With brands and retailers starting to venture more and more into the eCommerce market, our founder Jonathan Bellwood discusses two predictions for the future of eCommerce warehousing with relation to brands and retailers.
1) Brands will be trying eCommerce themselves with a dedicated eCommerce warehouse
Five years ago, Pureplay eCommerce companies dominated the market, brands were still selling via retailers or the Pureplay eCommerce companies, and the retailers would just buy from brands and sell in stores.
‘Neither brands or retailers were taking full advantage of eCommerce,’ says Jonathan, ‘but the retailer watched closely and started to see eCommerce as another store, despite their existing warehouse system being unsuitable. As such, they would pick from their central distribution centre for their stores, one of which was the eCommerce division. The more advanced retailers have split out their ship-to-store division into separate warehouses from their eCommerce division with separate stock.’
Brands, however, ship to retail stores of their own, to other retailers, and they also sell online. Behind the scenes, they have a dedicated warehouse for eCommerce. Jonathan says ‘We’re starting to see some brands, particularly those looking to expand internationally, set up their own warehouse for eCommerce or use third-party logistics (3PLs) to get an initial entry. I believe we’ll continue to see more of this in the future.’
2) Fulfilment of an order from the closest warehouse, not just the central warehouse
Let’s say that a retailer has their jackets made in China and the finished products are then shipped to the retailer’s warehouse in the UK. An order is placed in Singapore for one of the jackets and it is shipped out to the customer but they decide against their order and send it back to the UK for the retailer to resell it. In this situation, the retailer has lost days where the jacket could have been online for sale and they are spending a lot of money on shipping which eats into their overall profits.
‘A better system for companies fortunate enough to have the volume,’ says Jonathan, ‘is to have ‘local’ warehouses internationally so that items don’t have to be shipped as far, and can be dropped off for returns at a local collection point. By knowing the stock levels in these local warehouses as well as in the main distribution centre, a retailer will know the best place to ship from and return to.
‘Many eCommerce companies also tend to fulfil orders in one package which is fine if the multiple items are located in the same warehouse. However, if one of the items is across the country, general practice is to ship the other item to the main distribution centre and then pack both items for despatch to the customer. Again, this shipping expense eats into profits and takes up time.’
Shipping items separately may not be an ideal option for the customer, but it does save on costs and gets the items despatched quicker.
[Related: Blighty gets ahead in global eCommerce]