Growth Of Ecommerce Sparks Creative IT Solutions
The internet boom of the 1990s brought forth a new concept in the retail industry – the “e-retailer”–such as Amazon, Ebay and yes, the infamous Pets.com. With the dotcom bust, many of these “e-retailers” either ceased to exist or they quietly morphed into retail giants in their own right and thus began to challenge the traditional retailers such as Sears, Best Buy and even Wal-Mart.
Ultimately, this growth in online retail sales has resulted in not only a change in which traditional retailers operate but also the way in which they manage their supply chains.These changes have been necessary as “brick and mortar” retailers, those with a physical presence; have steadily lost ground to the likes of Amazon and Ebay. As such, many retailers have opted to create an “omnichannel” approach, which is connecting all shopping channels such as mobile internet devices, computers, bricks-and-mortar, and direct mail, catalog and so on. This omnichannel approach requires integrating the back office to these numerous sales channels. As a result, supply chain management has become a competitive survival technique for retailers to connect distribution centers, fulfillment centers, and transportation systems to these sales channels in order to create a seamless customer experience.
Traditional supply chain software providers such as JDA Software and Descartes are offering solutions for these integration needs. For example, in November 2013, JDA unveiled its JDA In-Store Picking solution. According to its press release, the solution enables retailers to pick e-commerce orders in a store. Designed for grocery, hardline and apparel/fashion retailers, the software accepts orders from retailers’ order management systems and then allocates and clusters them to make efficient use of both store space and time when picking and processing e-commerce orders.
Also in November, Descartes introduced its same-day delivery optimization technology. Utilizing GPS-based fleet statuses, this solution enables dispatchers to receive, automatically assign and execute orders throughout the day, placing pick-up or delivery orders on the routes best suited to meet the customer appointment requirements and cost constraints.
As retailers utilize IT to link their back office with their sales channels, logistics providers are also offering solutions in which to allow retailers and consumers the ability to monitor parcels and to select alternative delivery locations. For example, in 2012 UPS acquired Kiala, a technology provider with a platform that allows e-tailers to offer consumers the option of having goods delivered to a convenient retail location. Through the Kiala platform, consumers can track their parcels online and are notified via SMS, e-mail, or phone when a parcel has arrived at a specific delivery point. Originally with 7,500 deposit locations in Belgium, France, Luxembourg, the Netherlands and Spain, UPS has since expanded the Kiala platform, now renamed UPS Access Point, into the UK and into Germany. UPS is certainly not the only logistics provider to offer such a solution, DHL as well as some of the European post offices offer comparable solutions.
Back in the US, both UPS and FedEx have expanded their traditional parcel tracking options for customers. In 2011, UPS launched “My Choice” which offers customized home delivery services such as rescheduling a delivery, delivering to an alternative location such as to a neighbor’s home or to an UPS Store and requesting a 2-hour delivery window. This year, FedEx introduced “FedEx Delivery Manager”. This is a similar service by which FedEx Delivery also allows package recipients to customize home deliveries and provide visibility to deliveries. The service is available through multiple digital platforms, including a mobile application and mobile web browser.
Both services offer free and premium services. For premium services, fees range from $5.00 to $10.00. In fact, according to FedEx’s fact sheet concerning the service, “Use of some delivery options are available at a nominal fee so customers only pay for the options they want, when they want them. Customers are not locked into a premium-priced membership”.Indeed, UPS’ My Choice offers an annual subscription of $40.00 and as part of that most of the individual fees are waived except for scheduling a 2-hour delivery window ($4.00 fee).
While traditional logistics providers are introducing new IT solutions, emerging providers are also introducing such solutions. Often times, these new breed of providers are developing solutions based on SaaS or cloud computing. One such provider is MetaPack which partners with several different types of delivery companies and offers a delivery management platform based on managed SaaS service. It offers a range of delivery options and identifies the most suitable carrier service for each deliver and provides visibility and control for retailers.
Shipwire, just recently acquired by Ingram Micro, also operates on a SaaS platform and allows for customers to receive on-demand access to warehouses in the U.S., Canada and Europe, thus allowing merchants to access inventory closer to buyers so that they can cut shipping costs and delivery times.
One of the important aspects of this increasing use of SaaS solutions, or cloud computing, is that it allows small to medium size businesses to compete on a more level playing field with larger businesses. Among its benefits is that SaaS solutions usually allows for businesses to get up and running quickly and to pay some kind of monthly subscription fee versus a steep enterprise license fee.
As the retail industry evolves, IT solutions are playing a key role for retailers and consumers alike. Integrating and improving upon back-office operations such as warehouse management systems, order management, inventory management to managing transportation and deciding the best mode of transport, scheduling pick-up and delivery, route optimization and track and trace of packages are among the numerous logistics IT solutions that are vital for retailers. However, for retailers and other businesses, new IT solutions are always on the horizon and will likely cause new waves of disruption in the coming months and years. As such, retailers and businesses will need to be flexible and adaptable to this ever changing business environment.
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