem
Speed of fulfillment and delivery are vital, but only part of the equation. Having an on-demand business means every aspect of your operations cohesively come together to provide an exemplary customer experience that consistently meets consumer demands. Stocking up on baby wipes online should be as easy – scratch that, easier – as stopping to pick up a pack at the drugstore on your way home.
How do you stock the right inventory at the right time in the right quantity in the right location?
Businesses have always struggled with planning for assortment and allocation. This is especially difficult when adding speed to the equation. A future-proofed fulfillment partner will be paving their way to provide real-time visibility into your inventory cycles and local assortment needs to make effective, data-driven decisions.To function at an on-demand speed, you need prescriptive inventory AI at a local level with SKU rationalization and data intelligence. Instead of flying blind relying on historical sales data, the right fulfillment partner will help you understand your inventory needs in real-time and reduce over and under-stocks.
A future-proofed partner is already building such a model, poised to perfect the on-demand experience in the coming years.
7. The brand experience extends past checkout all the way to delivery
E-commerce success means creating an online experience that is equal to or even superior to an in-store experience. Many brands end interactions with consumers at checkout. In order to compete in this cutthroat environment, you need a fulfillment partner who will work with you to create a superior online experience from click to delivery.
How does a fulfillment center come into play here? Checking off all the above boxes. Fast delivery, consistent on-demand inventory, and eco-friendly practices all incentivize customers to stay within your bubble when shopping for goods. From the moment a customer lands on the website to the moment they receive their package, you need to maintain full control over that experience.
When choosing a fulfillment partner, ask them how they plan to ensure a good customer experience from start to finish.
The Bottom Line
It has never been more important for brands to provide a stellar customer experience. Due to last-mile challenges and other constraints, this has also never been more difficult – and times are changing fast. It’s only going to get harder.
With e-commerce still steadily growing, expect rapidfire changes to every step of the fulfillment process. To stay ahead, you need a fulfillment partner that can provide amazing customer experiences today, while future-proofing their supply chain to meet evolving needs.