Ecommerce sellers — both business-to-business (B2B) and business-to-consumer (B2C) — are keeping up with order fulfillment to their digital customers.
But the process is not easy with all types and sizes of online sellers fighting a litany of challenges, not the least of which are rising costs and a labor shortage, according to a survey of 300 sellers by Saddle Creek Logistics Services.
“Record ecommerce order volume, combined with rising rates and capacity issues, made shipping particularly challenging this year,” the Saddle Creek survey report says. “Not surprisingly, delivery expectations (45%) and transportation capacity (36%) were the most common fulfillment challenges.”
To help mitigate transportation issues, ecommerce shippers are utilizing traditional strategies such as negotiating rates (36%) and switching carriers (31%), but they are also exploring a variety of other approaches, Saddle Creek says. Many respondents also are turning to technology, the survey says. Half (48%) are adding or upgrading their parcel/less-than-truckload freight shipping (LTL) transportation management system (TMS). 36% are automating parcel sortation and/or utilizing software for rate shopping (32%) and parcel analytics (29%).
“It’s a seller’s market for carriers,” says Saddle Creek senior vice president, fulfillment Perry Belcastro. (Editor’s note: Less-than-truckload (LTL) shipping or less than load is the transportation of an amount of freight sized between individual parcels and full truckloads.)
Rising fulfillment costs are another problem area for ecommerce sellers, Saddle Creek says.
In the past year, 51% of sellers say their fulfillment costs increased “somewhat” or “substantially.”
For respondents whose costs increased, labor was the primary factor, followed by customer service requirements and the competitive landscape. Overall, most respondents whose costs decreased said greater use of material handling equipment/automation/ robotics (53%) was a factor, according to the survey.
In addition, 37% say they required less labor in the past year, due to decreased order volume, and/or improved processes (38%) to help reduce costs.
“The pandemic has escalated consumer expectations for free and fast shipping, and companies are stepping up their game to satisfy consumer demand,” Belcastro says.
Other survey findings include:
- Free shipping is offered more widely than fast shipping. Free shipping is offered for all orders by 43% of respondents. Just 25% offer one- or two-day shipping.
- Many companies are utilizing multi-node distribution networks. For example, 17% of respondents have two distribution centers, and 22% have three.
- Over half of respondents (57%) utilize a third-party provider for all their ecommerce fulfillment, and another 20% plan to begin outsourcing in the next 12 to 18 months.
- Many respondents plan to add new sales channels in the next 12 to 18 months, including third-party marketplaces (48%) and social platforms (41%).
- The aspect of fulfillment operations that respondents would most like to improve in the next 12 to 18 months is mechanization/automation/robotics.
- Moving forward, respondents are taking a more strategic approach to fulfillment operations. Plans include distribution network expansion, expanding technology use, optimizing for omnichannel, reducing labor dependency and more.
“There is no denying the impact of record ecommerce demand and historical supply chain disruptions in the past year. Those factors are likely to be in play for another year, if not longer,” Belcastro says. “Moving forward, we can expect ever-increasing complexity and velocity.”
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