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Reshaping Retail - Inbound Logistics

by:VIPUTRANS     2021-02-03
Retail, E-commerce, FulfillmentNew strategies such as BOPIS, BOPAC, microfulfillment, and drive-throughs could transform retail logistics forever.More to the Story:A Bright Spot Returns to Brick-and-MortarThe COVID-19 pandemic has been brutal to brick-and-mortar retail. As many as 25,000 stores could close permanently in 2020, according to market research company Coresight Research. That's far more than the 9,302 closures Coresight counted in 2019.For e-commerce, though, 2020 has been an endless Christmas. "Every day is peak season now," says Andrew Meyer, chief executive officer and co-founder of Pickle Robot, a Cambridge, Massachusetts, firm that makes robots for parcel shipping operations.As of May 2020, online purchases represented 20% of all retail sales, compared with 11% in 2019, according to commercial real estate company Jones Lang LaSalle. Consumers spent 77% more online in May 2020 than they did in May 2019, finds a June 2020 report from Adobe. Besides sending more shoppers online, government orders to close nonessential businesses as well as shoppers' fears about enclosed public spaces have also boosted newer forms of retail fulfillment. For example, when cloud commerce company Kibo surveyed its customers in April 2020, it found a 563% jump in buy online, pick up in store (BOPIS) orders compared with April 2019.To survive in this era, retailers have implemented strategies that stretch from their fulfillment operations to the storefront, parking lot, and customer's doorstep. Some of these changes could become permanent. After all, the trends we're seeing now—the swell in online commerce, customer demand for new fulfillment options, and increased digitization in the supply chain—were already underway before 2020. COVID-19 has just shifted the transition into overdrive."It's as though you were looking at a wave, and then a tsunami hit," says Meyar Sheik, president and chief commerce officer at Kibo in Dallas, Texas.At the Back EndOne process COVID-19 has shaken up is demand forecasting. How can retailers determine what to stock, in what quantities, and where?"With COVID, it was unclear whether the past rules would apply," says Sudheesh Nair, chief executive officer at ThoughtSpot, a vendor of business analytics technology in Sunnyvale, California. In a volatile marketplace, a company can't simply collect historic data on consumer behavior, add current information, and then use that to model the future. "Artificial intelligence starts to play a bigger role," he says.To generate a forecast in the COVID-19 era, ThoughtSpot might use data from sources such as Google, the Johns Hopkins Coronavirus Resource Center, and social media to profile a specific ZIP code. The data could indicate, for example, how many people are staying home versus commuting to work.In one neighborhood, the forecast might tell a retailer to stock nearby stores and fulfillment centers with electronics that stay-at-home workers require. Another ZIP code, where people head out each day to jobs in hospitals or grocery stores, would call for a different range of products."These kinds of forecasts were not even a consideration before COVID," Nair says. "It became clear that you cannot make decisions at the macro level when the world is changing at the granular level."In the fulfillment center, e-commerce and omnichannel retailers face a double bind: They must keep up with the volume surge while practicing social distancing and periodically stopping work to deep-clean their facilities.Retailers also contend with ongoing demand for fast delivery, requiring them to store inventory closer to consumers, says Jeff Cashman, senior vice president and chief operations officer at GreyOrange, an Atlanta-based robotics systems developer. In response, some retailers implement "microfulfillment"—shipping orders from small facilities in densely populated areas, including their own stores.Pandemic-related store closings have sped some of this movement to microfulfillment. When jewelry brand Kendra Scott shut its 108 stores in March 2020, for example, it quickly turned those locations into small e-commerce fulfillment centers, according to a Glossy.co report.GreyOrange's robots deliver mobile storage units to associates who stand at picking stations, taking items from the units for order fulfillment. The technology offers a safe solution for the COVID-19 era. "Inherently, each of these stations is social distancing," Cashman says. "They're more than six feet apart."The robots also let companies switch fulfillment strategies quickly as order volumes fluctuate over time. "I can put 20 robots in a store's storage room and roll in another 20 during peak season," Cashman says.A parcel handling robot from Pickle Robot, known as Dill, offers a similar advantage on the loading dock. Eventually, Pickle aims to refine Dill so it can load or unload a trailer.Pickle envisions putting a Dill robot at each door to load or unload, with one human supervisor assigned to multiple doors to handle dropped packages and other occasional problems.This approach eliminates the need for associates to crowd together at the back of a truck. With one person supervising five or six dock doors, social distancing is easy. "Your nearest neighbor is not a person; it's a robot," Meyer says.Robots also help maintain consistent operations when illness could force some employees into two-week quarantine just when the facility needs to work at 100% capacity, Meyer adds.BOPIS, BOPAC, Drive-throughAt the customer-facing end of the supply chain, retailers have used a variety of techniques to put product in consumers' hands, whether stores are open or closed. Classic e-commerce, which delivers to consumers' doors, remains popular. But other fulfillment modes, such as BOPIS, buy online, pick up at curbside (BOPAC), and drive-through shopping also play a role in the COVID-19 world.The trend toward BOPIS and BOPAC may seem counterintuitive. If you can receive products in the safety of your home, why venture out at all?Part of the allure lies in the fact that before COVID-19, more than 80% of retail sales still took place in brick-and-mortar stores. When nonessential stores shut down, more consumers got comfortable with e-commerce. But if a closed store offered curbside pickup, that was the next best thing to a traditional shopping experience, says Sheik.For retailers, BOPAC offered a way to keep moving product off shelves even while stores were closed. "The idea was for retailers to leverage existing assets—stores that they pay rent on and are shut down—and provide convenience for customers while also making the sale contactless," Sheik says.To meet this demand, Kibo recently launched a stand-alone BOPAC application that runs on top of its order management system.Michigan's Birmingham Shopping District chose a drive-through model to keep its farmers market running during the state's COVID-19 shutdown. City officials borrowed the idea from a local restaurant that, when forced to close, started selling bundles of produce to customers in their cars."You drove up and popped your trunk, they put the package in the back and you dropped $10 in their bin," says Jaimi Brook, operations and events manager for the Birmingham Shopping District.At the farmers market, starting in May 2020, customers drove past a line of tables, stopping where they liked to buy the items they wanted. A typical Sunday drew about 300 cars. In past years, the market attracted 2,000 to 2,500 visitors on a typical Sunday, but unlike the drive-through consumers, they weren't all there to shop, Brook says.If conditions let Birmingham resume its walk-up market later this season, there might still be accommodations for shoppers who aren't ready for business as usual. "We have discussed having a first 30 minutes or one hour that's drive-through only," Brook says.Crowdsourced DeliveryRetail chain Tractor Supply Company has seen a big jump in digital orders since the start of the pandemic. "A majority of those transactions are either being delivered, or picked up via our new contactless curbside pickup," says Rob Mills, executive vice president and chief technology, digital commerce, and strategy officer at the company, based in Brentwood, Tennessee.E-commerce orders filled from Tractor Supply's distribution centers ship mainly via UPS and the U.S. Postal Service, with less-than-truckload (LTL) and white-glove service for certain shipments. But for items available in the company's 1,881 stores, local customers can get same-day or next-day delivery, thanks to a partnership with Roadie, a crowdsourced delivery service based in Atlanta.Much like the ride-sharing services Uber and Lyft, Roadie recruits individuals who drive their own vehicles and use a mobile app to accept the jobs they want.As the pandemic has swelled demand for local delivery, Roadie has had no problem recruiting drivers to keep pace. "All of a sudden, everybody from busboys to knee surgeons to bartenders was furloughed," says Marc Gorlin, founder and chief executive officer. "Roadie made a great side hustle for folks whose regular gigs were not in place."Tractor Supply started working with Roadie about three years ago, when Roadie's same-day service was available in only about 20% of the retailer's locations. Pre-COVID-19, Tractor Supply was already making plans to expand the Roadie option to more stores. "The COVID-19 pandemic just accelerated those plans," Mills says.With Roadie already integrated into its systems, Tractor Supply could scale up easily. The company's existing ONETractor omnichannel strategy played an important role as well."A lot of the investments we had previously made in our infrastructure helped pave the way for quickly activating things like Roadie delivery from all stores, and other recent changes such as mobile point-of-sale devices across the chain, contactless payment options, a redesigned e-commerce site, and a new mobile app," Mills says.New retail models such as same-day delivery will remain important well into the future. "We're not going back to pre-COVID-19 conditions any time soon," says Gorlin. "The key for retailers is adding the optionality of retail." Consumers need to be able to engage with retailers in the ways that work best for them.Happier ReturnsSome e-commerce retailers have also modified the return process to fit the COVID-19 era. That includes companies using a Return Bar operated by Happy Returns, based in Santa Monica, California. The company has established Return Bars in brick-and-mortar outlets across the United States, including stores in the Harmon Face Values and Cost Plus World Market chains.Consumers start their return transactions online and then bring their items to the Return Bar, with no need to worry about packaging or shipping labels. A "Returnista" at the bar assembles all the returns bound to the same e-commerce merchant in one box and ships it via UPS to a Happy Returns processing hub.When the pandemic closed Happy Returns' brick-and-mortar partners, it shut down the return service as well. But as stores started to reopen in mid-May 2020, Happy Returns went back into business with some modifications to take physical contact out of the process.Today, when a customer starts a return online, the software generates a quick response (QR) code. At the Return Bar, they show that code to the Returnista. "The QR code can be scanned from a distance," says David Sobie, co-founder at Happy Returns.Pre-COVID-19, the Returnista used to examine the returned item to confirm its condition. Today, the online merchants forego that step in order to eliminate another touch point. Instead, the customer holds up the item, and the Returnista eyeballs it to make sure it matches the description in the QR code, Sobie says. Then the customer places the item in a polybag, the Returnista scans a QR code on the bag, and the customer places the bag in a tote—no mutual contact required.The old process also required the Returnista and customer to pass an iPad back and forth. The QR code has eliminated that step.Like others involved in pandemic-era retail, Sobie doesn't anticipate an eventual return to the old normal: "These changes are here to stay."
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