Fulfillment must evolve at the speed of eCommerce and, in recent years, that evolution has gained momentum. The past several years’ supply chain disruptions have shown businesses that innovation is critical. Your fulfillment operations need to stay one step ahead, or else you put your business continuity at risk. Smart enterprises use automation and big data to increase efficiency and speed up their customer order cycle time.
In addition, as eCommerce has grown as a share of retail, consumers demand and expect more. They want personalized and memorable unboxing experiences. Besides that, many consumers value sustainability, so environmentally friendly order fulfillment is a vital element that builds brand loyalty.
A crucial factor in the future of fulfillment is the growing dominance of third-party logistics. Outsourced fulfillment hubs will be incubators for new practices and improved logistics, driving innovation in the fulfillment industry.
Specifically, here are six trends that will drive the future of fulfillment:
1. Automation will add speed and efficiency to fulfillment operations.
Automation in fulfillment isn’t new. Amazon has used robots and drones to augment its human workforce for years. However, as eCommerce grows and more warehouses open, 3PLs need more labor to pick and pack orders. Look for automation to play an increasingly central role in filling gaps and speeding up order fulfillment processes.
Automation will also be a trend driving the adoption of third-party fulfillment solutions since the expense of high-tech solutions makes more sense when implemented at scale. Expect 3PLs to add sophistication to their warehouse management system (WMS) software. WMS software innovations will analyze pick and pack cycle time to determine optimal picking methods and use bar codes and RFID to increase picking accuracy, among other innovations.
2. Software platforms and big data will continue to level up inventory management.
Inventory management and forecasting are essential to eCommerce success in an era of unpredictable supply. ECommerce businesses can collect data at every step of an order. The future of fulfillment will include harnessing that big data to uncover sales trends, pin down restock time and reorder levels, and analyze supply trends to develop inventory plans to protect against shortages.
Fortunately, as inventory management software becomes more powerful and user-friendly, even small companies can take advantage of big data. You don’t have to be an engineer or a math whiz, and there will be no spreadsheets involved. Instead, you’ll be able to create reports and draw actionable analyses from your inventory management platform.
In the past, inventory management could be a time-consuming process that involved a great deal of manual labor. While there’s still no substitute for periodic physical counts, innovative apps allow you to automate formerly manual calculations and draw more powerful insights from the data.
3. Personalization will drive brand loyalty.
The personal touch is critical to customer satisfaction and loyalty, so fulfillment is an excellent place to build a connection with your eCommerce customers. Brands will use personalization through the fulfillment process to stand out from their competitors in the future.
For example, order management software could generate not only a unique packing slip but also a personalized note to go in the package, using your brand voice and addressing the customer directly. The software might store shipping and delivery preferences so your customer feels recognized and catered to on return purchases.
Fulfillment warehouses can assist in the personalization process by kitting gifts or marketing offers. Kitting is the process of assembling grouped items ahead of time, and the kits get a new SKU that’s added to the picklist. You can use kits of coupons, offers or samples tailored to different customer profiles to make your customers feel valued and to drive repeat sales.
4. Dropshipping will take on new forms and new importance.
Dropshipping is an eCommerce model in which sellers offer items for sale online without purchasing stock or holding inventory. The dropshipping manufacturer sends the product directly to the consumer.
The traditional drop shipping business model gives eCommerce startups an easy way to offer a broader product range while bootstrapping their business. However, major retailers have teamed up with brands to turn dropshipping on its head.
It works like this: Big box stores like Walmart and Target offer many items online that they don’t stock in their stores. When customers order those SKUs, the manufacturer handles the direct-to-consumer fulfillment. This benefits the retailers, which can offer many more products in their online stores without investing in retail or warehouse space for those items. Brands get to add new sales channels, capitalizing on the reach of major retailers to reach more consumers.
In essence, retailers’ websites have begun to function as a hybrid between a traditional online store and a marketplace, like Amazon. So, the future of fulfillment must include dropshipping logistics in an omnichannel environment that serves many sales channels.
5. Sustainability will drive everything from packaging to delivery to returns.
Building sustainability into your supply chain and fulfillment is an imperative, not a choice. Consumers reward companies that can demonstrate green practices, and business choices that reduce environmental impact are often money-savers as well.
Sustainability starts with packaging and infill. Kraft paper, cornstarch packing peanuts and molded cardboard box inserts are effective and sustainable infill options. In the future, more 3PLs will add solar panels, reducing the carbon footprint of fulfillment operations and providing a selling point for your brand.
One of the most significant opportunities for future sustainable practices are green returns. Reverse logistics has been eCommerce’s dirty secret: Many returned items are trashed rather than resold or repurposed. A slew of articles in recent years has brought to light the fact that liberal returns policies from some eCommerce brands have led to waste and dumps filling up with unwanted mattresses and other large items.
Returns policies are an essential element of eCommerce. Consumers need to know that they can easily return items that don’t meet their expectations or don’t fit—that’s what gives them the confidence to buy a product without seeing it first. However, knowing that their returns might end up in the trash may discourage people from making an online purchase in the first place. If your brand can tell a positive story about your reverse logistics that involves reusing or upcycling returned items, that can become a powerful selling point.
6. Brands of all sizes will have more choices to outsource fulfillment.
The final trend underpins all the other fulfillment trends and will, in part, drive logistics innovation: third-party logistics. Global brands have increasingly turned to outsourcing as a more flexible and economical way to meet growing fulfillment needs. But the expansion of outsourcing isn’t limited to large online retailers that can command shelf space in vast warehouses.
The future of fulfillment will include warehouses set up to serve businesses of all sizes. Startups will be able to make a move from bootstrapping fulfillment from a garage to professional logistics much earlier. Small sellers will have more options to outsource fulfillment, freeing them to become digital nomads. More specialized 3PLs will spring up to serve crowdfunding campaign fulfillment, localized food deliveries and other niche fulfillment needs. The ability to leverage LTL freight to ship larger items will grow, and 3PLs can help online businesses navigate freight rates for oversized shipping.
Soon, you’ll have more choices of warehouse location and a broader menu of available fulfillment services.
In summation, the future of fulfillment will be driven by a need for fast turnaround, accuracy and customization. As eCommerce gains prominence, eCommerce companies will need to hold fulfillment companies to higher standards. And that will be a win for the entire industry.
