Fulfillment is Critical to Keeping up with Consumer Expectations

Published : October 13, 2014

consumer-expectations-ecommerceThe economy is slowly, but surely, on the mend, and consumers are starting to feel more confident in their purchasing—but not necessarily in brick-and-mortar stores. Retailers who want to take advantage of the rebound need to offer convenient shopping, i.e. a digital storefront, and fast deliveries.

That means having a well-positioned fulfillment center.

American consumers are increasingly turning to e-commerce, but they don't want to wait long for delivery.

We have a strange sort of consumer schizophrenia in the US. Even as buyers eschew the brick-and-mortar shopping experience, in favor of shopping from home over the Internet, they still demand the near-instant gratification they would have enjoyed in purchasing a product at a store and walking out the door with it. Simultaneously, they don't want to pay for overnight air shipments, if they can get away without it.

For coastal manufacturers or retailers, this can present a problem: with most American customers demanding quick and cheap delivery, storing inventory on a site far away from much of its expected delivery territory can lead to consumer flight.

That's why third-party fulfillment and pack and ship companies in the Midwest enjoy a tremendous market advantage: their central geographic location allows delivery, even by ground, in 1-3 days to the majority of the population of the United States.

3PL providers are savvy to the need for multi-channel sales support.

We're in a transition time, from a retail perspective. There are holdouts and traditionalists out there who doggedly cling to the brick-and-mortar model. There are also progressives who diligently adhere to an e-commerce first philosophy and preach the end of store-based retail. The reality, though (at least for now) is that the market has settled into a mixed-channel delivery system.

Retailers increasingly realize that they need to be able to manage inventory for all their sales channels— stores, websites, wholesale and otherwise— from one distribution hub. And the fulfillment industry has responded to that need.

If you are selling across multiple channels, you'll want to be sure to partner with a provider who can help you to manage inventory smoothly.

You want to be able to track store-destined inventory under the same system as your e-commerce inventory, and to seamlessly shift units from one vector to the other. Using a central distribution hub, you need not even really distinguish between the two. Your inventory is your inventory, regardless of how it ends up moving out the door.

You need logistical flexibility and smart positioning.

3PF providers are becoming increasingly good at re-routing or finding alternative methods of moving freight when unanticipated bottlenecks happen.

Part of this is due to industry investment in better real-time tracking tools. Some of it has to do with the resurgence in rail and the competitive nature of the air shipping industry, where major passenger carriers starved for fares are increasingly hauling freight to make flights profitable, thereby taking market share away from traditional freight-only carriers and driving down prices.

Many third-party fulfillment providers also recognize that retailers must focus their keenest attention on boosting delivery capacity to growing cities. Retailers are savvy; a retailer historically based in a location with a decreasing population— say, in Detroit— will see falling sales if it sits back and does not seek out growing markets in growing localities like Charlotte or Atlanta.

Rather than move their distribution points far away from older population centers and foregoing deliveries there, most retailers recognize the need to locate centrally, so that they can serve the needs of the growing market without sacrificing their traditional territories.

If there's one thing that market trends have taught, it’s that population centers go through booms and busts, and that positioning distribution points to be able to play to population shifts over the long-term is a better play than spending the capital to open a new hub every 10-15 years.

And a Midwestern fulfillment center is that strategically positioned distribution point.

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Topics: Supply Chain Logistics

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