Every day, technology improves in ways that we couldn’t have imagined 20 years ago. This is as clear as ever in the supply chain industry, which is undergoing some massive changes as we head into the new decade. For that reason, we’ve got our eye on a handful of fulfillment trends that we think will change the way business works in 2020 and the years that follow.
1. Same-Day Delivery and Pickup
If you’ve been online in the last couple of years, you’ve probably noticed the rise of next-day delivery. Big players like Amazon and Walmart are obsessively working to cut the time between order and delivery. Online shoppers keep expecting orders to ship faster and faster, and small businesses are scrambling to keep up. This trend is not likely to go away any time soon.
So what does this mean for you, a small business owner? There are a handful of takeaways.
First, it’s more important than ever to have professionals handle fulfillment. More than anything, customers care about quick, reliable shipping. Giving customers a shipping date like “3 days” is a lot better than giving them a shipping date of “3-5 days” because of the certainty.
Second, fulfillment companies need to ship orders the same day they receive them. The delay in time to fill orders is one of the most preventable causes of slow shipping.
Lastly, it’s not sensible for every business to split their inventory between dozens or hundreds of warehouses so that low-cost, next-day shipping is always possible. That requires large amounts of inventory than many businesses don’t have. This will, however, likely pressure postal carriers like USPS, UPS, FedEx, and DHL to further speed up their operations without driving up cost. Only time will tell.
2. The Gradual Improvement of Last-Mile Delivery
Take a moment to imagine this scenario. You order a product online from a gorgeous website. The process is so clear and easy and the product is a good one. It’s shipped in two days.
Then a careless delivery driver just throws the package on your porch and ding-dong-ditches you.
This is not uncommon. Another common issue is that packages are stolen, lost, or delayed at the last step of the fulfillment process. These are all problems associated with last-mile delivery, or the movement of goods from a carrier’s local transportation hub to its final destination.
So with this in mind, here is what we think will happen in the future.
As customer expectations increase, businesses will have no choice but to go with carriers who have a good track record for fulfillment. We also expect that more businesses will soon have access to more data, allowing them or fulfillment companies working on their behalf, to select the best carriers. Meanwhile, carriers will be forced to compete on quality as businesses make more informed decisions. Who wins in this scenario? Both consumers and small businesses!
3. The Rise of Micro-Fulfillment
Grocery stores have become keenly interested in the fulfillment industry. It makes sense, too. Going out of your way to drive to the store to pick up a few basics seems oddly passe in an age where anything can be ordered online. We see the impacts of this everywhere from curbside pickup to the rise of apps like Instacart.
At the same time, stores are seeking to store common items in very small warehouses. Those items can then be picked and packed by robots and shipped to customers within an hour or two. At least, that’s the theory.
It will take some time before micro-fulfillment is viable and, indeed, it will only make sense for some industries, such as groceries. Remember: items have to be extremely common and readily available for this kind of fulfillment to make sense. We’re betting the Whole Foods, Walmarts, and Krogers of the world will figure it out before 2030, though, so we’re watching with keen interest as micro-fulfillment develops as an industry.
4. Wider Adoption of Robotics & Automation
Speaking of robots, we’re going to see more of them. In fact, we wrote a post about this not too long ago.
- Fully robotic order fulfillment is still going to take a while, but partial robotic fulfillment is already in widespread use.
- Robots can help with heavy lifting and walking long distances. Human judgment is still critical for many warehousing tasks, though.
- Amazon already employs robots in 26 of its 175 fulfillment centers.
- Demand for robots for order fulfillment is soaring.
- There is a persistent labor shortage in the warehousing industry, and robots help with that.
We’re not going to be living in an Issac Asimov or Philip K Dick novel anytime soon, but robotic technology is definitely on the rise. It won’t be too long before robotics in warehousing are widespread.
5. The Push for Real-time Data
Supply chain management is incredibly complex. Just think about everything that goes into shipping a product to your doorstep:
- Companies have to plan for demand to make sure that manufacturing is worthwhile in the first place.
- They have to manufacture goods.
- These goods then have to be transported via freight to a fulfillment center.
- Items have to be unloaded and stored, all while making sure their location is known for later.
- Once ordered, items have to be retrieved from storage, packed, and shipped to the customer.
- Then carriers have to use complex routing to make sure the customer receives the package.
All of this requires an incredible amount of data on a scale that is difficult to imagine. There is a growing push for fulfillment to be faster and more local. That means the data behind fulfillment needs to be very detailed and updated frequently.
The importance of data in the 2020s cannot be understated. We think Digital Commerce 360 says it eloquently:
As consumer expectations around shopping experiences and acceptable delivery times continue to put pressure on retailers, it’s crucial that organizations are positioned to meet these needs, and analytics can better inform strategies and decision-making practices both in the marketplace and in the warehouse.
6. The Continuing Growth of eCommerce
Last but far from least, eCommerce is continuing to boom. According to Shopify, eCommerce sales are expected to grow from 7.4% of all global retail sales in 2015 to 22% of all global retail sales in 2023. To put specific dollar amounts on that, think of it this way:
- Retail sales were $23.0 trillion globally in 2017. They are expected to be $29.8 trillion globally in 2023.
- That means eCommerce sales are expected to go from $2.4 trillion in 2017 to $6.6 trillion in 2023.
That’s exponential growth! We see no reason why eCommerce growth would slow down after that either. The internet will continue to become more accessible and more people will start shopping online. Shipping is expected to become faster as the technology and business processes improve.
It’s a really good time to be in eCommerce. Yes, standards are higher than they’ve ever been before. Customers expect much more than they used to. Yet opportunities still abound simply because the market is so huge and still growing.
Final Thoughts on Fulfillment Trends in 2020
Technology will improve. Business processes will streamline. Customers will expect more, but they will also buy more. Though it’s not without substantial challenges, the future of the fulfillment industry is a bright one.