Ecommerce Fulfillment Demand Rebounds Post-Lockdown
E-commerce reverse logistics is estimated to grow at a rate of more than 20% per year. Retail accounts for 40% of logistics demand, with ecommerce fulfillment comprising 30%-40% of this sector. The Role of Ecommerce in Logistics and Retail Retail constitutes approximately 40% of the overall logistics demand, with ecommerce fulfillment accounting for 30% to 40% of retail logistics.
In May, the demand for ecommerce fulfillment experienced a significant rebound, coinciding with a surge in online sales following the COVID-19 lockdown. This rise in demand underscores the growing importance of ecommerce fulfillment in the logistics and retail sectors.
The Role of Ecommerce in Logistics and Retail
Retail constitutes approximately 40% of the overall logistics demand, with ecommerce fulfillment accounting for 30% to 40% of retail logistics. As a result, ecommerce fulfillment has become a central topic in the field of Supply Chain Management, with publications such as the Supply Chain Management Review (SCMR) dedicating specific sections like the "E-commerce Fulfillment Fastlane" to explore its various aspects.
The "E-commerce Fulfillment Fastlane" covers an extensive range of topics including sourcing, procurement, inventory management, risk management, global trade, and more. It also provides resources such as podcasts, webinars, and white papers, enhancing the understanding of ecommerce fulfillment among industry stakeholders.
Advancements and Challenges in Ecommerce Fulfillment
Over the past decade, ecommerce fulfillment services have advanced significantly in both scope and sophistication. This progress is driven by the increasing demand for direct-to-consumer ecommerce, which continues to grow at unprecedented rates. Retailers are now pushing logistics providers to offer services that prioritize speed, flexibility, choice, cost, and overall customer satisfaction.
Despite these advancements, ecommerce fulfillment presents challenges such as margin pressure on logistics companies due to business-to-consumer (B2C) deliveries to residential addresses. The rise in consumer expectations for fast shipping, influenced by companies like Amazon offering one-day and same-day fulfillment, adds to these challenges. To address these demands, ecommerce sellers are strategically positioning inventory closer to customers to reduce shipping times and costs.
Innovation and Investment in the Fulfillment Sector
Fulfillment providers are increasingly investing in digital platforms that offer end-to-end supply chain visibility, integrated order management solutions, and personalized analytics. This includes tailoring services to brands, retailers, and marketplaces through hybrid models like 'dark stores' and showrooms.
Companies such as CEVA Logistics are investing heavily in new fulfillment centers and warehouse automation technologies worldwide. Similarly, UPS has made substantial investments in automation to enhance digital connections with customers, increase fulfillment center efficiency, and integrate fulfillment processes with final-mile delivery solutions. These investments are complemented by the integration of robotic warehouse technologies, such as autonomous mobile robots (AMR) and automated guided vehicles (AGV), with warehouse execution systems (WES), labor management systems (LMS), and warehouse control system (WCS) software solutions.
The Future of Ecommerce Fulfillment
The future of ecommerce fulfillment is poised to evolve with a focus on better service levels, more efficient shipping options, reduced carbon emissions, and the development of new, greener, and more cost-effective delivery technologies. As ecommerce fulfillment continues to be a pivotal aspect of supply chain management, global sourcing and manufacturing will remain crucial components of a frictionless supply chain.
As supply chain salaries and job satisfaction rise, the industry is expected to harness the power of artificial intelligence (AI) to further enhance the efficiency and effectiveness of ecommerce fulfillment. The ongoing evolution of ecommerce will require continued investment in innovative technologies and the adaptation of business models to meet the changing expectations of consumers.
E-commerce reverse logistics is estimated to grow at a rate of more than 20% per year.
In summary, the rebound in ecommerce fulfillment demand post-lockdown highlights the sector's critical role in modern logistics and retail. As the industry continues to adapt and innovate, it will play an increasingly vital role in shaping the future of global commerce.