As a result of the COVID-19 pandemic, retailers saw e-commerce revenue as a percentage of total revenue increase by 33%, according to a new survey released on Dec. 7 by Blue Yonder.
The report, Future of Fulfillment Research Report, also found that 27% of retailers added fulfillment centers to meet this need.
However, problems persist as retailers are struggling with a number of issues including stock availability, profitability, visibility and accuracy, as well as labor scarcity and a lack of fulfillment automation.
Increase of Fulfillment Networks
Looking at fulfillment networks, the reports showed that since March more than a quarter (27%) of retailers increased the number of fulfillment centers in their logistics networks, and half (50%) have centers dedicated to e-commerce order fulfillment.
Compared to other vertical categories, drug store/health & beauty retailers (41%), and grocery retailers (40%) increased the number of fulfillment centers to meet e-commerce needs.
While (71%) cited that they expanded their logistics network to meet increased e-commerce demand and nearly half (46%) cited that they needed to be closer to the consumer to reduce the cost to fulfill and enable delivery speed and convenience.
Out-of-Stocks Continue
More than half (51%) of retailers cited out-of-stocks as their biggest fulfillment challenge driven by the pandemic. Inventory accuracy is critical, along with the ability to view enterprise and third-party vendor inventory across locations and suppliers.
One reason for retailers being out of stock is that 55% of consumers are stockpiling according to a recent survey from Blue Yonder. And this translated to grocery retailers being more likely to cite out-of-stocks (66%).
Other challenges for retailers are increasing delivery costs (54%) and reliable order fulfillment (36%).
Maintaining mandated social distancing practices or safety protocols (36%) and worker scarcity (34%)are other issues that retailers are having to contend with. Drug store/health & beauty retailers were also more likely to be challenged with maintaining mandated social distancing practices or safety protocols (43%) than any other product category.
All of these conditions create a need for increased automation as well as orchestrate omnichannel fulfillment, the study concludes.
Only 29% of retailers rate their current order management solution as ‘excellent’ for meeting omnichannel fulfillment needs, and just y 14% reported that their fulfillment locations are automated today. However, half of retailers (49%) who cite all revenue is from e-commerce have automated fulfillment locations today.
“Traditional distribution order management approaches are dead,” said Eugene Amigud, group president product management, Blue Yonder. "As retailers grapple with the new reality of shopper convergence on one shopping channel – e-commerce – they must also expand automation, inventory accuracy and real-time visibility, as well as order promising intelligence to profitably get products to customers on time,” said Eugene Amigud, group vice president, product management, Blue Yonder. “Retailers must go beyond traditional order promising to advanced, omni-fulfillment capabilities embedded with automation and artificial intelligence to instantly pivot, adapt and refocus to deliver the personalized experience consumers expect – all critical to success.”
