Fresh Strategies for Rebuilding Retail
E-commerce retailers construct new partnerships and processes to enhance operations, brick by brick.
As e-commerce sales continue to climb, retailers seek ways to keep pace, filling orders promptly while controlling costs. That's true for retailers that sell entirely direct-to-consumer, for omnichannel companies with extensive brick-and-mortar footprints, and everyone in between.
In fact, 14% of retailers responding to an October 2020 ResearchScape International survey conducted for supply chain services company Blue Yonder had fully automated their fulfillment centers, with another 21% planning to do so in the next 12 months.
E-commerce retailers also use many other strategies to improve customer service and increase efficiency. For example, they implement software to provide visibility and support better decision making, outsource fulfillment to logistics partners, and use alternative fulfillment strategies such as drop shipping.
Let's see some of those strategies in action.
Titan Brands: The Power of Paired Software Solutions
When an e-commerce customer wants a large, heavy item delivered fast, express shipping is rarely a cost-effective option. Since many of its products are large and heavy, Memphis-based Titan Brands uses alternative strategies to shorten the fulfillment cycle.
Titan consists of four branded organizations: Titan Fitness, Titan Attachments, Titan Great Outdoors, and Titan Ramps. Its sales are nearly all direct-to-consumer, and it currently fills orders from two facilities in Memphis and one in central California. To get product closer to more customers, Titan will soon open a fourth facility, in Pennsylvania, and it plans to add one or two more in the coming years.
"We're looking at how to reach 95%+ of the U.S. population in a two-day delivery time frame," says Jeff Hill, Titan's director of global supply chain.
Titan also seeks to boost speed and efficiency with two new software solutions, the Enspire Commerce order management system from enVista of Indianapolis, and the Körber Warehouse Management System (WMS) from Körber, whose U.S. headquarters are in Minneapolis.
When an order is placed, Enspire calculates how long it will take to deliver the product using different delivery options, including an economy option that comes with free shipping. It also determines how to fulfill the order, based on factors such as distance to the customer from each warehouse, inventory available at each site, and available capacity with different delivery services.
Tapping into Inventory Data
Enspire bases these calculations in part on inventory data in the WMS. "That includes inventory that's physically on hand and then, more importantly, in transit," says Ken Mullen, strategic account director at enVista.
With that visibility, Titan can fill orders for products that have not yet arrived in a warehouse, and tell customers when to expect those items.
Next, Körber's WMS develops picking instructions based on each customer's chosen fulfillment speed, using a "waveless picking" strategy, Hill says.
The system processes expedited orders immediately but holds back economy orders for a day or two, accumulating enough to make picking efficient.
"You're looking at the cost of the picks, compared to the price being charged, and optimizing accordingly," Hill says.
Besides setting priorities for picking, the WMS plans the necessary labor. "It applies the algorithms to correctly plan labor for the day-of, making choices around those priorities," says Rik Schrader, senior vice president of sales at Körber. "It also forecasts for performance efficiency based on what will happen in the future."
As of July 2021, Titan planned to take the new systems live in California in mid-August and then add the Pennsylvania and Memphis facilities at a rate of one per month.
Titan is also gaining efficiencies by adding new technologies to the inbound side of its warehouse operations. It is currently implementing a system called Destuff-IT, from Engineered Lifting Systems and Equipment of Elmira, Ontario, to cut the time needed to unload a trailer, getting product into inventory faster.
"In our California warehouse, where we tested it, they were originally able to unload two containers by hand daily," Hill says. "With the new system, they were easily able to increase that volume to five containers daily."
Decathlon: Changing the Game With Robots
French sporting goods company Decathlon has been using goods-to-person robotics technology to increase efficiency in some of its e-commerce operations in Europe. The company's Canadian business, based near Montreal, also will implement that technology, from Exotec North America, at the end of 2021.
Decathlon Canada operates eight retail stores, with three more under construction. Its e-commerce business, on an annualized basis, has increased tenfold since the start of the pandemic.
"The growth has put a lot of pressure on our supply chain and logistics team to respond to wildly variable demand levels," says Jaylone Lee, the company's chief marketing officer. "In terms of e-commerce deliveries, there have also been challenges in maintaining service level agreements for pick, pack, and shipping timelines, all while managing customer expectations."
The Canadian business decided to implement Exotec's Skypod system based on the company's experience with the technology in Tilburg, the Netherlands, says Mathieu Masson, logistics and warehouse leader at Decathlon Canada.
Goods-to-person systems, which transport product from multilevel storage locations to warehouse associates, let companies store more inventory in a smaller footprint and increase worker productivity, says Rudi Lueg, managing director at Exotec North America, Atlanta.
Exotec's Skypod improves on the traditional goods-to-person model with autonomous robots that can travel from one aisle to another, and to any level, to retrieve a tote filled with product.
That means the warehouse doesn't need to install shuttle equipment on every level in every aisle. A retailer can start by investing in just enough robots to meet current demand. "If they then grow and need more throughput, they can just buy additional robots," Lueg says.
Keeping Pace with Growth
Decathlon Canada looks to Skypod to help it keep pace with the company's rapid e-commerce growth.
"The objective is to increase warehouse staff productivity in our Montreal logistics center by automating low value-added and time-consuming manual tasks involved in order preparation," Masson says. Employees will no longer have to walk many kilometers per day to pick orders.
"We also expect this automated solution to help us be more agile in responding to the seasonal variations that can exist in the Canadian sporting goods market," Masson adds.
When the system goes live in Montreal early in 2022, it will include approximately 30,000 stock locations, 50 robots, and five packing stations. Those numbers could increase as Decathlon Canada continues to grow.
"We expect the solution being installed in partnership with Exotec to evolve over time," says Masson.
Browze: Warehouse? What Warehouse?
Common knowledge holds that e-commerce consumers want orders delivered fast. So retailers scramble to shave as many hours as they can from the fulfillment cycle.
But some e-commerce retailers pursue a different kind of consumer, one who is willing to wait for a product in exchange for a lower price.
One example is Browze, a Toronto-based startup that offers unbranded home goods, fashion accessories, jewelry, toys, and other products, all made in Asia and drop-shipped to consumers from the factories.
"Most of retail is racing to deliver product faster and faster," says Izzy Rosenzweig, Browze's founder and CEO. "We're going in the other direction."
Today, Browze sells mainly to customers in the United States and Europe, plus some in Canada. In the next year or so, it expects to start expanding into other parts of the world, such as Australia and South America.
Browze holds no inventory. Instead, when a customer orders, say, a decorative solar lantern, Browze transmits that order to the factory, which packages it for shipping by an airfreight company.
Each of those air carriers puts thousands of packages on a plane at one time. In the United States, companies such as UPS, the U.S. Postal Service, or DHL handle final-mile delivery.
Customers might receive purchases in as few as eight to 15 days, although Browze makes a more modest promise, with a money-back guarantee that shipments will arrive within 45 days.
Customers pay shipping on orders less than $25, but the cost is small. For example, an order for that solar lantern placed on July 7 would have arrived by August 10, according to Browze's website, with a $1.95 shipping cost.
Although Browze's model doesn't require any fulfillment facilities, the company operates a logistics center in the United States and one in the U.K. to receive returned products and direct them to secondary markets.
"If a product arrives damaged, customers don't even need to send it back," Rosenzweig says. "They just take a picture of it, and they get a full refund."
Hyper-Focused on Quality
Browze isn't the only e-commerce retailer that uses drop-shipping, but Rosenzweig says his company does something different from its competitors, maintaining a hyper-focus on quality.
"We have a team in China that visits our suppliers, and audits their warehouses and the products," he says. "We do our own photography and copywriting. We're involved in the logistics side, making sure they're using only good carriers."
Browze also monitors delivery performance, tracking how long orders take to arrive and the average time for delivery by country. If a factory doesn't meet its service level commitments, Browze works with it to get at the root of the problem, whether that involves transportation, a supply issue, or another cause.
But ongoing problems could prompt Browze to drop a supplier. Says Rosenzweig: "We will always protect the customer."
Gymshark: Outsourcing for a Wider Footprint
While some e-commerce companies enhance their internal operations, others collaborate with third-party logistics partners to increase efficiencies. That's what Gymshark, a British direct-to-consumer vendor of workout wear, is doing as it expands in North America.
Since 2019, Gymshark has outsourced its fulfillment in Canada to Radial, an omnichannel fulfillment and technology company based in King of Prussia, Pennsylvania. In July 2021, Radial added Gymshark to its multi-client fulfillment center in Rialto, California.
To prepare for the 2021 holiday season, Radial will soon also start serving Gymshark from facilities near Columbus, Ohio, and Allentown, Pennsylvania. Gymshark recently opened a North American headquarters in Denver.
Before Radial entered the picture, Gymshark shipped orders to North American customers from Europe. Service was good, but there was room for improvement, says Chris Ormonde, operations director at Gymshark in Solihull, U.K. "If we really believed in providing the best customer promise to Canadian and U.S. customers, we couldn't continue to do this from Europe," he says.
Canadian customers used to wait a week or longer for their orders. Then Radial started to fulfill those orders from its multi-client facility near Toronto. "Now, customers only have to wait anywhere from one to four days for their orders," Ormonde says.
As Radial brings the three U.S. locations online for Gymshark, it will start using its Radial Order Management System to route U.S. orders efficiently, says Saurin Mehta, senior vice president of fulfillment services at Radial North America.
For instance, if a customer in the Midwest orders three items, the system will determine which facility should ship that order based on factors such as inventory levels, distance to the customer, and available transportation options.
The process is designed to give consumers a fast, seamless experience. "It wants to optimize and make sure we don't split the packages," Mehta says.
Inventory Solution Pops Up
When Radial starts fulfilling Gymshark orders from Ohio and Pennsylvania, one of those operations will be a "popup" facility, designed to meet the end-of-year demand surge.
"We put that inventory into a popup facility for a short time, hire the labor, and run the processes in order to be able to pick, pack, and ship the orders," Mehta says. "Then three or six months later, we close that operation."
"Popup sites allow us to get orders out to customers quicker and take pressure off labor and carriers by spreading the demand out over more sites," Ormonde says. But Gymshark also expects to invest several million dollars in automation for the Allentown site to support larger volumes over the longer term.
"The aim for our first year is for all customers to receive their orders within three days on a standard service, with a large percentage of customers getting them within one to two days, depending on location," Ormonde says.