At first thought, order fulfilling robots and virtual reality lipstick try-on may conjure a mental image of something right out of The Jetsons. The long-running TV series portrayed a utopian future of three-day-workweeks, aero cars, and even a robot maid called Rosie —a life simplified by all manner of technological advances, leaving plenty of time for leisure. While current trends in order fulfillment are driven by a need for customer satisfaction and cost savings, as opposed to more time for leisure, order fulfillment strategy has changed, and technologies in place today are a lot closer to The Jetsons than you may realize – and the urgency to embrace the trends of the future is very real. Let’s take a look at three trends you should not ignore.
Micro-fulfillment
It’s not difficult to understand why so many retailers, especially grocers and big box ones, began looking to create smaller versions of their warehouses and distribution centers inside their less-populated (and sometimes closed) store spaces. At the heart of micro-fulfillment strategies is an increased desire to meet the customer where they’re at, a positive message during the pandemic. Micro-fulfillment often blends the power and efficiency of a shipper’s warehouses and/or distribution centers with the swiftness and personalization of regional fulfillment, sometimes even including last-mile delivery. Some see micro-fulfillment as a natural progression of another popular order-fulfillment strategy during the pandemic (BOPIS/curbside pickup), the premise being that widespread investment and expansion of these programs lead to retailers naturally rethinking their retail spaces, along with reconsidering how they can best use all of their available resources to fulfill as quickly as possible to the consumer and outmaneuver pandemic-driven logistical concerns. Both Kroger and Target have notably invested heavily into micro-fulfillment in the last year, announcing their own highly specialized order fulfillment centers. Kroger believes its planned two dedicated order fulfillment centers will reduce the costs and increase the speed of online grocery delivery, and, while announcing their planned order fulfillment center, Target stated its belief that “shipping a package from a store rather than a fulfillment center is 40% cheaper”.
Robotic Order Fulfillment
While robots have been promised as a serious and innovative game-changer for shippers for some time now, their adoption has been slow as brands remained steadfast to carefully planned budgets. Then came the pandemic, which quickly threw those plans off course and gave shippers new reason to consider more long-term opportunities. According to a recent RetailWire survey, “73% of large retailers say the importance of using robotics in warehouses or distribution centers has increased due to factors that emerged during the pandemic.” Whether they’re facilitating order picking or packing, robots make great and fast additions to the socially-distanced warehouse. And not only are they speedier than their human counterparts, 100% of their activity data can be mined for greater network goals, like inventory management. But their benefits go beyond the warehouse; many brick-and-mortar retailers (especially grocers) have found use for robots in scanning product shelves for low stock, price verification, and more.
Augmented and Virtual Reality Selling and Fulfillment
Yes, really. Much like robots, AR and VR technology seemed somewhat of a novelty prior to the pandemic. But 2020 saw a dramatic drop in in-store foot traffic (an average 16% decline, according to Retail Dive), leaving many retail shippers seriously reconsidering the at-home shopping experience. Brands such as IKEA, Macy’s, and Sephora began heavily emphasizing AR/VR-enabled mobile apps that let consumers visualize everything from furniture sizing/placement to lipstick colors. It’s estimated 100M online consumers were AR shoppers in 2020, making for an incredibly effective retail selling tool; however, these brands also discovered an impact on returns. The common belief is that AR/VR technology lets consumers understand products better, which leads to fewer returns. Macy’s notably reported that return rates for their AR/VR-assisted purchases dropped to less than two percent (up to a five percent difference from the industry average). But this technology goes beyond selling – shippers of all types, as well as vendors, are finding that wearable computing devices can decrease order picking and packing times. One study found “wearable computing devices” increased the average picking speed of new warehouse employees by 37%, and DHL prominently expanding its “Vision Picking” smart glasses worldwide after finding a 15% bump in warehouse employee productivity. And again, while not exactly new, this technology directly addressed some of the unique challenges created by the pandemic, such as social distancing measures, filling gaps created when employees had to quarantine or chose to leave the job due to safety concerns, as well as a growing desire amongst brands to speed up order fulfillment as much as possible to seemingly increase delivery speeds during unprecedented decreases in carrier capacity.
Should you go all-in on AR and robotic order fulfillment? That depends. Much like the rise of carrier diversification, these order fulfillment strategies were not created during or by the pandemic; however, they have amassed huge interest and buy-in from shippers of many types and sizes (especially e-commerce retailers) looking to combat pandemic-driven industry challenges. And, almost all of these new fulfillment strategies enhance the customer experience. Our best advice? As you envision near-term future enhancements to your order fulfillment strategy, consider the technologies necessary to ensure you’re not playing catch-up with your competitors and the market.
Rebecca Wyatt is a Solutions Manager at Green Mountain Technology (GMT), where she partners with clients representing nearly $1B in parcel spend to provide GMT’s strategic Parcel Spend Management solutions – Network Optimization, Spend Analytics, and Contract Management. Cam Elliott is the Brand Manager at GMT, where he oversees the design, creation, and direction of GMT’s customer touchpoints, particularly as they relate to the mission, vision, and values of GMT and its audience.
This article originally appeared in the September/October, 2021 issue of PARCEL.
