E-commerce has already had a significant impact on warehouse operations and that impact will only increase as e-commerce continues to be the fastest growing segment of the economy. Global retail e-commerce sales are expected to reach $3.9 trillion dollars by 2020, up from $2.3 trillion in 2017.
At the same time, customer expectations for delivery are changing, with two-day delivery now the norm on e-commerce orders. This is forcing fulfillment operations to compress cycle times and provide more options in terms of delivery and cost. A survey of e-commerce retailers by Temando found that 43 percent of retailers drove increased revenue by offering better choices in e-commerce delivery. Among enterprise retailers, 33 percent reported a reduction in cart abandonment when offering more shipping choices, while 50 percent of mid-market retailers experienced increased sales.
The choices consumers now expect are not limited to shipping. Retailers, both traditional and e-commerce, are realizing that consumers want choice across their entire shopping experience. They want to be able to research products online, evaluate products in brick-and-mortar stores and purchase, take delivery and perform returns through either channel as part of a seamless experience now widely referred to as omni-channel.
This has caused traditional retailers to move aggressively into e-commerce and once “pure” e-commerce companies to establish a foothold in the physical world. The result is more complexity in product storage, picking and delivery as these companies seek to support e-commerce and omni-channel sales more efficiently without establishing parallel distribution networks.