The Future of Fulfillment Is Fast and Will Change Retail Store Layouts
The future of fulfillment is going to get fast, while the convergence of physical retailing and online shopping is expected to transform the layout and footprint of stores. That’s the take of omnichannel retailers, manufacturers and logistics firms surveyed by Zebra Technologies Corp. in its latest research white paper, “Future of Fulfillment Vision Study.”
As companies are preparing to meet the “growing needs of the on-demand economy,” respondents anticipate that 40 percent of parcels will be delivered within two hours by 2028. Researchers at Zebra, which offers rugged mobile computers as well as barcode scanners and printers, said 78 percent of the logistics companies polled “expect to provide same-day delivery by 2023.”
The study also revealed that 87 percent of respondents “expect to use crowdsourced delivery or a network of drivers that choose to complete a specific order by 2028.” The survey included 2,700 industry professionals from the U.S., Canada, Brazil, Mexico, Colombia, Chile, France, Germany, the U.K., Italy, Russia, Spain, China, India, Australia and New Zealand.
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Jim Hilton, manufacturing and transportation and logistics global principal at Zebra Technologies, said that driven by the connected and tech-savvy shopper, “retailers, manufacturers and logistics companies are collaborating and swapping roles in uncharted ways to meet shoppers’ omnichannel product fulfillment and delivery expectations.”
Hilton said nearly 90 percent of respondents agree that e-commerce is fueling the need for faster delivery. “In response, companies are turning to digital technology and analytics to bring heightened automation, merchandise visibility and business intelligence to the supply chain to compete in the on-demand consumer economy,” he added.
The survey offers a snapshot of the state of omnichannel retailing — warts and all. Researchers at Zebra found that one-third of respondents said reducing back orders was the “biggest challenge” facing companies that are looking to achieve omnichannel fulfillment. Other hurdles included inventory allocation and high freight costs. Of those surveyed, Zebra said, “only 39 percent of supply chain respondents reported operating at an omnichannel level.”
“Globally, 87 percent of respondents agreed that accepting and managing product returns is a challenge,” authors of the report said, adding that the increase in “free and fast” product delivery is having a direct impact on product returns. The authors of the report described returns as a “costly concern that retailers struggle to manage efficiently across many different purchasing models.”
According to the National Retail Federation in a separate report, merchandise returns account for over $260 billion in lost sales for U.S. retailers annually, while retailers manage 3.5 billion product returns each year. Researchers at the NRF said if merchandise returns were a corporation, it would rank No. 3 on the Fortune 500 list. In the Zebra study, about 70 percent of executives polled expect retailers to transform stores “into fulfillment centers that accommodate product returns.”
Other key findings of the survey include that 60 percent of retailers who are not offering free shipping, free returns and same-day delivery have plans to offer these services, “while 44 percent expect to outsource returns management to a third party.”
With online orders, 76 percent of retailer respondents said they are using store inventory to fulfill orders. And 86 percent said they “plan to implement buy online/pick up in store in the next year.” The study noted that retailers are making investments to retrofit stores to “double as online fulfillment centers,” while also “shrinking selling space to accommodate e-commerce pickups and returns.”
The study anticipates supply chains to evolve by adding “newfound speed, precision and cost-effectiveness” to transportation and labor functions. The survey found that 39 percent of respondents see drones as the top disruptor in this regard, followed by driverless vehicles at 38 percent and wearables/mobile technology at 37 percent, along with robotics at 37 percent.
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