In 1999, E-commerce sales accounted for only 1% of the total retail sales in the US. In 2017 it was more than 9% (a 3,000 percent increase). Over the last four years, the sales increased by 13 – 16%, which outpaced traditional retail sales, which are generally between 1% & 5%. The industry has estimated that e-commerce sales will reach 17.5% of retail sales by 2021 for the entire world.
So E-Commerce is on the upswing. How has this affected transportation and logistics in the Fulfillment industry?
- Many 3PL’s have adopted “Just-In-Time” Inventory Principles. Keeping the right amount of stock in the correct warehouse that is close to the destination.
- Vendors will get fined if they cannot deliver in their promised window.
- Carriers must deliver with faster turnaround times, even though they still have to deal with traffic, congestion, and weather.
- Drivers and truckers are in high demand, with low availability. Outsourcing has helped to grow the delivery channels. For example, one company XPO has gone from grossing $175 million to the largest logistics provider in NA with revenue over 15 Billion
- New Regional Hubs are emerging near airports, train depots, and interstates, to accommodate the higher demand.
- New types of services have emerged, such as White Glove service for furniture and large items. The supplier will offer extra service add-ons such as Installation or Assembly.
- The Majority of customers surveyed feel that delivery speed is the most crucial factor in choosing a product.
It can be hard to keep up with the constant changes in the Fulfillment Industry. The most important things to remember are:
- Customer Loyalty – make sure you provide continuous improvement and invest in the equipment and technology as needed. This will ensure that your customers continue to use your services and recommend you to other companies.
- Positive Customer Experience – meeting your SLA’s and quick response to customer communication will help to ensure your customers will stay happy.
- Aligning Warehouse Space with Needs - Don’t overcommit to warehouse space. It will end up costing you your profit margins. Make do with less, and keep turning inventory rather than storing lots of pallets that don’t move.
- Price Yourself Right - Know what your overhead and labor costs are, and make sure you are covering your expenses and charging your customers accordingly.
Follow these simple guidelines to help your company to stay on the right side of E-Commerce Growth.