In the press: The future of e-commerce

The rise of e-commerce has seen shopping coming full circle – from the milk delivery man, to the grocery store, to the mega mall, and now back to the online shopping delivery service.
Australians spent a record $21.65 billion online in the year to December 2016, up 10.4% year-on-year, according to National Australia Bank’s (NAB) Online Retail Sales Index. Local sales continue to dominate, with 81% of the total spending online controlled by domestic retailers , though this is likely to change sharply once Amazon arrives on these shores as confirmed recently.
As a result of the rise of e-commerce a consumer is in control of the retail world, all from their smartphone or watch. With the mall in the palm of their hand, all today’s consumers need are finger strokes, rather than footsteps, to access better product and pricing information and to compare a range of stores.
Despite the increasing popularity of online shopping, retail stores are still important in Australia, creating a shift to omni-channel behaviour. This follows in the footsteps of consumers in the US who say they research online and purchase in-store (88%), browse products in stores before buying online (73%), and find it very useful to be able to return goods to a physical location, access retailer stock information online, and get a text message saying goods are about to be delivered in X minutes.
It is clear to retailers in Australia that they must adapt to increasing consumer expectations. Forty nine per cent of executives believe customers will switch brands due to poor customer service. And this is supported by figures showing 89 per cent of customers have actually switched brands due to a bad customer service. Retailers must service the engaged consumer and develop the capabilities to meet their demands for what they want, where they want it, when they want it, and at a price they are willing to pay.

The omni-channel challenge for supply chains
As a result of the growth and increasing importance of e-commerce, businesses have had to review their approach to order fulfilment. With the majority of online purchases being for small quantities of goods – often single items – a cost and time-efficient approach to picking individual items is required to cost-effectively process orders and meet demanding delivery windows. High service level expectations and the high cost of rectifying errors and processing returns means fast and accurate order fulfilment is critical.
For retail supply chains, the main challenges of supporting omni-channel retailing include order fulfilment costs, margin pressure, SKU proliferation, returns, order processing speed, order processing accuracy, available network, and inventory visibility.
These challenges are driving the development of innovative new flexible, scalable, modular materials handling and order fulfilment equipment that enables fast, accurate and cost-effective order processing, which is critically important in the highly competitive retail sector.
Omni-channel solutions
Person-to-goods. This is discrete order fulfilment picking to totes, cartons or other shippers on a trolley or pallet. Depending on the volumes involved, picking can be directed by RF, voice or via pick-to-light displays, with product and order scanning minimising the potential for errors. PTG is a cost-effective solution for picking relatively small quantities of discrete orders, and can be easily scaled up. It provides reasonable picker productivity levels, typically around 80-120 items per hour.
Person-to-goods with batch picking. Productivity levels can be significantly increased by batch picking the individual products required for multiple orders, concurrently to a trolley or pallet. The batch-picked items can then be efficiently sorted to their respective orders in a variety of manual processes directed by RF or voice, before packing and shipping. Or, depending on the physical characteristics of the products and volumes involved, via a put wall or an automated conveyor sorting system.
Put walls. Put walls optimise the processing and shipping of orders for single or small quantities of items. Serving as an order consolidation and packing hub, they deliver high productivity and order accuracy. After all of the goods required for a batch of orders have been picked, typically into totes, they are delivered to the Put Wall on a pallet, by trolley, or conveyor sorting system.

Put walls are a double-sided wall of shelving with individual compartments, each representing a single customer order. The front of the Put Wall is for ‘putting’ items to orders, while the rear is for packing and shipping. The order compartments can be configured in a range of sizes to suit the user’s product range, with individual compartments also capable of being used for multiple orders through the use of dividers or small tote bins.
Put walls can be utilised manually using printed pick lists and alpha-numeric location labelling, or used in conjunction with technologies including barcode scanning and RF terminals, put-to-light (PTL) or ‘cubby light’ displays, or voice-directed picking and putting to further increase accuracy, productivity and throughput.
Automated conveyor sorting systems. Automated conveyor sorting system options range from pop-up wheel, pivot arm and sliding shoe sorters for throughputs of up to 6,000-8,000 packages per hour, to cross-belt sorting systems, which can process up to 20,000 items per hour. A key benefit of cross-belt sorting systems is their ability to handle a wide range of products from books, magazines and flat pack apparel through to large goods weighing up to 50 kg.

Goods-to-person (GTP). With GTP, stock is automatically delivered to picking stations in the precise sequence required for order assembly: heavy items first, fragile items last, by family group or in whatever sequence needs dictate, ensuring rapid order fulfilment with high productivity, accuracy and throughput rates. Light-directed, one-to-one or one-to-many pick station configurations – for example, one-to-two, in which a single stock tote and two order totes are presented to the operator – eliminate time wasted waiting for stock and enable multiple orders to be fulfilled concurrently.
Totes containing stock for orders are delivered to pick stations by an automated inventory buffer store, typically an automated storage and retrieval system (ASRS) like the Dematic Multishuttle. A single GTP system operator can achieve very high pick rates of up to 1,000 items per hour.
 
The future of e-commerce
The rapid growth of online shopping with its high service level expectations, competitive pricing and constantly evolving IT requirements, make it a very demanding market, but one in which traditional bricks and mortar retailers must engage to defend their market share in an increasingly crowded global marketplace.
While both clicks and mortar and pure play online distributors put lots of effort into meeting or exceeding the front end of a customer’s online shopping expectations, the hard work really starts in the DC where the perfect order must be picked, packed and despatched in increasingly smaller timeframes. To do so requires flexible, scalable, modular materials handling equipment and processes, along with smart order fulfilment software, which are fully integrated with the online ordering platform.
Pas Tomasiello is Dematic’s director of integrated systems. For more information visit https://www.dematic.com/en-au/.