Customers worldwide are looking for a uniform buying experience for product and pricing across all retail channels. Today’s sophisticated consumer expects to find the highest quality product at the best pricing by doing their research—visiting nearby retail outlets, testing products, seeking out social media promotions, online reviews—and comparison-shopping through online retailers.
Meeting Demands of Sophisticated Online Consumers
Today, customers expect products ordered online to be delivered within 24-48 hours. This is a huge step forward from earlier e-Retail expectations of receiving their products within weeks, not days. At the same time they want hassle-free free shipping, proactive visibility of delivery dates, prompt notifications of shipping delays and a hassle-free returns process.
For e-Retailers, the role of the Fulfillment Center has become critically important for customer satisfaction and overall company reputation. Companies with excellent fulfillment and returns processes can use this as a competitive advantage that provides them with an extremely loyal customer base. For example, companies such as Amazon and Zappos are able to enjoy higher margins and sustained growth because customers keep coming back to a process they trust rather than risk the low cost provider with a problematic fulfillment process. From warehouse to delivery to returns, E-Retailers need a fulfillment and logistics process that is second to none.
Third Party Logistics
Companies also need to bring down total supply chain costs by optimizing the entire order through delivery cycle. Specialized knowledge of third party logistics companies (3PLs) is critical to their success. 3PLs must take an active interest in building process-driven and IT-enabled modern warehouses that will cut down entire order processing times. The whole process needs to be consistent, standardized and optimized, including:
- pick process at individual SKU level
- packing the products as per the Retailer’s standards or per the customer’s specific instructions (gift category)
- shipping to the destination within the promised delivery date.
Outcome-Based Compensation Models
In the future, the roles of brick-and-mortar retailers, e-Retailers or click-and-mortars will be changing from the active management of warehouses to a more supervisory role, leaving the execution roles to 3PL players with specialized knowledge and streamlined processes. Logistics players will no longer be measured based on quantity, but new outcome-based models are becoming the norm, where 3PLS are judged and compensated based on a minimum level of satisfied customers, with payment increased by percentage depending on the satisfaction of the end-customer with the entire experience.