20 SCS:E-FULFILMENT
Instant
As online retail sales gain a significance hitherto unheard of, reaching 5.2 per cent of all retail sales
in 2007, e-fulfilment is no longer an issue that can be ignored. For many high street brands online
sales are now critical to overall profitability. Just make sure you get it right. NICK ALLEN
TGW sees opportunities for
automation in the
e-fulfilment market.
What exactly is e-fulfilment? In supply chain circles,
fulfilment is well understood as the processes
centred around order preparation/picking,
dispatch and physical distribution to, say, a retail outlet. But
with the prefix of an “e”, fulfilment takes on a very specific
meaning relating to the order picking, dispatch and
distribution of goods for online customers.
Fulfilling orders for online sales is a booming sector for
logistics service providers and reflects the tremendous
growth in online retail sales in recent years. According to
Verdict Research, online retail sales grew from virtually
nothing in 1996 to £14.7bn in 2007 – accounting for 5.2 per
cent of all retail sales. And Verdict expects this to more than
treble by 2012 to £44.5bn.
But fulfilling online orders requires a very different
distribution strategy, one geared to the order-picking,
packaging and delivery of much smaller order quantities
(more often than not single items), in contrast to the high
street retail distribution operations designed for
replenishing high street stores in much greater quantities,
involving case loads or pallet loads of goods.
However, with online sales gaining a dominance that was
previously unheard of – John Lewis’ online business is now
OCTOBER 2008 SUPPLY CHAIN STANDARD
www.supplychainstandard.com
its largest store – it is becoming difficult to draw a distinct
line between high street and online approaches. One
important consideration these days is that consumers
expect the same level of service and product offering from a
brand across both its high street retail outlets and its online
shop front. Price, product range and service have to be
consistent, regardless of the channel, especially as research
indicates that 47 per cent of customers believe that if a
product isn’t available online it won’t be in the stores either,
which could lead to the risk of the online channel letting
down the core brand.
Complicating matters still further, consumers now expect
to be able to “mix and match” the way they use channels,
perhaps researching prices online and buying on the high
street, or buying online and picking up from a store. What’s
more, consumers want to be able to buy online and return
goods to a store. This has created considerable challenges
for retailers in meeting these needs and has led many
forward thinking retailers to adopt an integrated multichannel
retailing strategy.
But with this change in reaching out for online spend
retailers are often unaware of the differences in fulfilment
strategy that are needed to maintain efficiency in the
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