Business is booming for e-commerce retailers according to a new global market study. But getting goods to buyers is creating huge headaches. Only half of e-tailers are happy with their fulfilment operations.
By MediaStreet Staff Writers
Business is booming for e-commerce retailers according to a new global market study announced today by Peoplevox, an e-commerce Warehouse Management System (WMS) provider.
The report found sales of 82% of the e-commerce and multichannel businesses taking part had increased in 2016, with only 6% reporting a decrease in orders. While many voiced concerns over increasing competition, Brexit and currency fluctuations, the majority (88%) expected a further increase in orders during 2017.
Despite such positive results and the generally upbeat outlook for this year, only 53% of respondents said they were happy with their fulfilment and warehouse operations.
Purchasing and Forecasting was highlighted as the most common challenge overall with almost a quarter (24%) saying this was the one area requiring the most improvement in 2017.
Furthermore, many of those businesses questioned (63%) admitted to not always shipping on time with 34% citing the unavailability of stock being a key reason. When it comes to rectifying shipping errors, the majority (80%) appear accepting of the additional carriage, customer service and warehouse labour expenses as an inevitable cost of order fulfilment. 1 in 5 admitted to not knowing the cost of shipping mistakes.
A majority (78%) of businesses also found meeting the additional demand for orders at peak times an ongoing challenge in 2016, with just over half (52%) resorting to hiring temporary staff. Paying overtime to existing staff and pulling in staff from other parts of the business were other common solutions.
While 62% of respondents said their business used a WMS, 70% of those that don’t ‘will not’ or ‘may not’ implement one in 2017 for reasons such as complexity, unclear benefits, or believing their business just isn’t ready. A significant minority (30%) said they still rely on their ERP/e-commerce platform for managing the basics of warehouse management.
However, specific business challenges or key IT events appear to impact directly on a retailer’s decision to invest in a dedicated WMS platform. 40% stated that an increase in picking errors was the main reason they would or had implemented a WMS while other common reasons included sales growth, warehouse expansion, or the implementation of new e-commerce platforms or ERP systems. Just over 10% said poor online ratings had also inspired a move towards implementing a WMS.
Commented Jonathan Bellwood, CEO, Peoplevox said, “While it is encouraging to see so many survey respondents reporting continuing sales growth, which is broadly in line with figures for the online retailing sector as a whole, our report has identified a number of growing pains. These will become increasingly challenging for businesses as they continue to expand rapidly.
“First and foremost, in this super-competitive era of E-commerce Fulfilment retailers can no longer afford to paper over the cracks. With expectations of next day/same day delivery, customers just won’t accept the apparent inability of online businesses to accurately ship on time, every time, or inadvertently sell items that just aren’t available. These fundamental warehouse and fulfilment issues need to be addressed before they grow into more serious problems that may risk customer loyalty, cause increases in the number of returns, a failure to maximise available sales opportunities, and an escalation in avoidable overheads.
The full report can be downloaded by clicking here.