5 Steps to Creating a Profitable Same-Day Fulfilment
The same-day delivery market is forecast to double over the next three years. According to a survey by Gatepoint Research called «E-Commerce Strategies in Today’s Enterprises,» 40% of retailers are focusing on this as one of their 2022 priorities. And according to the 2022 Bringg Barometer: State of Retail Delivery & Fulfillment, 99% of retailers are aiming to offer this service within three years. While we see ever-increasing customer demand for quick delivery, as evidenced by the explosion of fast-delivery grocers and tie ups with Uber Eats and DoorDash, delivering this profitably remains a challenge. For many retailers, the focus has been on the last mile but now the focus needs to shift to the first step.
Step One: Right Inventory in the Right Location
In order to meet customer needs, retailers need to understand their customers’ expectations better. To provide this service, inventory must be close to the customer therefore stores are fast becoming a key part of the digital experience. But what merchandise needs to be where? For many retailers, store planning remains store-focused but the impact of online must now be considered. How should stores be laid out to support buy online, pickup in store that requires efficient in-store picking? Are there items that need to be held in back-room for ease of collection? What assortment is needed for the omni-channel shopper?
As the fulfillment network gets more complex, the key is intelligent demand forecasting capabilities, which understand different shopper journeys. What a customer wanted to purchase from one location but had to travel elsewhere to get becomes important to understand. Historically, demand and supply were aligned but in the complex world of omni-fulfillment, different actions are needed to ensure the right products are located in the best place to maximize inventory, reduce risk and improve the customer experience.
Step Two: Enhance the Shopper Experience
For a number of years, the consumer started their shopping journey through one channel and ended it through another. In-store and online experiences need to be seamless. Over the past few years, shoppers have expected to see item availability before they go to a store, something that took on an even greater importance during the COVID-19 pandemic. However, most websites still do not make it easy for customers to see stock levels and personalized delivery options as they shop. This is a must, not only for the customer but for the retailer. Rather than showing items are out of stock, you can easily advise a customer of a nearby store that has availability. Rather than making wide delivery promises, you can show exact delivery times tailored to that shopper improving both conversion and satisfaction.
According to Blue Yonder’s 2022 Consumer Sustainability Survey, nearly half (44%) of consumers said their interest in shopping sustainably increased since the start of the pandemic. This can include holding inventory closer to the customer to reduce emissions or offering green delivery options to consolidate orders in the most effective way. In this way, online shopping can provide significantly more sustainable options than visiting a mall.
Step Three: Flexible Fulfillment Network
The distributed network of the future is a mix of warehouses, micro-fulfilment sites, dark stores, and the extended use of the store footprint. Inventory will be held at third parties, sold through marketplaces or drop-shipped. The need is to fulfill close to the customer with the flexibility to orchestrate by order. We are already seeing growth in smaller footprints, highly automated micro-fulfillment centers, and the use of robotics, cobotics, smart storage and autonomous vehicles. While fast delivery will grow, not every item is needed immediately so retailers need to ensure they can deliver with the right mix of speed, cost and convenience.
Step Four: Intelligent Order Decisioning
With a more complex network comes the need for intelligent order routing. Historically transportation cost was the biggest driver, but the answer today is broader. For example, what if a location has an over-stocked item that is about to be marked down. Maybe the product should be prioritized to distribute or if a location had labor shortages maybe it needs to be deprioritized. These decisions need to not only be intelligent, but they also need to be dynamic and made in real-time. Retailers need to deliver on their promise and leverage technologies that can evaluate these complex decisions in milliseconds, which can integrate with last-mile providers and IoT solutions to understand real-time insights.
Step Five: Efficient Fulfillment
In this distributed network, ensuring that you have the right resources to manage these activities is key. Demand forecasts can help understand the number of items that need to be picked, the optimal ways to organize a warehouse, and the right number of workers needed. Orders need to be picked, packed and collected efficiently. Visibility is needed throughout the process to understand delays and resolve issues. In-store collections need to be efficient. And finally, the last mile must be effective. Optimization of fleet and drivers and efficient routing are imperative. Clear communication to the customer is crucial, taking into account any delays and avoiding missed deliveries. And let’s not forget customer service. For many consumers, the delivery driver is the only person they come into contact with through the whole process, and they are part of your brand. Delivering profitable fulfillment is complex but with the right processes and technologies, retailers and customers are already seeing benefits.
Many retailers still do not feel they have effective omni-channel processes and as we move into a “Commerce Everywhere” phase, the complexity will only increase. The need to streamline the organization with seamless omni-channel structures and end-to-end accountability, supported by new intelligent, real-time technologies, is critical to provide the level of service customers expect in a sustainable, profitable manner.
ASDA is one example of a retailer delivering a game-changing retail transformation through the Blue Yonder Luminate® Platform to accelerate further customer centricity, from first to last mile. Blue Yonder’s Category Management and Luminate Demand will ensure the product inventory in the right location. This will work seamlessly alongside Blue Yonder’s Luminate Commerce and Warehouse Management solutions driving intelligent order orchestration fulfilled efficiently from all locations. Blue Yonder is helping retailers every day to create the right end-to-end unified commerce process from first step to last mile.