E-commerce in the U.S. was already on a tremendous growth path prior to COVID-19, growing at about a 15% compound annual growth rate for the last decade plus. The pandemic accelerated e-commerce growth exponentially, bringing the overall penetration of online retail in the U.S. up from just 11% as of the end of 2019 to nearly 30% in the second quarter of 2020, and 45% over the 2020 holiday period, according to Digital Commerce 360.
For supply chain logistics and transportation, the acceleration and increasing penetration of e-commerce has profound implications, both in terms of the buildout of warehouses, distribution centers, and fulfillment centers to place inventory closer to consumers, as well as how products are routed and shipped.
This accelerated growth has caused a multitude of U.S. companies to be met with an enormous, rapid, and unexpected influx of e-commerce demand. As a result of the proliferation of e-commerce and the pandemic, sales at most retailers’ brick-and-mortar store locations have decreased. This shift in buying behaviors requires retailers to have an exceptional and flexible supply chain in place to be able to smoothly manage this transition.
Because implementing an e-commerce strategy on their own can be costly, many retailers, big and small, are turning to third party providers like Ryder for expertise and a solution that lowers costs. Here are three ways partnering with a provider can set retailers up for success.
Infrastructure & Diversification
One of the top lessons of the last year is the need to diversify fulfillment operations. Having one location to hold inventory or working with one carrier has a great risk associated with it. Retailers with single locations found they were capped, delayed, or shuttered, which can negatively affect your operation. Diversifying locations and carriers has proven to be a successful solution.
Partnering with a provider like Ryder can help. It allows retailers to take advantage of a vast network and place inventory at multiple locations. This improves fulfillment and customer satisfaction. Additionally because of the infrastructure, retailers can take advantage of being in a multi-client facility, which allows them to spilt costs with other retailers and eliminates upfront costs. This applies to transportation as well, a provider like Ryder works with numerous carriers to ensure orders are fulfilled on-time and at the lowest operating cost.
Having technology systems in place that allow the operation to flex and adapt quickly to change creates success. For example, at the end of 2019 just 7% of business offered curbside pickup. By August 2020, 43% of stores offered it, according to Digital Commerce 360. Without the proper technology already in place, companies would not have been able to pivot so quickly to provide this service. Additionally, the right warehouse management, order fulfillment, and transportation management technology can provide data on where to locate inventory and fulfill orders across the network.
Ryder is able to implement the technology necessary for retailers to keep e-commerce fulfillment operations moving and provide visibility across the entire network. This technology also includes analyzing data of where to place inventory, carrier scheduling and routing, and allowing companies to pivot their strategies to meet consumer needs.
The demand from consumers continues to grow, creating a greater need for flexibility and resilience. Whether its expedited fulfillment, free shipping, curbside pickup, or hassle free returns, constant pressure is being put on retailers’ supply chains to keep up.
With the trajectory of e-commerce growth continuing to accelerate, outsourcing distribution and logistics becomes a logical approach. A third party provider, like Ryder, is well positioned to help companies overcome various challenge from pandemics to labor shortages, seasonal peaks, and shifts in consumer behavior. Ryder provides the people, space, and systems to quickly pivot strategies to help companies develop a supply chain that is well prepared for any future disruption.