Online retail revenue and shipping volumes broke records again in 2017. More and more e-tailers are gazing across borders to increase sales but forgetting to look within to ensure they can cope with it – a dangerous mix. One pillar of the solution is fulfillment.
Around the world, the e-commerce business is riding an enormous online shopping wave. In 2017, global e-commerce sales were on track to increase year on year by 23.2% and, for the first time, account for more than one-tenth of total retail sales. Forecasts indicate that the e-commerce market, which includes products and services ordered over the internet regardless of device, likely hit some $2.290 trillion at the end of the year.
The seemingly endless potential in these markets is naturally turning a lot of heads.
This shouldn’t come as a surprise. Every year we watch the biggest shopping days of the year – Singles Day, Black Friday, and Cyber Monday – in China and the U.S., the biggest e-commerce markets in the world, continue to break records.
But even in the more established markets of North America and Europe, online retail sales still make up a relatively small share of total retail sales, so plenty of opportunity remains. In emerging markets, where we see widespread internet adoption and a rising middle class, the industry is at the dawn of a golden era. The seemingly endless potential in these markets is naturally drawing a lot of attention.
Both new and established e-commerce players are scrambling for a bigger piece of this ever-increasing pie and looking beyond their home markets to do it. More and more traditional retailers are getting into the game, too, investing heavily in online shops to complement their bricks-and-mortar stores. Many have developed multi-channel retail sales strategies to make sure consumers can purchase their products through a number of channels – from physical stores to online shops to social media platforms.
Sales is only the surface
But making the sale alone is only half the battle – it’s what happens after consumers click the BUY button that actually fulfills the customer promise. And though the behind-the-scenes logistics is a complex business, it looks pretty easy to shoppers on the outside and their expectations are growing. Those who are not able to bridge the gap between what they have and what their customers want will not be successful.
Therein lies the challenge: how to really profit from the magic of offering a multi -channel experience and the resulting flood of orders. Right now, many online retailers are struggling with this very problem to the brink of collapse. Their supply chains are becoming huge burdens because they are ill-equipped to efficiently manage warehousing, packaging, returns, and customer service, nor have they built a solid IT infrastructure to support it all.
The real “nuts and bolts of e-commerce” is complex and comes at a high price.
That’s because fulfillment – the real “nuts and bolts of e-commerce” is complex and requires a lot of expertise. With many consumers nowadays expecting next or even same day delivery, your shipping and return costs go up, and you need to stock more items closer to the demand.
And certainly not without sophisticated software systems in place that provide end-to-end visibility across your entire supply chain – from every digital sales channel and consumer touchpoint to every store and warehouse. Automated order processing, track and trace, preferred delivery times, and easy returns options can dramatically reduce processing time, shipping costs, and overhead while increasing accuracy and getting your products to customer doorsteps faster.
How well you execute fulfillment is and will remain vital for driving growth. How fast e-tailers are able to swallow up pieces of the total retail sales pie will to a very large degree depend on how well they innovate when it comes to fulfillment.
Cutting edge e-tailers are tapping into the logistics industry to (ful)fill the gap – to have someone else meet their fulfillment needs. They don’t want to divert assets and lose sight of their core business.
Our own internal research and first-hand experience tells us that more and more sellers are looking for help. In response to a recent survey, almost half of our customers in Germany say they are interested in fulfillment services to support their business throughout Europe. When we asked our customers why they make use of DHL Fulfillment services, more than half say they trust the DHL brand and appreciate the scalability of our fulfillment system.
Fulfillment really is a business in and of itself – a complex web of warehouses, order processing, delivery, and more. A network of DHL Fulfillment centers around the world provides retailers with a global solution so they can serve customers faster and more efficiently no matter where they’re located. For example, we just opened a new center in the UK and will open more European sites to complement our facilities in the United States, Mexico, Columbia, Germany, Hong Kong, and Australia. These B2C warehouse facilities are strategically located to ensure inventory is as close as possible to the end consumer. Each center handles the entire fulfillment process, from picking items and filling orders to managing all incoming stock and returns.
A state-of-the-art order processing system is a key component as well. A fulfillment specialist will already have a system in place and be able to seamlessly integrate it into all sales channels. That way one click automatically sends the entire warehouse management system in motion – receiving, picking, packing, delivery, and returns.
The shipping is of course the final step in the process, with the “last mile” both the costliest and the most important. How a product reaches a consumer’s doorstep can make a lasting impression and turn that customer into a loyal fan. The best way to ensure that the final leg of the customer journey ends with a satisfied consumer is to put your logistics in the good hands of a world-class logistics company – like DHL.
By integrating our platform, online retailers can tap into DHL’s complete portfolio of fulfillment services in all the major e-commerce markets, such as North America, Latin America, Europe, and Asia Pacific. With this scalable IT infrastructure in place, there is no need to integrate new platforms or additional tools, which makes it easy to expand their business and grow in new markets.
Fulfill your future
The forecast for the e-commerce industry in 2018 also looks bright. The number of online buyers will continue to grow exponentially, which will drive worldwide e-commerce sales to new record heights. And we’re sure to see more and more entrepreneurs setting up online stores and gazing hungrily across borders in order to catch a ride on this wave.
But before you paddle out to catch it, make sure you’re supported by a logistics partner who understands what’s happening below the surface. Because if you fail at fulfillment, you’ll soon find yourself sinking, and your e-commerce future with you. With expert fulfillment support in place, you’ll ensure that your customers are able to buy your products anytime and anywhere – and you’ll be well on your way to riding that wave and “fulfilling” your e-commerce future!