It’s difficult to succeed in e-commerce, even for large, well-known brands. For instance, after H&M reported a sizable drop in profits, the fashion retailer’s CEO Karl-Johan Persson said the online retail industry requires companies “to transform and rethink faster and faster.”
Sean McCartney, executive vice president of global operations at Radial Inc., a global omnichannel technology and operations provider, agrees.
“E-commerce is in a constant state of flux, and those who can’t adapt quickly will lose market share and customers,” he says. “To succeed, retailers need to replicate what the leading players, such as Amazon, are doing in the area of customer experience—and fulfillment and delivery are central to that strategy.”
However, many retailers face several fulfillment and distribution challenges, such as labor, he says. “Labor is the fuel of e-commerce facilities,” McCartney says. “Right now, there just isn’t enough manpower out there to handle the demand—especially during peak seasons.”
Integrating different systems can also be difficult for retailers—particularly for those still working with older networks, McCartney says. “Being best in class requires robust networks that give the retailer a full view of inventory, and it won’t get that on these older systems,” he says. “This tends to be the biggest obstacle for retailers wanting to transition to a modern fulfillment and delivery system.”
McCartney suggests retailers take on a multi-location, regionalized fulfillment strategy, and then harmonize it with omnichannel technology to leverage the store network as fulfillment points.
“Omnichannel technology is an essential component of winning in fulfillment because it connects inventory across the entire chain,” he says. “The technology allows retailers to optimize fulfillment and delivery based on business rules and algorithms within their network to scale e-commerce shipments.” For example, it helps them understand when to ship an item from a fulfillment center or a store.
Implementing omnichannel technologies and strategies can be difficult for retailers to handle on their own. That’s why McCartney suggests merchants work with a partner, such as Radial, that has the technology to manage intelligent order routing as well as the expertise and best practices to set up business rules in order to optimize order distribution, minimize split shipments, and set store level maximums, to name just a few key considerations. “We’re one of the largest e-commerce solution providers in North America,” he says. “Our solutions help retailers be more efficient, maximize inventory sell-through, reduce costs, and ultimately drive more revenue.”
Radial has more than 11.7 million square feet of fulfillment capacity in locations throughout the country. “This means we can deliver orders to customers faster and reduce shipping costs for retailers,” he says. In 2017, Radial shipped 242 million units—50 million of which were shipped during the peak shopping season; in addition to $1.3 billion in-store fulfilled sales.
Partnering with a vendor such as Radial also alleviates the labor challenges most e-commerce companies face. “By leveraging the volume of multi-tenant fulfillment centers, it’s easier to keep labor year-round and hire temporary workers during peak seasons so that retailers can focus on their business,” McCartney says.
Radial’s data analytics technology gives retailers better visibility into their inventory, as well. “It allows intelligent inventory placement across fulfillment locations to match supply with demand,” McCartney says. “Retailers are able to avoid inventory inaccuracies and reduce split shipments and transportation costs.”
Thanks to Amazon.com Inc. and Walmart Inc., consumers have high service-level expectations when it comes to e-commerce. “There is an element of speed to compete,” he says. “To do that, it’s absolutely imperative that retailers have the capabilities in place—the right infrastructure, people, networks, technology, and partners—otherwise, they will be swallowed up by the competition.”Favorite