E-commerce has shaken up supply chains, prompting merchants to move away from single central distribution facilities to multiple warehouses located close to large consumer markets. Brick-and-mortar retailers have been forced to embrace online selling and multi-channel delivery concepts, but some are also looking to find faster ways to get their goods to consumers and manage inventory levels more proactively.
US retail chain Target has devised a strategy to speed up the replenishment of inventory. It has configured a warehouse in New Jersey as a ‘flow centre.’ From there it feeds merchandise to its stores in New York more frequently than before and in smaller quantities, which is intended to minimize the time between order and delivery.
The new approach has the additional benefit of allowing Target to reduce the space needed for storage without risking bare shelves that might send consumers to competitors’ venues.
The flow centre ties in with Target’s strategy of opening smaller stores in densely populated environments. These stores carry a smaller array of products based on information what customers in these particular areas tend to shop for. This approach requires flexibility and speed.
SEKO Logistics, which focuses largely on the retail sector and has worked extensively with e-commerce and multi-channel delivery models, sees changes in consumer attitudes and shopping behaviour that are having profound ramifications for retail logistics. Brian Bourke, vice president of marketing, predicts that delivery will become cheaper and faster for consumers, and it will become more local. He also sees a greater role for new technologies like voice control. Furthermore, retail will have to offer consumers omni-channel options.
Free delivery has been widely accepted as a given. Bourke pointed to a survey of consumers in Britain that showed 94% were more likely to purchase an item online if delivery was free. With orders in excess of a certain price, many expect free delivery.
Notwithstanding the emphasis on low or no delivery charges, consumers do not want to wait for their products, Bourke noted. One survey found that 40% of respondents would pay for next-day delivery, he remarked, adding that Amazon’s Prime offering shows that consumers are willing to fork out more for shorter transits.
Fast transit time expectations are challenging for the final mile, he pointed out. Quick deliveries require that products are available locally and that they can be packed and dispatched in a speedy fashion. Retailers must have real-time visibility of their inventory, and they have to be able to deliver orders ad hoc multiple times throughout the day.
Another trend is the increasing propensity of shoppers to shop from nearby locations. They tend to look for local options on their mobile devices and often visit a store within a day. Some retailers offer consumers the option to reserve an item without payment for collection at the store the next day. If items are out of stock at a location, consumers can be alerted when the item is available again.
Increasingly consumers use voice recognition technology for their online searches and purchases. Hence they will likely expect the rest of the transaction to be maneuverable by voice, which is pushing logistics providers to integrate this technology in their customer-facing elements, Bourke said.
Some merchants have begun to deploy new technologies like augmented and virtual reality in their online shopping options, such as virtual trials of make-up or trying clothes for size. Bourke also sees a role for augmented reality in logistics to help workers locate packages or to better plan warehouse layouts. SEKO already uses 3D load optimization software for optimized stock replenishment and it is researching the use of drones in warehouses, he remarked.
To create a consistent customer experience across all channels, retailers have to work closely with their logistics providers and share data with them, Bourke stressed. This calls for visibility across communication channels and real-time fulfillment options in the logistics arena, he said.
To protect information and keep customer data safe, retailers and logistics firms should employ a secure technology like blockchain, he reckons.
Blockchain would also go some way to eliminate multiple data entries, which are still far too abundant in today’s logistics, Bourke finds.
Ticking off as many of these boxes will become increasingly important for logistics firms, as retailers are less inclined to use multiple logistics partners. “More and more retailers want a one-stop solution,” Bourke said.
By Ian Putzger
Correspondent | Toronto
