Between the accelerated industry growth sparked by the pandemic and steep customer expectations thanks to the “Amazon effect,” the stakes in ecommerce today are extremely high. Increased sales are a blessing for retailers, but many weren’t prepared for the massive demand in both outbound and reverse logistics.
Aside from the obvious financial setbacks, inefficient logistics can have a profound impact on customer loyalty and retaining quality employees. Let’s take a look at a few logistical pain points and how to solve them.
Picking and labeling errors.
So many orders, so little time. While the efficiency of a picking process is almost always measured by speed, there’s another important factor: accuracy. With DCs stretched thin as they try to keep up with demand, costly errors are on the rise. Order errors lead to customer returns, which adds additional strain on your warehouse and can quickly result in overall customer dissatisfaction.
To improve your process, look at the following:
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- People: Are there certain teams or individuals responsible for the errors? Where in the process are errors occurring? This could reveal 20% of the people are responsible for 80% of the defects and provide the opportunity to correct issues before they escalate.
- Training: Are you leaning on the same old training operations you had before the 2020 ecommerce boom? How can you update this process to reflect your company’s current needs and challenges?
- Floor Plan: In an ongoing effort to improve efficiency and limit mistakes, it all comes down to having a floor plan that allows employees to move equipment and inventory swiftly and easily while eliminating areas of wasted and underused space.
- Equipment: Ensuring that your employees have the tools they need at the point of use is a great way to eliminate a majority of errors. Integrating mobile powered industrial carts that hold picking supplies like laptops, scanners and printers has shown to reduce labeling errors by up to 90% and increase overall productivity by 50%.
Expedited shipping.
With Amazon setting the gold standard for extremely fast shipping, delivery and returns, today’s customers demand instant gratification. In a recent survey, 57% of respondents stated that same-day delivery would make them more loyal to a brand. Another survey found that 40% of shoppers said taking more than two days for delivery would prevent them from making the purchase. So how can you keep up?
Make sure to continuously research the most compatible and cost-effective carriers in your region, and negotiate costs and shipping times. Consider offering free or low-cost shipping, returns and exchanges to build loyalty. Lastly, keep the lines of communication open with customers from the moment they place an order to when it arrives on their doorstep.
Increased returns.
Even if the order is accurate and shipped in a timely manner, the customer could always change their mind. Return rates typically average around 25% to 30%, but in 2020 they rose by a whopping 70%!
To set up your business for success, prepare for returns before they happen. Make sure staff and inventory systems are prepared for batches of returns, and keep them separate from other incoming shipments. Have a dedicated returns department in a separate part of the warehouse that handles all returns and exchanges to streamline the process, get the items back on the shelves and ready to be picked for new orders. An organized, efficient returns area has the potential to yield better fulfillment rates, offsetting the cost of reverse logistics and mitigating the risk of unhappy customers.
Even as the world reopens, the accelerated growth in ecommerce is showing no signs of slowing. In 2021, the industry is expected to surge to $4.2 trillion. With this comes incredible opportunity, but those who choose to overlook these pain points risk being left behind.
John O’Kelly is the Founder and CEO of Newcastle Systems, an innovator of workplace mobility solutions partnering with many of the world’s leading companies to enhance worker productivity, operational efficiency and organizational profitability.
