Winning the ecommerce battle

Retailers are at war and it’s not just the usual competition. The battle here is all about logistics and it presents an opportunity for the materials handling industry to provide solutions to meet the new challenges.

Just look at Wal-Mart and Amazon.

This past week, Wal-Mart announced on Wednesday that it will test same-day delivery of online orders in select markets. Where available, you will be able to place an online order in the morning on Walmart.com and get it delivered to your door later that day from a nearby Walmart store.

Wal-Mart’s announcement followed on the heels of Amazon’s plan to offer same-day delivery in select markets.

Meanwhile, every retailer worth its salt is trying to figure out how to offer free shipping without giving away the store. No one makes money on shipping any longer. The game now is to minimize the cost of giving it away.

That’s where materials handling comes to play. In our October issue, going online next week, Josh Bond provides four examples of multi-channel retail warehouses – facilities that are successfully doing traditional store replenishment and filling direct-to-consumer orders.

Picking those orders is a challenge. Minimizing the shipping after the orders are picked is a separate challenge. We’re seeing a number of innovative packaging solutions coming to market to reduce the amount of corrugated and dunnage required to ship an order and to maximize a parcel carrier’s cube.

Getting the most out of those systems is shining a light on cubing and weighing systems. They provide the data a packaging and shipping system needs to figure out the best way to pack an order. With that in mind, I talked to Clark Skeen, the president of CubiScan to find out about the best practices he’s seeing among e-tailers.

“The big change we’re seeing is the way etailers look at shipping,” says Skeen. “When ecommerce first started, etailers just wanted to break even on shipping so they charged their customer whatever it cost them. The next step was to drive down their shipping and handling costs so they could turn shipping into a profit center.”

That all changed with free shipping, a relative term since free shipping is only free to the customer and not the etailer. “It used to be that our customers just needed information about cartons,” says Skeen. “Now, they need dimensional and weight data about every individual item. Many times, those items aren’t packaged or they’re irregularly shaped.”

Instead of just picking a carton from one of three sizes and filling the void with dunnage, the best etailers are collecting weight and dimension information at the point of receipt and using that data to be much more precise about their packaging. “They want to reduce the cost of corrugate, they want to reduce the amount of dunnage in the box and they want to reduce what they spend with shippers, especially those that dimension their freight.”

The data is being used in four ways, says Skeen.

To make layout and slotting decisions about where to store the product.
To prioritize picking when the weight or size of an item is a factor, such as picking the heaviest items first so they’re on the bottom of a carton.
To do a better job at cartonization.
And finally, to minimize shipping costs.

“At the end of the day, a shipping trailer is just a mobile warehouse where you’re renting space,” says Skeen. “You want to take up as little space as possible.”

As the battle for customers is fought over customer service, the etailer that figures out how to best minimize its picking and shipping costs is going to win the war.