Retailers need to be flexible and quickly adapt to consumers’ fluctuating demands to survive in today’s rapidly changing ecommerce environment. To discuss the fulfillment and delivery challenges currently confronting retailers, as well as innovative ways to overcome those issues, Internet Retailer spoke with Stephen H. Smith, senior vice president of global operations at PFS, a global ecommerce services company.
IR: What are the most complex distribution challenges retailers face?
SS: Amazon’s rollout of one-day delivery is driving consumer demand for fast deliveries. One-day and same-day deliveries simply aren’t realistic for most retailers. And some merchants’ poor inventory management systems can make it even harder to meet those delivery targets. Having the right amount of inventory on hand, in the right distribution centers and maintaining it accurately over time requires expertise and knowledge about inventory analytics and forecasting that many retailers don’t have.
Retailers also often struggle with reverse logistics, which is particularly challenging in categories such as apparel that have return rates as high as 20%.
IR: What common mistakes do retailers make with regard to fulfillment and delivery?
SS: Many retailers lack insight into inventory management and don’t plan for adequate storage space. That leads directly to slow or late deliveries. Having errors in product details or purchase orders is another mistake that can affect fulfillment efficiency and lead to a domino effect down the supply chain.
Retailers also need to take care of the people behind the process; they should focus resources on reducing employee turnover and the loss of knowledge and expertise that goes with it. Over the long term, merchants that fail to deal with those types of “people issues” could find that they ultimately damage their brand’s reputation.
IR: What trends are affecting retailers’ fulfillment and delivery capabilities?
SS: The earlier start to the holiday season means a longer selling season for industries that have their peak during the fourth quarter. What we’re seeing now is an uptick in sales as early as October.
IR: What strategies can online retailers implement to address these trends and overcome challenges?
SS: Having a scalable fulfillment solution is key. Retailers need to build their capacity for the longer holiday season with a fulfillment solution that’s agile in terms of labor, processes and technology.
They should also offer omnichannel capabilities by investing in technology and tools that enable them to ship from their stores and offer shoppers curbside and in-store pickup. An omnichannel strategy enables merchants to give consumers the services they want without having to allocate a lot of additional resources.
To capitalize on mobile shopping, retailers need to use tools that increase the speed to market. Consumers expect the delivery process to be as simple, streamlined and convenient as the online-ordering process.
IR: How can technology help retailers meet these objectives?
SS: The use of automation and artificial intelligence in fulfillment continues to grow and is only going to increase. Retailers are increasingly leveraging predictive analytics during the order process to create a profile of a customer’s buying habits, such as how quickly her household goes through laundry detergent. Innovative technology is also playing a bigger role on the warehouse floor. Having an automated process to capture the dimensions of a new SKU quickly and accurately is a game-changer because it speeds up the fulfillment process and minimizes human error.