E-commerce has been growing at a tremendous pace in recent years and the trend will only continue. As more and more people switch to online shopping, the demand for efficient and effective warehouse management is also increasing. This article looks at what factors are driving the changes in e-commerce, what this means for warehouse management and how warehouses can facilitate the growing requirements.
What does the future of e-commerce look like?
Figures from Statista, a leading provider of market data, global e-commerce sales equated to approximately 5.2 trillion USD – this number is expected to rise to 8.1 trillion USD by 2026. This exponential growth can be attributed to several factors, including the widespread use of smartphones, digital assistants, social media (both as a promotional tool and more recently as a purchasing platform) and the internet in general, as well as the increasing adoption of e-commerce platforms by businesses of all sizes.
One of the most significant changes that we are likely to see in the future of e-commerce is the increasing use of technologies such as artificial intelligence (AI) and machine learning (ML) to provide a personalised and seamless shopping experience to customers. E-commerce companies are already using AI and ML to analyse customer data and make personalised product and service recommendations and this trend is likely to develop even further.
Thanks to digital assistants like Alexa and Google Home, consumers are now able to order products just by using their voice. When an account is properly set up, someone can order or re-order a product simply by saying “Alexa, order more toilet roll” or “Hey Google, repeat my last order of printer paper”. When a digital assistant already has your billing and delivery details, and all a customer needs is to give the instruction, it becomes easier than ever to make a purchase and add more boxes to a warehouse’s thoroughfare.
There is also the rise in chatbots to consider; chatbots are computer software designed for the benefit of conversing with users, answering common questions and performing some functions. As well as giving faster answers than having the customer wait for a human assistant, chatbots are also able to analyse a shopper’s on-site browsing history and make personalised recommendations, increasing customer satisfaction and the likelihood of purchase.
An increasing number of websites are offering Buy Now Pay Later services, with notable providers including Klarna, PayPal Credit and Shop Pay from Shopify. Apple has also announced its Apple Pay Later which allows users to split purchases into four payments. Customers having easier access to credit schemes removes barriers to purchase and will increase the number of orders generated.
Augmented reality is also becoming more popular for both businesses and consumers; prospective customers can use the IKEA Place app to place virtually-created life-size furniture in their homes to understand how a certain table, sofa or another piece of furniture might look in a given room. Being able to visualise how certain products look in certain situations means customers can get a better feel for the item before purchasing, which may mean fewer items are returned in future.
Outside of technology, there is the customer expectation of next-day or even same-day delivery. Gone are the days of ordering from a catalogue and waiting 6-8 weeks for delivery, customers will place an order and expect almost immediate delivery. Such is the extent of this expectation that estimated delivery time can determine where a customer takes their business, so those that can’t keep up often lose out.
There is also an increasing focus on sustainable business operations, and for e-commerce one of the big changes is in packaging. E-commerce behemoth Amazon has taken steps to improve its approach to packaging, doing this through minimising materials, eliminating packaging where possible, using more sustainable materials and using machine learning to better identify how to pack products so as to use fewer materials, all while maintaining a standard of protecting the product. All sorts of warehouses can take cues from this approach.
Impacts on Warehouses and Warehouse Management
The growth of e-commerce will have a significant impact on warehouses and warehouse management. As more and more people shop online, the demand for warehousing space will only increase, and warehouses will need to become more efficient in how they store products and how they operate in order to meet this demand.
One of the key challenges that warehouses face as e-commerce continues to grow is the need to manage a large number of SKUs effectively, as well as the need for faster and more accurate order fulfilment.
Implementing predictive analytics helps warehouses forecast demand and subsequently optimise their inventory levels to meet customer demand and minimise delivery disruptions.
Warehouses will need to adopt automated storage and retrieval systems (AS/RS) and other technologies such as robotics and drones to improve efficiency and reduce costs. Further efficiency tactics also include utilising IoT (Internet of Things) and Sensor Technologies to automatically monitor inventory levels; they can also keep track of temperature and humidity levels, ensuring stock is kept in optimum conditions.
With customers expecting their orders to be delivered quickly and accurately, warehouses will need to adopt technologies such as barcode scanning and RFID to track inventory and improve order accuracy.
Environmental pressures are causing all sorts of industries to foster more sustainable practices, and warehouses are no different. There are a number of ways warehouses can be more environmentally friendly, including:
- Using energy-efficient lighting
- Using renewable energy sources
- Improving insulation
- Adopting sustainable packaging
- Optimising transportation routes of delivery drivers
- Implementing green supply chain practices.
E-commerce companies will also need to adopt a more customer-centric approach to warehouse management. This means that warehouses will need to be designed and optimised to meet the specific needs of customers, such as offering same-day or next-day delivery options, providing real-time order tracking, and offering flexible return policies.
How can Optima help?
Our Optimiser Warehouse Management System (WMS) is designed to increase the efficiency in warehouses, making them more equipped to handle the continual increases in goods storage and dispatch as a result of e-commerce’s ongoing growth.
Optimiser WMS creates intelligent paths through your warehouse so your team can pick and pack orders in the most efficient way, it also helps optimise the storage space in your warehouse and the barcode readers mean your team can achieve 100% pick accuracy.
Get in touch today to see how Optima can help your business.