Retail, CPG and Logistics

Creating flexibility to keep up with e-commerce fulfilment demands

Retail has undergone a remarkable transformation over the past five decades, progressing from small stores to supermarkets, hypermarkets, and now online stores. Although brick-and-mortar establishments still exist, they face formidable competition from thriving online retail stores.

Online shopping's unparalleled convenience and expansive reach have propelled e-commerce sales to unprecedented heights. The boom in e-commerce has reverberated throughout the entire consumer packaged goods (CPG) industry, including supply chain and logistics.

Any impact on the supply chain or logistics affects order fulfilment. With order fulfilment playing a key role in retaining customers and protecting the brand, it is no wonder that companies go the extra mile for order fulfilment.

Today's interconnected world facilitates businesses to expand beyond local boundaries and tap into a broader demographic to source products for meeting customers' demands. However, fluctuating customer demands compound e-commerce fulfilment complexity. Therefore, it becomes imperative to seek innovative solutions that bridge the gap between consumer expectations and order fulfilment.

Flexible fulfilment

One such innovative solution is flexible fulfilment. Flexibility in delivery or associated activities is critical, just as much as having the right inventory at the right place.

Flexible fulfilment is a model that lets customers choose from a number of delivery options (also known as last-mile delivery methods, shipping options, or shipping services).

The list typically includes:

• Same-day or next-day delivery
• Instant delivery
• Home delivery
• Mailbox delivery
• Parcel locker
• In-store pickup or BOPIS (buy-online-pick-up-in-store)

The preferred delivery method varies depending on factors such as the type of items purchased, timing, seasonal trends, item specifications and estimated delivery times.

Why the fuss over last-mile delivery solutions? Online shopping success relies on various factors, but unsatisfactory delivery options often lead to high cart abandonment rates. If an online store fails to provide the desired delivery option, 95% of consumers will look elsewhere, regardless of product quality, value, curation and sustainability. However, the benefits of flexible fulfilment extend beyond customer-centric reasons.

Advantages of flexible fulfilment

Whether you are a small online retailer or a large enterprise, understanding the benefits of flexible fulfilment can shape your e-commerce strategy for success. Here are a few pointers:

Enhanced customer satisfaction: This is perhaps the most significant benefit of a flexible fulfilment strategy.Some consumers may prefer their purchase home delivered, while others may want to pick up their orders in-store right away.
Flexible fulfilment recognises these diverse customer preferences and offers choices. This translates to satisfied and happy customers.

Adaptability to demand fluctuations: In the event of sudden surges in demand during peak shopping seasons or unforeseen circumstances, businesses can effectively expand their operations through flexible fulfilment strategies. This involves collaborating with additional third-party fulfilment providers or establishing temporary distribution centres to efficiently handle increased order volumes and returns.

Increased operational efficiency: Flexible fulfilment allows businesses to utilise their existing store network for order fulfilment, instead of relying solely on centralised distribution centres. Businesses can optimise resources and cut transportation costs and delivery times by utilising merchandise available at stores nearer to customers.

Speeded order processing and delivery: Flexible fulfilment enables collaboration with local delivery services to shorten delivery delays. This contributes to meeting the increased need for fast delivery, particularly for time-sensitive products.

Geographic expansion: Businesses can access new markets by using flexible fulfilment. For example, an online retailer can collaborate with third-party fulfilment centres strategically situated in various regions to serve customers in those areas.

Technology’s role

Flexible fulfilment necessitates a flexible and integrated approach to various retail functions such as inventory management, logistics and order processing. It entails leveraging technology and data analytics to improve inventory visibility, effectively manage resources, and speed up fulfilment processes. Here’s how:

• Businesses can receive real-time visibility into stock levels with comprehensive inventory management systems, preventing stockouts.
• Order management systems can streamline order processing and reduce errors by automating order routing and inventory allocation.
• Data analytics can help with demand forecasts and inventory management decisions.
• Robotics and automated guided vehicles (AGVs) can improve warehouse productivity by optimising inventory movement and order fulfilment operations.
• Delivery tracking and communication solutions can enable real-time updates and transparency in the shipping process.
• System integration and connectivity can provide continuous data flow and communication throughout the fulfilment process.
• In-store pickup options can be enabled through mobile applications and point-of-sale (POS) systems.

Technology helps automate processes, optimise operations and make data-driven decisions. This results in enhanced flexibility and efficiency in e-commerce order fulfilment.

Conclusion

Today’s retail landscape has an omnichannel approach where retail outsourcing companies strive to provide customers with a seamless and unified brand experience, regardless of the channel they use. This is a challenging task.
As demand volatility increases, customers preferences shift, lead times shrink, distribution network paths become more complex and the repercussions for stockouts increase in severity, e-commerce faces the imperative to adapt and innovate in response.

It becomes crucial to employ agile supply chain strategies, leverage advanced analytics for demand forecasting, implement efficient inventory management systems, and enhance collaboration with retail partners.

By embracing technology-driven solutions, firms can mitigate demand fluctuations, streamline operations, improve fulfilment speed and minimise stockouts.

Ultimately, staying responsive to evolving customer preferences and maintaining a robust fulfilment strategy is vital to thrive in the dynamic retail landscape.

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