The New Normal for Ecommerce Fulfillment
As we look back across the past three months, much has changed in our environment. With stay-at-home orders driving new buying behaviors and creating a surge in ecommerce purchases, many 3PLs saw significant increases in demand for their services. In a recent poll of 3PLs, 67% shared that their ecommerce fulfillment had increased, with 24% saying that it had increased more than 25% this year. Looking at our own Extensiv customer volumes, we’ve seen an increase of 65% more ecommerce order volume flowing through our warehouse management system (WMS), Extensiv 3PL Warehouse Manager, as compared to last year.
As communities begin to emerge from stay-at-home orders, what lies in store for the future of ecommerce? Across the United States, many cities began reopening businesses at the end of May, and order volumes dipped week over week just slightly at the end of the month. However, ecommerce volumes continue to rival historic holiday peak season volumes.
Has Consumer Behavior Changed for Good?
While no one can predict with certainty, a recent McKinsey study showed that US consumers plan to shop more online in most key categories. And, if we use history as any indicator, after the SARs outbreak in China in 2003, it became a watershed moment for ecommerce because of changed buying behaviors during the outbreak.
Speaking to third-party logistics companies daily, we continue to hear a focus on scaling their 3PLs to better support ecommerce, as well as learning how to diversify to support omnichannel fulfillment. With fear that another wave of Coronavirus may strike in the late summer/fall, 3PLs are rapidly preparing for what could be yet another dramatic increase in online shopping.
What Does This Mean for 3PLs?
To scale for the continued onslaught of ecommerce orders and more retailers or manufacturers leveraging third party logistics warehouses for inventory management and order fulfillment, 3PLs must quickly examine where they can improve efficiencies, automate connections, and create visibility into their systems.
During our recent webinar, “Scaling Your 3PL for Ecommerce with Connectivity,” 58% of 3PLs reported technology implementations as one of their biggest challenges to scaling their 3PL to prepare for the continued increase of ecommerce orders. Fifty percent (50%) also cited operational efficiency as a key challenge area.
For 3PLs facing challenges with operational efficiencies, consider the core processes and systems you use to manage inventory, accept receipts, process orders, and ship orders. Do you have a warehouse management system, like Extensiv 3PL Warehouse Manager, that can automate processes and turn your 3PL into a paperless warehouse? Consider your core processes:
- Receiving – Does your system allow receipt against ASN, and does it allow for dock scheduling to ensure you manage personnel and facility resources in the most optimal way? Does your system offer directed putaway to manage locations available to store receipts?
- Pick & Pack – Does your system offer mobile barcode scanning to send picking instructions directly to a mobile device? Can you use that scanner to verify the right product has made it to the right order?
- Shipping – Are you able to easily print labels, connect with carriers, and identify optimal shipping rates in an automated fashion?
Once you’ve assessed your processes at a high-level, ensure you have the right technology to automate as many of the processes possible and follow best practices to drive optimal warehouse efficiency.
For 3PLs facing challenges with technology implementation, first take stock in your technology ecosystem:
- For order intake, what shopping carts or marketplaces do your customers need you to connect to? What information will need to be passed back and forth in real-time?
- For in-process orders, what visibility will your customers need to real-time inventory availability and order statuses?
- For shipping orders, which carriers will you need to connect with, and will you need to do rate shopping on your customers’ behalf?
Once you’ve assessed what your ecosystem looks like, assess whether you can handle the heavy lifting of integration on your own, through your warehouse management system (WMS) partner, or using a third-party developer. Create your roadmap and implement.
Are You Ready?
With no end in sight for the shift to ecommerce and omnichannel, prepare today, to learn more about how to scale for the new normal of ecommerce, schedule time to speak to an expert.