Survey: E-commerce growth drives fulfillment transformation plans

Retailers are increasingly seeking to automate their fulfillment centers in response to increasing consumer adoption of e-commerce.

The second installment of the Blue Yonder Future of Fulfillment Research Report reveals that within the next 12 months, 50% more retailers, as compared to those who are currently fully automated, plan to fully automate their fulfillment locations to be best positioned to address consumer needs.

While the first installment of the report revealed retailers are having difficulty keeping their supply chains responsive to surging rates of e-commerce, the latest edition suggests that retailers are taking steps to remediate the situation. While 14% of respondents have automation across their fulfillment locations today, another 21% expect full automation in the next 12 months, representing a 50% growth. 

Almost one-quarter (23%) of retail executives expect to have most of their fulfillment locations automated in the same timeframe. And almost one in five (17%) drug store/health & beauty retailers currently have all fulfillment locations automated – more than any other vertical.

Over the next two to three years, retailers’ usage of pop-up DCs will double, rising from 12% of networks today to an expected 26%. Dark stores will double from a small base, growing from 6% of networks today to 12%; and micro-fulfillment centers will nearly double, rising from 15% of networks today to 27%.

About two-thirds (64%) of respondents currently provide buy online, pick up in store (BOPIS) services and contactless shopping, but usage of these offerings will decrease by roughly 8% over the next two to three years. With COVID-19 vaccine deployment, consumers are anticipated to return to stores, which could account for the expected decrease.
The study also revealed a number of interesting insights regarding respondent supply chain plans over the next 12 months:
•    The majority of respondents want to prioritize increasing existing capacity (43%) and improving labor productivity (42%).
•    Almost 40% of respondents want to improve picking processes (39%) and reduce warehouse/DC costs (38%).
•    Almost half (48%) of retail executives want to improve pricing and promotion to ensure profitability from market launch through markdown.
•    Almost two-fifths (38%) of respondents want to improve workforce management, including associate retention, employee engagement, and productivity.
•    Improving real-time inventory visibility and orchestration (36%) and assortment management (36%) to drive higher sales and margins across channels with localized customer insights, were listed as top respondent priorities.

Conducted in October 2020 by Researchscape International, the report analyzed responses from 300 senior executives across retail and e-commerce with responsibility for logistics and fulfillment operations in the U.S.

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