Online retail sales are expected to buck the trend because of the confluence of new technologies, new entrants and new consumer demands. With annual sales totaling US$3 trillion globally, and growing in strong double digits, it has huge implication for retail.
What can we expect for businesses in Asia, the region with the fastest e-commerce growth in the world?
• Omni-channel world
As consumers want to buy what they want where they want and when they want with relative ease, omni-channel retail is becoming the new norm. In recent years, brick and mortar retailers have gone online to reclaim markets lost to e-retailers. More recently we have seen online retailers opening up shop fronts to bolster their brands and improve the customer experience. Amazon – the bye word for e-commerce – made its first bricks and mortar move in 2015 when it opened its first physical bookstore, Amazon Books, in Seattle in 2015 and has since expanded across America. It then acquired Whole Foods in a $13.4 billion deal, allowing Amazon to own 460 stores U.S., Canada and Britain almost overnight.
• Increasing complexity in order fulfilment
Order fulfilment has increased in complexity, as delivering to the store and to individual customers cannot be more different. Supplying B2B to stores involves periodic delivery cycles, relatively limited order lines, many items per line and a targeted number of delivery addresses, whilst B2C is characterised by rapid, ad-hoc deliveries of small quantities at short notice.
As Kevin Kuntz, Senior vice president, global logistics fulfilment of American apparel retailer Gap Inc, told attendees at the Manhattan Associates Momentum conference, it took three years for Gap to overhaul its distribution centres (DCs) to fulfil increasing online orders.
We can expect increasing complexity going forward as delivery windows are becoming increasingly shorter.
• Multiple DCs
Consumers want their orders to be delivered fast, within the same day or the next day, accurately and on-time, but without having to pay additional costs. To slice hours off from the receipt of customer orders to product delivery without knocking a huge dent in the company’s bottom-line, we expect the shift towards multiple fulfilment centres to accelerate. The DCs will have to be strategically located near population centres to address challenges posed by last mile delivery.
• Higher degree of automation
Given the challenging fulfillment requirements, warehouse automation is inevitable, even in countries with low labour costs. Not only are stock keeping units (SKUs) in DCs increasing in multiples, DCs must also have the flexibility to accommodate both daily demand as well as major peaks like Singles Day or Black Friday, handle a variety of orders, etc
There are many solutions available to provide different levels of increased productivity and improved accuracy, including miniloads, conveyors, carousels, shuttles, automated guided vehicles and robots. But as the DC’s handling throughput passes 1 million SKUs per day, it demands a different kind of system.
We are witnessing the emergence of a new solution using sortation technologies targeted at the 1 million plus units per day. Frequently referred to as pocket sortation or pouch sortation, it uses the overhead circulation conveyors as the primary load carrier. As it completely automates the wide variety of e-commerce warehouse functionality, including the buffering, sequencing and sortation of orders, high performance asynchronous picking is achievable especially when supported by the right software.
SSI Schaefer has in its intralogistics solutions suite the SSI Carrier which can achieve throughput of 10,000 load carriers per hour. The intelligent and modular pouch sorter system is capable of transporting items weighing up to 3 kgs, from shoes to household goods to electronic devices. It also effectively integrates returns making them immediately available. The system is supported by nextgen software, which provides unified control via a centralised warehouse execution system.
Such a development is of course in view of the strong understanding of various needs by the different market sectors. Being one of the leading intralogistics solutions provider, SSI Schaefer sees continuous research and development as one of the top priorities. And so, it is our mission to continue developing new solutions that suitably fit market requirements.
A competent solutions provider who can help you Think Tomorrow, will therefore certainly put you at ease on how to equip your DC to meet the future challenges.