The rapid growth in online shopping forces e-retailers to take dramatic steps to ensure they can fulfill all orders on time during the holiday season and at other times when demand peaks.
Some, such as electronics e-retailer Newegg, No. 17 in the Internet Retailer 2015 Top 500 Guide, will nearly double their workforce in their e-commerce fulfillment centers during peak times to keep up with demand and work closely with managers in each warehouse to make sure they’re ready. Newegg has 500 year-round employees working in eight fulfillment centers across North America.
“We provide an accurate volume forecast to our operators so they can plan their staffing needs in advance,” says Kunal Thakkar, vice president of operations at Newegg. “We focus on the labor hours needed to process the workload in time to meet service commitments.”
Jason Apfel, president of online-only perfume and personal care products retailer FragranceNet.com (No. 159) says the company more than doubles its staff during the holidays because the winter holiday shopping season accounts for 40% of FragranceNet’s sales.
Because those temporary employees must take in a lot of information quickly, Apfel says FragranceNet implements a buddy system to help them absorb and retain all that knowledge.
The retailer pairs each temporary employee with a company veteran who then trains and monitors the temporary worker over a period lasting from a couple of days to a couple of weeks. “It’s a lot to take in. We need all the help we can get, we just want to make sure it’s being done the right way,” he says
FragranceNet developed proprietary software to manage warehouse operations and continuously measure performance. Employees receive badges which they use to check in when they are performing different tasks.
“All pickers and checkers are monitored against their peers and past performance history from previous holiday periods,” Apfel says. “We monitor the picking and checking in real time. If a picker makes an error the system will alert them in real time to make the proper adjustment. If an employee is underperforming the system will alert a manager for retraining.” Retraining consists of pairing the underperforming employee with a company veteran so the experienced worker can retrain the newcomer.
Peak times present a different set of challenges when online orders are being fulfilled for multiple retailers.
“We have a large variety of clients, some of which run flash sales beyond seasonal,” says Benoit Robinot, senior vice president of operations for online order fulfillment and logistics provider Newgistics. “They can see spikes of 10 times (normal volume). Given that we have a large variety of clients, we’re able to distribute more labor, but we have to have a very strong strategy around direct labor to be able to handle that type of volume.”
Robinot says Newgistics currently has 200 employees working at its two fulfillment centers on opposite sides of the country.
To make sure they’re ready for those peak times, Robinot says Newgistics plans more than six months ahead, ensuring that when demand spikes, there’s enough labor to keep customers happy.
“We have a set of core Newgistics employee and we pull from multiple temp agencies to accommodate the spike. It’ll vary seasonally and it’ll vary by function.”
For more on how retailers are working to get the most out of their fulfillment center employees, check out the January edition of Internet Retailer magazine.
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