Ecommerce fulfillment in the New Normality
The pandemic is rapidly changing our behavior towards network channels, so changes are likely to persist after a pandemic.
While many companies are challenged to survive within the short term, the crisis also presents an opportunity. Bold companies that invest ambitiously and timely in their online business are likely to emerge as market leaders.
We are now all learning the way to manage the business in a different world.
What has changed in twelve months?
Due to the pandemic crisis, companies have fallen into one of two categories, people who don’t do anything, hoping such deception won’t ever happen again, and others who heed the teachings of the crisis and make investments in mapping their supply networks.
There is an unspoken feeling among many that we may see Coronavirus regrowth in the short term.
This could lead to a greater focus on social distancing and personal hygiene, which will discourage people from shopping at brick-and-mortar stores and encourage continuous online shopping.
Every business has found a way to sell online
Businesses without online stores have been forced to adapt and move their bricks online. In the era after COVID-19, companies will not make identical mistakes twice.
Creating a functional website where consumers can spend as protection against a new potential outbreak will be crucial to determining success.
The most successful E-commerce companies hold onto their supply chains firmly
Some companies were forced to shred orders as demand increased, and delivery promises of 2-3 days grew to 2-3 weeks.
Massive delivery delays were a significant side effect of the onset of COVID-19, and lots of companies failed to anticipate the mere impact on demand as they might see it.
From globalization to regionalization
Logistics hubs will re-emerge at the regional level. To eliminate single-source dependencies and to ascertain a versatile and adaptable supply chain, product integrators, sub-system suppliers, and component suppliers will source, assemble and deliver from their backyards.
Today, large equipment manufacturers source about 40% of their parts from China, including sub-assembly. Given the incredibly high number of components required – each with different lead times – a return to regional supply chains presents a very complex challenge. However, that challenge could be worth taking within the post-COVID world.
We have seen the impact of world sourcing within the pharmaceutical industry in Europe, which has imported 80% of the active components for its drug supply from China and India. Within the post-COVID future, it’s entirely expected that European governments would ensure they might draw these supplies from their region. Accordingly, we could soon see a purposeful shift to regional sourcing.
COVID-19 boosts ‘Buy Online, Pick up In Store’
As E-commerce grows, many retailers encourage customers to contemplate cheaper shipping options like BOPIS to keep these costs under control. Charges related to both last-stage delivery and returns can have a significant impact on retail margins.
Digital initiatives like BOPIS are essential for big-box sellers during the pandemic. Some retailers have announced significant plans to expand these initiatives after recording 300% digital growth annually. A raise in BOPIS orders by 208% April (y / y) is another sign that people try to cut back their exposure to the Coronavirus by reducing the time spent in the store. BOPIS traffic increase under normal conditions creates a chance for added purchases and allows customers to return the product in the store.
E-Commerce order fulfillment centers have put many new protocols in place to ensure their warehouse operations stay up and running. This is critical because even just one case of a worker testing positive for the virus can force a warehouse and all its fulfillment operations to stop until proper sanitizing is done.
DHL started to use contactless delivery methods, such as leaving deliveries at your door, online shopping (BOPIS), and setting up intelligent lockers. These are some of the ways that are becoming more common for the security of all parties involved.
They maintained their daily schedule to avoid holding, while many other logistics companies could not sustain their international business.
But everything is not as it seems. DHL planted its pockets with “hidden fees.” A law firm in Vancouver will file a lawsuit against DHL, claiming that the courier giant profited by falsely presenting some of the fees it charges customers.
According to the proposed collective action filed by B.C. Last week, the Supreme Court, North American operations for DHL’s express courier service, required customers to pay additional fees for receiving their packages by submitting claims that were “false, misleading and deceptive.”
UPS and FedEx are experiencing delays in domestic deliveries and transit times. FedEx is additionally suspending its money-back guarantee and is waiving signature-on-delivery service in most countries. UPS is also waiving signature-on-delivery service in some countries.
The U.S. Postal Service (USPS) is also making changes – temporarily suspending international mail acceptance to pick out countries because of service impacts associated with COVID-19.
Online players like Amazon are making adjustments to their delivery policies for the US, UK, and EU markets.
Some online retailers began taking 1.5 days longer than usual to fulfill orders, and the efficiency went down.
What we can learn from the Past Pandemics
The e-commerce industry has already almost doubled on an annual basis compared to 2019. Even after COVID-19 has subsided, people will subconsciously avoid risk by not going shopping in person.
3PL, which has proven its ability to respond to demand jumps and help scale its customers, is invaluable.
Hold intermediate inventory or safety stock
Suppose alternate suppliers don’t seem to be immediately available. In that case, a company should determine what proportion of extra stock to carry in the interim, in what form, and where along the value chain. Of course, like all inventory, safety stock carries with it the chance of obsolescence and ties up cash. It runs counter to the widespread practice of just-in-time replenishment and lean inventories. Still, the savings from these practices should be weighed against all the prices of an interruption, including lost revenues, the upper expenditures that would have to be paid for materials that are briefly delivered, and the time and energy required to insure them.
Owned E-commerce channels will play a more significant role than before
When Amazon focused solely on delivering only essentials, it left Amazon-dependent sellers relying on their fulfillment services in the dark. It is still worthwhile to sell on multiple marketplaces, but people who sell on their site will manage better and might need tremendous success being independent.
Shopify’s dominance will continue to grow and will pose an increasing threat to Amazon’s share of the e-commerce market.
In the period between March and June 2020, Shopify made significant progress in its strategic partnerships. This collaboration will enable Shopify to achieve a more substantial market share compared to the e-commerce giant Amazon.
The economic turmoil caused by the pandemic has exposed many vulnerabilities in supply chains and raised suspicions of globalization.
Managers everywhere should use this crisis to observe their supply networks, take steps to grasp their vulnerabilities, and enhance robustness. They can’t and shouldn’t retreat from globalization; doing so will leave a void that others—companies that don’t abandon globalization—will gladly and quickly fill. Instead, leaders should find ways to create their businesses work better and provides themselves an advantage. It’s time to adopt a brand-new vision suitable to the realities of the new era — one that also leverages the capabilities that reside around the world and improves resilience, and reduces the risks from future disruptions that are absolute to occur.