Today, ecommerce predictions continue to hinge on the global reaction to the ongoing variants of COVID-19. Shopping habits remain altered for the foreseeable future. Although brick-and-mortar businesses are open, online shopping remains enormously popular with record breaking sales continuing.
The landscape has changed for ecommerce businesses and their third-party logistics (3PL) partners. Unprecedented ecommerce growth continues to accelerate, and disruptions to the supply chain remain a challenge for the highly competitive and assertive marketplace.
3PL warehouses work tirelessly to achieve ecommerce fulfillment with storing, inventory management, packing, and shipping. The days of traditional manual processing have ended. Now, logistic solutions are omnichannel fulfillment with integrated warehouse management system (WMS) software and varying degrees of artificial intelligence (AI) integration.
The Future of Omnichannel Order Fulfillment
Omnichannel fulfillment is about developing successful strategies and processes to manage burgeoning inventory, picking, packing, and shipping from a specific location to a multitude of consumers often located around the world. The internal 3PL fulfillment processes must focus on optimizing operations, streamlined outbound processing, and efficient shipping.
Consumers have become increasingly demanding. They have high expectations for ecommerce sellers due to the giants like Amazon who offer same-day or two-day delivery. Nowadays, they want a truly seamless buying process that provides fast, reliable delivery.
Many consumers also demand choices. They want to buy items online, in the store, or via a combination of both. The high consumer expectations have made sellers scramble to find omnichannel fulfillment services to meet these demands and ensure customer satisfaction.
Since 2020, omnichannel fulfillment has gained a firm foothold and is accelerating in exciting ways. Easy and efficient curbside and home delivery services are being fine-tuned in remarkable ways.
Omnichannel fulfillment is about providing choices for consumers. Consumers want choices, and ecommerce brands and 3PLs want to meet those needs. With omnichannel fulfillment, businesses have a multitude of delivery choices that help cater to different consumers and their particular needs and wants.
Most relate omnichannel to retail/ecommerce, but it also encompasses logistics. Without a doubt, the two most prominent factors involved with omnichannel fulfillment is the entire inventory process, packing, and transportation of the items. Ecommerce brands scramble to assure their customers receive the items they have ordered and purchased by turning to 3PLs for inventory, packing, and shipping processes.
At this point, there is no doubt that omnichannel fulfillment is the new ‘norm’ and future of ecommerce. Performing things manually is simply no longer an option. It is imperative that ecommerce brands partner with 3PLs who embrace WMS software, 3PL billing software, and other integration options.
Exploring Omnichannel Fulfillment
Omnichannel fulfillment, also called omnichannel order fulfillment, is the entire process that starts from the minute that a consumer makes an order and continues through to the warehouse/inventory management, packaging, and delivery of the goods to the buyer. This includes order pickup, warehousing, order packaging, and delivery to the buyer on-time and during the last mile. Omnichannel fulfillment becomes an orchestrated performance that functions as a well-oiled machine when handled by a professional third-party logistics provider.
With omnichannel retail fulfillment, consumers have the chance to research products, examine and compare costs, make purchases, and then receive goods through multiple channels. Omnichannel fulfillment lets things become simplified and automated to speed the process along.
The process of omnichannel fulfillment is usually made up of at least five processes:
- Warehousing: Storing, checking merchandise, and inventory management
- Management of Orders: Order confirmation and processing
- Packaging: Picking orders, label printing, and packaging
- Shipping and Return Services: Payment, shipping, refunds, and return of goods
- Customer Communications: Customer care and satisfaction after all sales
Benefits of Omnichannel Fulfillment
Below are a few benefits of omnichannel fulfillment:
Ability to manage and Lower Inventory Costs
Orders will continue to increase as demand grows, which sends ecommerce businesses surging to embrace the biggest fulfillment trends. As the number of orders escalates, businesses are put under pressure to manage items and guarantee timely delivery to consumers, managing inventory through omnichannel synchronization of complete data. With this process, a company can save about half of their logistics costs by partnering with a 3PL so they can focus on their business needs while letting the 3PL handle the supply chain.
Meeting the Needs of Buyers
Timely delivery is a necessity to ensure customer satisfaction. If customers do not receive timely delivery, they will usually cease shopping on an online site and instead opt to shop with a competitor that better meets their shipping and delivery needs. Shoppers have become spoiled thanks to companies like Amazon and Walmart. Now they demand fast delivery with return policies.
Ensuring Customer Satisfaction
Omnichannel order fulfillment is a way to ensure customer satisfaction. Logistics providers arrange and manage consumer orders to ensure professional, on-time delivery and the right quantity that the buyer purchased. They will also make sure to collect the seller’s money by shipping cash on delivery (COD). Both the customer and consumer are satisfied with the processing time and delivery.
Provide Accurate Inventory Management
Managing warehouse inventory effectively keeps costs consistent. Sellers and logistics providers know what is available and where it’s being warehoused to ensure fast and accurate delivery of items.
The use of effective warehouse management software also provides real-time reporting of the warehouse and fulfillment center’s performance to offer in-depth insight into the performance metrics, which will ultimately help the supply chain improve delivery performance. Items are never misplaced or mislabeled. Effective picking and packing are also honed.
Warehouse productivity is increased with more detailed information in areas such as efficiency and inventory.
Distributing products using several channels helps to open up opportunities which increases sales and revenue. Retail fulfillment processes that leverage multi-channel distribution open up a wealth of buying channels. Customers and clients report higher levels of satisfaction which solidifies long-term relationships.
Clearly, distance is an integral part of fast delivery, but is not without challenges. 3PL providers that ship from a location that is nearest to customer have the advantage when it comes to speed.
If the 3PL has more than one nearby location that can handle the consumer order, then other factors such as labor availability and the number of open orders being picked and packed are all necessary considerations when deciding what warehouse to use.
Improved Brand Perception
Brands that utilize multiple distribution channels in the marketplace are usually very attentive to their consumers preferences and needs. Their brand will stand out from the competition, especially if they have not taken full advantage of multi-channel distribution. The entire performance process is about speed and accuracy.
Standard Steps of the Omnichannel Performance:
- Verify the Order: The order is confirmed along with the consumer’s information such as shipping preference and billing address.
- Fulfill: The orders are separated.
- Pick: Select multiple orders or a single order and then print out the composite picking list
- Pack: Create multiple or single packages.
- Deliver: Display all shipping information including the tracking number for the carrier.
Reduced Delivery Costs
Shipping from the closest warehouse location is the best way to reduce delivery costs. 3PL fulfillment is an efficient and cost-effective option. The 3PL will source the closest location of the inventory and ensure stock availability.
Split shipments are always a way to ensure faster delivery because you are eliminating the necessity of order consolidation, but it's not as cost effective because you pay the delivery twice, which can cut into profitability. Split shipments also aren’t as good for the environment due to the added shipping materials and carbon emissions during delivery.
Clearly, a 3PL and their customer will need to balance factors like speed over profitability while seeking to minimize split shipments or having a minimum order value put in place for split shipments.
With omnichannel order fulfillment, you’ll need to figure out the most efficient combination to ensure that your bottom line grows while your consumers remain happy.
When a brand first starts to ship products, they usually ship exclusively within their home country, but as the business grows, that can change.
Global sourcing approaches involve:
- In-Country Business Autonomy: All orders are shipped from a location within the country where the order was placed. In-Country businesses are customized using sourcing rules and additional fulfillment logic that follows local consumer preferences. This gives a competitive advantage.
- Global Expansion/Business Continuity: Global expansion along with business continuity involves using regional fulfillment hubs. Orders are sourced to the nearest hub. A regional hub is used to fulfill orders to a new country if a local presence has not been established. With this approach, an ecommerce business can test the demand from a new region before taking the step of setting up a local distribution network.
Global shipping is not without its roadblocks. Issues like customs processing along with cross border returns can all create headaches. Using in-country business unit autonomy simplifies operations while providing faster delivery. However, the system is far less flexible.
Regional Fulfillment Centers
Regional fulfillment hubs also help foster business continuity. The hubs support international shipments but if one should close as a result of a power outage or some other problem then orders can automatically be shifted and sourced using the next closest hub so that the entire process remains seamless.
12 Omnichannel Sales & Fulfillment Trends to Watch 2022
Ecommerce is exploding and there is no slowdown in sight as 2022 wanes. Despite the growing demand for online and mobile shopping, customers also still want to shop in-store. They want their cake and to eat it too with a blended online and offline shopping experience. Brands are scrambling to meet their consumer’s voracious appetite and lofty expectations by embracing the latest omnichannel sales and fulfillment trends. 3PLs also need to be aware of these trends in order to better serve customers' logistics needs.
1. Purchasing Platform Variety
Consumer loyalty hinges on the successful implementation of a flowing omnichannel experience. Ecommerce brands are dedicated to creating a consistent and satisfying experience for their consumers via mobile, social media, physical store locations, and websites.
Consumers want and are demanding the ability to purchase on every available platform. They thrive with direct shopping on social media, chatting with virtual assistants, purchasing in-store, and more. In the highly competitive market, brands are scrambling to meet their needs by offering multiple shopping channels. Many are even providing voice search and commands for buyers to make purchases.
2. The Use of Mobile Apps
Target remains a strong model of a successful omnichannel retail strategy that is working to perfection. They offer their Target Circle app which provides an easy-to-use customer journey.
When shopping in-store, shoppers can use the store’s free Wi-Fi to access the app. They can even scan items to check prices or to gain rewards and specialized deals all using their mobile device and the Target app. Outside the store, shoppers can check a particular location's inventory to decide if they even want to shop in-store or forgo it to make an online purchase.
Another favorite mobile app for shoppers is provided by Starbucks. Users earn rewards when they use their app to pay, but they can also order for advance pickup. There is even a new feature that integrates with Spotify so that Starbucks users can know what song is playing in the store.
Another feature being embraced is the use of mobile wallet payment methods such as Apple Pay and Google Pay, which let consumers checkout easily, quickly, and safely.
3. Augmented Reality (AR) Applications
Historically, the biggest benefit of shopping in-store was the ability to look at something before you buy it. AR applications have the ability to give online shoppers a view of each product to decide if it fits their needs.
Examples of AR include:
- Virtual try-on of clothing and accessories so the customer can see what it looks like on themselves and not a model before making a purchase.
- Preview placement lets a buyer place couches, chairs and dining room tables in their living space.
4. Buy Online, Pick Up In-Store (BOPIS)
The COVID-19 pandemic accelerated the buy online pickup in-store (BOPIS) movement by providing safety to those who wanted to socially distance and not expose themselves to the virus. It was also a way that smaller brands could effectively compete against Amazon.
For the foreseeable future, the need for BOPIS will remain and even grow. The service clearly gives a brand a competitive edge and helps ensure a satisfying customer experience.
In 2022, with the new COVID variants emerging and infection rates surging, many people continue to abstain from entering a crowded store, shopping, and standing in line. Some brands are even designing separate entryways for BOPIS shoppers to pick up their merchandise. Also, most have started to designate particular parking spaces for BOPIS.
Another trending approach to BOPIS is the use of smart lockers which are opened using a PIN or barcode that is delivered via text message, email, or mobile app at the time of purchase. The use of smart lockers is rapidly becoming the number one choice for BOPIS shoppers because it requires zero human interaction. A retailer simply fills the locker with the merchandise and the consumer picks it up at their convenience without any human exposure or interaction.
Lowe's recently started installing smart lockers at 1,700+ stores to meet the needs of their customers who want to place an order online and then pick it up in the store without interacting with an associate. It creates a fast and frictionless experience that is beneficial for time-pressed customers and those who want to limit human exposure.
BOPIS is not a luxury but a necessity with most consumers making the decision on where to shop based on if they offer pickup in-store or not.
5. Buy Now and Pay Later
This form of payment method has become extremely popular. It is basically structured with interest-free loans that let the total purchase price be divided into payments. The system helps encourage shoppers who are debt-averse to buy costly high-ticket items by providing affordable payment options. Three of the leading banks, Affirm Holdings, Afterpay, and Klarna, have enjoyed record earnings since they adopted the service in 2020.
6. Same-Day Delivery
Same-day delivery is mandatory for any ecommerce business. Every brand is embracing fast delivery from Petco to Build-A-Bear. Virtually all retailers now offer a same-day delivery option.
Best Buy is a major player with a host of impressive same-day delivery options that provide faster order fulfillment. Macy's and Bloomingdale's have also partnered with delivery companies to provide same day order fulfillment for their shoppers.
7. Contactless Checkout
Brands are starting to offer contactless checkout services where technology is substituted for cashiers. The process saves a considerable amount of money while providing speed, safety, and a positive shopping experience.
8. Customer Returns
Historically, returns cost businesses greatly and have been a major obstacle. Many online sellers consider the cost of returning an item far more expensive than simply issuing a refund, so they often tell the customer to keep the item. Target, Chewy, and Walmart all have the ‘keep it’ option due to the prohibitive cost of returns, which can average $10 to $20.
Some brands are looking at processing returns through smart lockers to save on time and expense.
9. Making Social Media Shopper-Friendly
A recent report by Statista shows that 72 percent of shoppers have used social media to learn about new products. Consumers are now also buying items via social media.
10. Instagram Checkout
Instagram Checkout lets a consumer make a purchase without ever leaving the app. If someone scrolls through Instagram, sees an item, and taps on it for more details, they can finalize the purchase if they decide to buy it by using their mobile phone. With native integration, a merchant can start selling directly on Instagram.
Benefits of Instagram Checkout include:
- Very few steps from discovery to conversion
- Shoppers are never redirected to a new website
- Greater insight into the top performing products
- Increased conversions due to influencer marketing when they tag directly to a brand’s products
- Lower operational complexity when an ecommerce store integrates into Instagram
11. Live Streaming
Using live video on social media to sell has become popular. Facebook Live Shopping lets merchants live stream their featured products. They can also upload photos, create short descriptions, and include prices for anyone who might be watching the live stream.
12. Analytics and Automation
Ecommerce brands partnering with 3PL warehouses will enjoy greater delivery benefits through the trending use of analytics and automation.
Inventory analytics give warehouses the edge by providing better position inventory. Robotics and automation help the supply chain reduce time and cost which offers greater customer service satisfaction.
Refining inventory analytics help brands expand their entire fulfillment networks through the use of complex distribution nodes. Large multi-market distribution and fulfillment centers are expanding their network through distributed inventory. Omnichannel inventory solutions help brands offer fast and affordable delivery to their customers while still remaining highly profitable.
Robotics and automation systems improve the speed and accuracy of the fulfillment process. Recently there has been a rapid growth in integrators and cobotics solutions which are robots that collaborate with humans. The need continues to accelerate with at-scale implementations. Robotics and fulfillment solutions are using robotics as a service (RaaS) to reduce capital burden and create more scalability to grow a business. It is remarkably affordable for those on limited budgets.
The goal of any omnichannel fulfillment plan is to create a seamless experience for the consumer. Ecommerce companies that partner with a third-party logistics provider help ensure that their goods are delivered in a timely manner that satisfies consumer expectations.
3PLs who use effective warehouse management solutions coupled with additional innovative trends are rising to the growing challenges of clients and consumers. Contact Extensiv to learn more about our cloud-based WMS system, Extensiv 3PL Warehouse Manager.