Study: Retailers experiencing e-fulfillment growing pains
Retailers are thrilled with their surging online sales, however the same can’t be said for associated fulfillment operations.
Business is booming online as sales across 82% of e-commerce and multichannel businesses increased in 2016. Only 6% reported a decrease in orders. While many voiced concerns over increasing competition, Brexit and currency fluctuations, the majority of companies (88%) expected a further increase in e-commerce orders during 2017.
This was according to “The 2017 E-Commerce Fulfillment Report,” from Peoplevox, a warehouse management system (WMS) provider. The report is based on 154 respondents from a variety of countries, including the United Kingdom, Ireland and the United States. Participants work for multichannel retailers; online only, or marketplace resellers.
Despite such positive results and an upbeat outlook for 2017, only 53% of respondents said they were happy with their fulfillment and warehouse operations. Purchasing and forecasting was their most common challenge overall, with almost a quarter (24%) saying this one area required the most improvement in 2017.
A majority of businesses (63%) admitted to not always shipping on time with 34% blaming unavailable stock for the hiccup. When it comes to rectifying shipping errors, the majority (80%) said that additional carriage, customer service and warehouse labor expenses as an inevitable cost of order fulfillment. Only one in five admitted to not knowing the cost of shipping mistakes.
A majority (78%) of businesses also found meeting the additional demand for orders at peak times an ongoing challenge in 2016, with just over half (52%) resorting to hiring temporary staff. Paying overtime to existing staff and pulling in staff from other parts of the business were other common solutions.
“While it is encouraging to see so many survey respondents reporting continuing sales growth, which is broadly in line with figures for the online retailing sector as a whole, our report has identified a number of growing pains,” said Jonathan Bellwood, founder and CEO, Peoplevox.
“In this super-competitive era of e-commerce fulfillment, retailers can no longer afford to paper over the cracks,” he added. “With expectations of next day/same day delivery, customers just won’t accept the apparent inability of online businesses to accurately ship on time, every time, or inadvertently sell items that just aren’t available.”
While 62% of respondents said their business used a WMS to improve operations. Specific business challenges or key IT events impacting retailers’ decisions to invest in a dedicated WMS platform, one of the most popular was an increase in picking errors (40%). Other common reasons included sales growth, warehouse expansion, or the implementation of new e-commerce platforms or ERP systems. Just over 10% said poor online ratings had also inspired a move towards implementing a WMS.
However, 70% of those that don’t use a WMS, ‘will not’ or ‘may not’ implement one in 2017 citing reasons such as complexity, unclear benefits, or believing their business just isn’t ready. A significant minority (30%) said they still rely on their ERP/e-commerce platform for managing the basics of warehouse management.
“These fundamental warehouse and fulfillment issues need to be addressed before they grow into more serious problems that may risk customer loyalty, cause increases in the number of returns, fail to maximize available sales opportunities, and escalate avoidable overheads,” Bellwood said. “For those still without or delaying investment in the latest technology, the availability of affordable, fit for purpose e-commerce fulfillment solutions now makes it easier than ever to equip their warehouses with the tools necessary for maximizing productivity, accuracy and profitability.”