E-commerce growth affecting the logistics, warehousing industries
E-commerce grows exponentially each year, which presents retailers with unique expansion opportunities and challenges. It also forces the logistics and warehousing industry to adapt with the growth. Studies show that the e-commerce market is expected to reach $1.5 trillion by the end of this year.
Technology already allows consumers to track their shipments, at least as the packages are checked in at handling facilities. More advanced technology allows companies such as On Time Logistics to know exactly where their couriers are located, letting them know if deliveries are running on time.
It’s easy to see how e-commerce can increase a retailer’s reach because customers no longer have to be in close proximity to a brick and mortar store location. E-commerce companies face with different challenges, however, as they must decide how to best fulfill customer needs in a timely manner.
Warehouses, because of their sheer size and technology requirements, are more expensive propositions compared to stores. It makes logical sense to construct more warehousing facilities to make quick deliveries more feasible but that also decreases profits because of the costs.
Personnel costs are another logistical consideration with e-commerce. Smooth fulfillment operations rely on technology, but also on skilled workers. Retailers must plan on recruiting and retaining a reliable and skilled warehouse workforce. A larger labor base is necessary whether a retailer chooses to build a larger number of warehousing and fulfillment centers across the country, or to push larger quantities of product through a smaller number of fulfillment centers.
How do retailers adjust to these higher logistics costs? The truth is, many accept smaller profit margins that come even after the company makes other cost adjustments to save money. No customer is going to accept higher prices for items purchased online and many expect free or reduced shipping for larger orders.
This is why it’s imperative for retailers to research their delivery and other logistics options. This includes finding the right 3PL provider such as On Time Logistics who has the technology and experience to manage their warehousing and fulfillment needs.