We, at EcommerceNext, recently did an interview with Johannes Panzer from Descartes about the trends in inventory and fulfillment management. Here is what he had to share with us:
1. How will the recession impact the e-commerce industry as a whole in 2023?
- Consumers and merchants alike are becoming more cost-conscious. E-commerce
companies will lean into strategies, tactics, and technologies to keep operational and
fulfillment costs down while protecting margins and focusing on the customer
experience. - With macroeconomic uncertainties, leading e-commerce organizations will require quick
decision-making and the ability to pivot to specific product assortments and marketing
strategies that can accompany rapid growth.
2. Is there an e-commerce trend you’ve been hearing about/coming across recently that you predict will continue into 2023? If yes, what is it? Please explain further what the impact on the industry will be.
- E-commerce merchants are keen to convert visitors to their online channels into
purchasing consumers—and purchasing consumers into lifetime customers, as the more
a retailer can keep customers coming back, the lower the customer acquisition costs
are. - Part of the strategy for increasing conversions is understanding buyer personas
based on customer purchasing habits. While buyer personas are familiar territory for
retailers, many miss the opportunity to build delivery personas that reflect the delivery
preferences of their customers. Delivery personas help retailers to improve service and
reduce fulfillment costs to maximize top- and bottom-line performance.
Last mile benchmark studies have identified five basic delivery personas:
1. It’s All About Money: These customers are extremely cost-sensitive and will choose
the slowest delivery option if it saves them money.
2. Parcel Mentality: Typical parcel deliveries (e.g., books, apparel, household wares) are
fast, but not necessarily “time definite” at the point of purchase. These customers enjoy
a fast delivery cycle and are happy for the package to be left at their doorstep at any
point during the day.
3. Convenience Matters: These customers prioritize a precise time window over speed;
they often need their goods on a particular date and time and value the convenience of
knowing the delivery will arrive at the scheduled time of their choosing.
4. Timing is Everything: Time-poor and cash-rich describe this delivery persona. These
customers want their delivery ASAP and are unwilling to wait around all day for it. Most
importantly, they’re willing to pay a premium for quick delivery within a tight time
frame.
5. Sustainability First: This emerging persona describes customers seeking eco-friendly
delivery options.
3. The logistics industry as a whole struggle with employee retention. Do you have any advice for leaders looking to reverse attrition?
- Merchants struggle to find warehouse labor for a variety of reasons; for example, they
may compete for workers with other industries that dominate their region, or they may
be located in a metropolitan area that is crowded with employers. - Others have gotten creative: PackAngels, the e-commerce fulfillment unit of German logistics service provider ANCLA Logistik, leverages its proximity to a university for access to a great pool of students—and they make it easy for students to apply via a WhatsApp group chat.
- Other merchants in rural areas look to leverage people in their town by offering a
nearby place of employment and the opportunity to work for a local company.
Warehouse labor is an area to focus on with respect to retention. When picking, staff
often cover many miles, day after day, in the process of fulfilling orders. - To reduce the physical strain on the team, route-optimized picking provided by an IT-based e-commerce fulfillment solution can make work in the warehouse much more
efficient—in fact, it can reduce walking distance by 90% per employee! - Instead of just picking one order at a time, each employee can pick 4, 8, 16, 20 or even more orders at the same time, depending on the range and composition of the customers’ shopping
cart. - This multi-order-picking strategy significantly reduces the time needed to fulfill
orders, thus resulting in shorter put-through-times. This plus in efficiency is extremely
valuable, especially when ecommerce companies face a (seasonal) peak they must
navigate. - The reduction of picking errors is also a goal when trying to increase employee
satisfaction. Manual processes often result in incorrectly picked items during the order
fulfillment process, which then immediately results in additional “mileage” in the
warehouse (when the mistake is being discovered during order fulfillment) or in an
increase in inquiries with customer service, when customers follow up on the erroneous
shipment. - The use of a mobile device with barcode scanning can make for a paperless
picking process, which ensures items are picked correctly. Scanning the barcode on an
article checks directly during the picking process that the right item is picked.
4. What’s your advice for retailers when it comes to inventory and fulfillment management during peak times for reverse logistics?
- Automation is key! Incoming returns should be made ready for sale again quickly and
with the least amount of effort or, at the minimum, sorted effectively. Modern
warehouse management systems incorporate a mobile application that enables image-
supported picking, receipt of goods (based on supplier orders), storage, retrieval, and
relocation. - In particular, returns can be processed efficiently and quickly using the
mobile app, including photo documentation and automated information to customer
service. Through scans and manual entries, the warehouse employee can carry out the
steps from receipt of the return to removal or restocking, while the associated
processes in accounting, payments and customer service run in the background. - After scanning the item, the app immediately displays the next stored process steps for the warehouse worker. This creates a high degree of standardization, resulting in a speedy, reliable, and productive returns management process.
5. Which kinds of digitization across the supply chain are some of the most crucial to e-commerce, and why?
- According to a recent study of 1,000 supply chain and logistics decision-makers across
nine European countries, Canada and the United States, the top two digitization
initiatives, where respondents were focusing their efforts, were order fulfillment (47%)
and customer experience (45%). - High performance in both of these areas is critical to e-commerce success as accurate, timely fulfillment translates into a positive customer experience, which, in turn, can foster brand loyalty and repeat purchases. As companies grow and daily order volumes increase, technology plays an important role in fulfillment performance through automation, such as with pick and pack processes as well as with parcel shipping and delivery.
6. Retaining customers will be key as we kick off the new year in a recessionary landscape. Please suggest a few different ways brands and retailers can differentiate themselves.
With the help of an e-commerce-enabled WMS, processes for e-commerce merchants
and their customers are much more streamlined, resulting in higher customer
satisfaction:
1. Item Availability: The real-time synchronization of stock in the warehouse with
inventory displayed online guarantees item availability in web shops.
2. Quality: Overselling errors are prevented, and customers have a reliable,
positive buying experience.
3. Transparency: Customers are informed about the status of their orders via real-
time tracking throughout the entire customer journey—from the point of
purchase to delivery to the front door.
4. Accessibility: Technology not only drives direct-to-consumer (D2C) transactions
but also facilitates the emerging need for connect-to-consumer (C2C)
interactions and channels, providing consumers with the opportunity to deepen
their engagement with online brands at any time.
Transparency and quality are already basic requirements for being able to survive as an
online shop in the highly competitive ecommerce market. Diversification is becoming
increasingly important to stand out from competitors and to help ensure long-term
ecommerce success, including diversification in product range, price, and service as well
as in sourcing and in carrier choice.
