E-commerce retail sales in the United States are growing at an incredible rate when compared to bricks-and-mortar stores, an article on the Swisslog website reports. In fact, the rate of growth is putting enormous pressure on distributors. Customers demand fast order processes and even faster delivery service.
The stresses put on distribution centers to fulfill orders of varying dimensions and locations are increasing. Most importantly, the question of profitability of current e-commerce practices is growing in prominence. Challenges facing distributors and manufacturers who have ventured into the e-commerce channel are many. In such a turbulent, new world, is there a distribution management system for businesses to meet these demands?
According to Bill Leber, the article’s author, “Any consumer today with access to the Internet plus a credit card lives by the mantra of ‘Click and get it now.’” Fast order completion and guaranteed delivery times are mandatory for companies wishing to remain competitive.
E-commerce companies will often lower online prices, include free shipping and offer bundling of items of all kinds in order to secure customer business. This puts enormous stress on distribution centers to fulfill orders which include items normally stored in separate locations and do it quickly.
But businesses often have no choice if they want to stay in the game. If customers can’t find low rates and fast delivery on your website, they will surely find a seller whose website does. Businesses are demanding more from distribution management systems “to acknowledge, pick and pack the customer’s order – providing a connection to the consumer to ensure the sale is not lost to competition,” the article explains.
These practices are symptoms of something larger. “So far, the e-commerce market remains early in its life cycle where the priority is on capturing overall growth – at the expense of profitability,” the article notes.
Leber goes on to say that Amazon’s 2011 profits were only a fraction of its order fulfillment expenses. Wholesale distributors and manufacturers are eager to land customer business through the e-commerce channel.
However, it’s clear that the current e-commerce environment will be unsustainable for many businesses. Costs will have to be reduced. As the Swisslog article reports, “The majority of e-commerce fulfillment operations, which today are person-to-goods, labor intensive systems, will not provide the efficiency and speed necessary to be sustainable.”
The answer, the article asserts, lies in technology. E-commerce distributors will need to look toward automating their distribution management system to remain profitable and competitive.
Solutions like NetSuite will be ever more in demand as the e-commerce market continues to grow. The NetSuite distribution management system is able to accommodate multichannel order management and inventory distribution as it offers one integrated system to manage all of an organization’s sales and distribution needs.
NetSuite software is able to manage a web store while integrating it with the backend accounting system. Its inventory management system is able to accommodate multiple distribution centers and inventory locations. This automation is paramount to remaining profitable in a competitive e-commerce market.
Source: Swisslog, February 2013
