White Paper - Fulfillment 2.0: Tackling the Seven Critical Fulfillment Challenges of eCommerce

DeliveryBoy

Internet technology continues to evolve at such relentless speed that we all now carry a complete shopping mall in the mobile phones in our pockets.  What is now referred to as Web 2.0 has propelled online shopping at 18% annual growth to about $200B a year in North America, with similar numbers overseas.  What's needed to keep that growth going is a way to fulfill all those orders as fast and inexpensively as the web itself.  What's needed is Fulfillment 2.0 

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Introducing the eCommerce Seven:

  1. Cycle Time: Internet retailers must satisfy consumer demand for instant gratification with next day delivery (even same-day delivery) while keeping operating expenses (OpEx) low.
  2. Accuracy: Unlike retail replenishment, direct-to-consumer order accuracy affects both customer satisfaction and order cost-an incorrect order is not just a lost sale, it is a lost customer. In addition, manual processing of returns can erode margins, and traditional efforts to increase accuracy often increase OpEx.
  3. Flexibility: Your Marketing Department changes product offerings, new categories and SKUs are added all the time and today's hot items are often tomorrow's obsolete inventory.  Existing material handling processes that are perfect for one SKU may be a poor fit for the next hot category.
  4. Scalability: Online retailers are challenged to have the right capacity at all times because hypergrowth increases market churn and makes forecasts less and less accurate. Nevertheless, the fulfillment operation must be able to accommodate changing throughput demands.
  5. Long-tail Inventory: SKU proliferation is relentless. Internet retailers need to support an ever-increasing selection of merchandise that typically includes many very slow moving items. How can you support fast movers and slow movers at the same time without clogging your process?
  6. Seasonality: Most eCommerce sites must accommodate seasonality (bathing suits in the summer, mittens in the winter) and changing styles of merchandise, along with high peak-to-mean throughput variation.  But, traditional reslotting processes increase OpEx.
  7. OpEx: Did we mention the importance of keeping OpEx low?  Without a distinctive in-store experience to differentiate how your firm delivers goods to consumers, competition is based more on price….and that puts a spotlight on your costs.