Understanding the new DTC and high-volume ecommerce fulfillment
There’s no denying that the ecommerce landscape has gone through an unprecedented shift. From March 2020 through February 2022, U.S. consumers spent $1.7 trillion online. That’s based on 1 trillion visits to U.S. retail sites and over 100 million SKUs purchased.
Given the scale of this shift, it's clear that in today's highly competitive ecommerce market, ensuring accurate and timely order processing is crucial.
Whether you're a fulfillment network, online retailer, or a 3PL, you need to adopt the latest technologies and approaches to ensure your direct-to-consumer (DTC) operations are a success.
Continue reading as we explore the emerging trends and challenges in the industry, while highlighting the technological advancements that are having the most significant impact.
We'll also provide some valuable resources you can download to get a deeper view of these topics.
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Cracking the Fulfillment Code: 5 Key Industry Trends and Challenges
The ease and speed at which ecommerce has accelerated in the past five years is miles ahead of where anyone thought it would be—and shows no signs of slowing down. It effectively represents a DTC revolution—driven by a world where orders materialize at doorsteps with lightning speed and precision.
So, what are some of the key challenges and trends you need to keep tabs on?
Great Expectations
Remember life before next-day shipping? Neither do we. In the age of next-day shipping, customer expectations have skyrocketed. Many now demand incredibly fast delivery times, with 41% expecting 24-hour service and 24% anticipating delivery within 2 hours.
Meeting these demands requires ultra-fast, precise, and dependable order fulfillment. This challenge applies to both smaller DTC businesses without the resources of larger retailers and larger fulfillment enterprises, which may lack the necessary technology and expertise for a DTC shift.
Flexible Thinking
As DTC brands expand and reach more customers, scalability and flexibility become increasingly crucial in fulfillment. Adapting to changing order volumes, new product launches, and seasonal fluctuations necessitates agile supply chain management. This involves embracing a range of modern technology solutions such as cloud computing, automation, robotics, generative computing, and artificial intelligence.
Inventory Optimization
Efficient inventory management is at the heart of successful DTC fulfillment. It’s a constant struggle to maintain sufficient stock levels to meet demand while avoiding excess inventory that ties up your capital. Of course, proper forecasting and data analytics are essential when it comes to inventory optimization.
Alternative Routes
Last-mile delivery remains a significant challenge for DTC brands, as it constitutes the most intricate and costly segment of the delivery process. Meeting consumer expectations, managing increased delivery volumes, and adopting eco-friendly practices are key considerations.
To address these challenges, businesses are exploring alternatives like crowdsourced delivery, collaborating with local courier services, and investing in smart routing and optimization software. These solutions also help alleviate the strain of labor shortages, which affected 34% of surveyed businesses in 2022, leading to missed business opportunities.
The Boomerang Effect
Returns are an inevitable part of ecommerce, and managing them effectively is crucial, both for customer satisfaction and your cost management. DTC businesses need to figure out the right processes for handling returns, including efficient reverse logistics and effective customer communication. Things like automated returns management systems, hassle-free return policies, and optimized product packaging can minimize the impact of returns and increase customer loyalty. And that directly translates to success: a study by Invesp revealed that a 5% increase in customer retention can lead to a profit boost of 25-95%.?
Learn more about these industry trends and challenges by downloading the full ebook.
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New Fulfillment and Logistics Ecosystems: How Technology is Shaping the Sector
There’s no avoiding it: modern technologies like artificial intelligence, robotics, blockchain and even augmented reality are changing the DTC fulfillment game completely.
These innovations have the potential to revolutionize operations, driving efficiency, accuracy and customer satisfaction. So, let’s dive into the latest technology trends that are reshaping the landscape of fulfillment.
Artificial Intelligence (AI) ??
Achieving perfect order fulfillment is the holy grail for DTC, 3PL and B2C companies. But with complex supply chain and warehousing challenges, ensuring flawless delivery experiences can be a daunting task. That’s where AI steps in as a game-changer. Research by Gartner predicts that by 2024, more than 50% of warehousing activities will use AI to make processes run more efficiently. After all, AI-powered robots can pick, pack and sort items, and machine learning algorithms can analyze data to optimize inventory levels and predict demand.
AI can also be used to optimize delivery routes and schedules, reducing delivery times and costs. And by analyzing real-time data, AI can help identify and prevent potential supply chain disruptions such as delays or stockouts (a continuing pain point post-pandemic).
Robotics ??
A game-changer in warehouse operations, robotics is rapidly becoming the go-to for automating manual tasks and optimizing processes, with 4 million commercial warehouse robots to be installed in over 50,000 warehouses by 2025. Autonomous mobile robots (AMRs) navigate the warehouse floor, picking and transporting goods while minimizing errors and maximizing productivity. Working with these robots can even help employees increase their speed and accuracy.
Blockchain ??
According to a McKinsey report , a single shipment can require up to 50 sheets of paper exchanged between 30 different stakeholders. That’s why blockchain is making waves in the world of fulfillment and logistics. By encrypting transactions and storing them in a decentralized digital leger, blockchain serves to drastically cut down data mismatch and loss—which means faster turnaround times and lower delivery costs. Smart contracts, which are self-executing agreements, can automate tasks like triggering payments or initiating shipments when specific conditions are met. Like a digital backbone keeping everything in check, blockchain technology is one of the biggest opportunities to improve transparency, security and traceability in warehouse management and fulfillment operations.
Augmented Reality (AR) ??
A staggering 63% of operational costs within the warehouse space can be attributed to order picking alone. AR headsets—or mobile devices equipped with AR apps—provide workers with real-time visual guidance in a whole new way, improving picking accuracy and speed. With AR, workers can instantly access digital instructions that show the location and quantity of items to be picked, minimizing errors and reducing training time.
Given the efficiency of robotic automation, the real-time insights provided in the cloud, the transparency and security offered by blockchain, and the enhanced productivity of augmented reality, DTC warehouses must look to the future, or risk getting left behind. As global ecommerce expands, WMS solutions that are cloud-native, agile, and designed to help you build and scale at high volume will be worth their weight in gold.
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