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THE RETAIL FULFILMENT INDUSTRY — THEN AND NOW

E-commerce is on the rise, and the methods and trends in retail fulfilment have changed forever. There are many factors that have caused this shift, as consumers become more connected via the Internet, and demand more convenient choices and variety in products and services.

What used to be a standard transaction between retailer and customer is now much more complicated. Many traditional brick-and-mortar establishments are providing online services and are finding that last mile fulfilment — that part in the supply chain before it gets to the customer — can be tricky, indeed.

Retailers operating partially or completely online face challenges in navigating online payment services, delivery services, and large-scale warehouse operations. The retail fulfilment industry has moved from single channel to omni-channel, where the customer gets a seamless experience in purchasing an item on their mobile phone, computer or at a retail outlet, being able to select from a variety of payment methods, and can choose when and how they want the item to be delivered — at home, secure locker or local collection point.

A Win-win Situation

These may be daunting for retailers, but the benefits are clear — running an online store has much lower overheads compared to high rental and utilities costs that characterise running a physical store. These savings can be channelled into other avenues, such as social media marketing, or promotions for customers. Consumers also benefit from a better choice of products, which they can browse from the comfort of home. Early success stories in this industry such as eBay also entice more retailers to move online.

Technology is also on the side of the retailers. It is a huge driver for e-commerce as it is now easier to reach consumers online and sophisticated systems allow retailers to cope with a large number of transactions and last mile problems. One factor is growing Internet and mobile penetration, as more consumers spend time online.

Retail Fulfilment

The Power of Data

However, e-tailers need to find other ways of enticing consumers to change their habits and shop online. Here, the power of data comes in handy. The UPS Pulse of the Online Shopper study of more than 5,000 online shoppers in mainland China, Hong Kong, Japan, Singapore and South Korea found that 6 in 10 consumers have abandoned a cart when the wait till delivery is too long or unspecified, and 40 per cent want the convenience of receiving email or text delivery alerts.

In developing Asian countries with a predominantly cash-based economy, cash-on-delivery is a vital service. E-tailers such as HomeShop18 based in India offers these services due to local knowledge that consumers generally do not trust online shopping sites. They offer cash-on-delivery services for customers who wish to touch and feel the product before paying for it. The knowledge gained of regional and local customer preferences through studies and surveys has and will continue to help e-tailers achieve customer satisfaction.

Meeting Customer Needs Is a Team Effort

E-tailers also benefit from the growing number of third-party logistics (3PL) companies who ease the logistics and fulfillment headache they face as operations grow. Arvato Bertelsmann and Singapore Post (SingPost) have added many e-commerce solutions to their repertoire of services to help e-tailers in their day-to-day operations.

Arvato Bertelsmann has rapidly grown in their e-commerce-related services. It now offers consultancy, online marketing, and fulfilment services, and continues to grow the scope and depth of its services to meet the demand of omni-channel services. In February 2015, its IT systems arm, Arvato Systems, formed an alliance with CAS AG, and IOT GmbH to streamline customer, sales, and inventory data to be merged into a single matrix. In November 2014, it also opened a new logistics centre in Thailand to better serve emerging Asian markets.

SingPost has also made strategic alliances and rolled out new services to benefit e-commerce firms and have enlarged their presence in the Asia-Pacific region. SingPost started as the local postal service but has become a regional e-commerce facilitator. In April 2015, they introduced the cloud-based e-commerce fulfilment platform ezyCommerce to help small e-tailers in warehousing and delivery. This system helps to store and deliver goods in a warehouse where e-tailers can check and replenish stock remotely through a mobile app.

“By outsourcing fulfilment and delivery to SingPost, SMEs can better focus on business growth strategy and scale up their business across multiple marketplaces and countries without contending with fixed fulfilment costs, hence boosting both sales and productivity,” Dr Wolfgang Baier, SingPost Group CEO, elaborates.

In a similar vein as Arvato, SingPost acquired freight-forwarding company Famous Pacific Shipping (NZ) Limited in January 2015 to increase its capabilities in the Oceanic region. More companies, big and small, are getting involved in 3PL as the e-commerce industry grows.

The Future Is a Double-edged Sword

There are many emerging opportunities and challenges in the retail fulfilment industry. For example, crowdsourcing and “uberisation” are solutions as much as disruptors. Nevertheless, they are on the horizon and both retailers and fulfilment service providers would do well to embrace these new concepts. Companies like EasyVan and MyWays crowdsource freelance drivers to fulfil door-to-door delivery orders, but face challenges in screening and managing them.

Technology has aided the retail fulfilment industry in providing ecommerce solutions and growing a population of online shoppers. Its rapid advancement also brings a world of exciting possibilities for consumers, whose complex demands challenge the retail fulfilment industry to keep up.

Companies will need to keep disrupting in order to incorporate the latest trends and technology into their operations. The first one who makes the first successful move stands to gain the most.

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