EXPLORING WAREHOUSE OPTIONS
Meeting the needs of e-commerce and brick-and-mortar retailers takes a variety of warehouse configurations and equipment to be successful.
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s the boom in e-commerce continues to transform today’s business environment, how should warehouses be structured to meet these demands for quick turnaround? Previously, one warehouse was built to handle store fulfillment, and another was built to handle strictly e-commerce orders. Retail stores were fulfilled via bulk shipments from the closest distribution center (DC), which could take anywhere from one to five days. E-commerce orders were filled from the e-commerce warehouse. Even if an online customer was located next to a retail-only DC, the order was shipped from the e-commerce warehouse, resulting in inefficiencies and greater costs. Filling e-commerce orders is a much different proposition than replenishing brick and mortar stores. Consumers are placing more frequent orders of smaller sizes to be delivered to their home or to another location for pick up. Many traditional warehouse operations are not set up to efficiently accommodate a
large range of orders with varying units. Instead, warehouses today need to be built to either process e-commerce orders or replenish store inventory, or be built to handle both. E-COMMERCE AND MULTI-CHANNEL WAREHOUSES Because of consumers’ Amazonian-mindset of instant gratification, the ability to quickly and accurately deliver an order to an online customer is an essential part of doing business in today’s fast-paced e-commerce world. Retailers that compete in this environment focus on their order picking processes to speed fulfillment and keep customers happy. Daily order volumes and order quantity can change frequently with seasonal and promotional peaks. Changing SKU velocity and SKU proliferation are challenges, too, especially if there is limited warehouse space. Regardless, the need for speed is essential to the success of the e-commerce warehouse operation. Multi-channel warehouses supply a mix of products to retail stores while
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also filling e-commerce customer orders. Fulfilling both store inventory and e-commerce orders from the same stock has its complexities, mainly because stores order in bulk, while e-commerce orders are smaller. However, having the ability to view the entire pool of inventory in real-time allows orders to be filled, regardless of the channel, eliminating the need to stockpile products in bulk storage. Retailers can quickly and accurately check inventory availability, giving consumers access to more products. Store replenishment and direct order picking can coexist peacefully. Stores can be used as fulfillment warehouses by shipping directly to consumers, often saving on transportation costs. Using stores for fulfillment also reduces the likelihood of out of stocks, increases sales, and eliminates the need to drastically mark down leftover merchandise at season’s end. To enable ship-from-store, retailers need to increase inventory visibility across all channels to ensure that each order is being fulfilled from the smartest location.