Top Delivery and Fulfillment Challenges in Retail and How to Tackle Them
Delivery and fulfillment are the lifeblood of any eCommerce retailer. A seamless and efficient process not only ensures customer satisfaction but also serves as a competitive edge.
However, navigating the intricacies of delivery and fulfillment can often be a labyrinthine task, especially in the face of high demand and supply chain hurdles. According to Supply Chain Brain, "Retailers and suppliers aren’t making full use of the data that’s available to them. In addition to consumer-level intelligence, they should also be drawing on sales or basket data for both e-commerce and in-store purchases, seasonal trends, weather patterns, holidays, and the pricing strategies of competitors."
Poor visibility into consumer habits and an inability to forecast demand create obstacles in striking the optimal balance between supply and sales.
This article aims to illuminate these issues and propose effective strategies to overcome them, ensuring a smooth shopping experience for consumers while optimizing retail operations.
Top Delivery and Fulfillment Challenges
Retailers can struggle with unique challenges due to the nature of their products and how they typically sell to customers. For example, a luxury retailer could have significantly different supply challenges compared to a retailer that sells staple household items.
Still, there are some similar delivery and fulfillment challenges among all retailers. Here are some of the top delivery and fulfillment challenges for retailers and eCommerce organizations:
- Fast Delivery: Customers expect fast delivery, with many expecting delivery within two days. This can be challenging for retailers, especially when it comes to last-mile delivery, which can be the most expensive part of shipping.
- Scaling Fulfillment: As eCommerce becomes more popular, retailers must scale their fulfillment operations to keep up with demand. This can be challenging, especially for smaller retailers.
- Data Visibility and Reporting: Retailers need to be able to keep customers updated in real-time about their order status. This requires good data visibility and reporting, which can be challenging for some retailers.
- Inventory Management: Retailers need to manage their inventory effectively to ensure they have enough stock to meet demand. This can be challenging, especially for retailers with a large number of SKUs.
- Reverse Logistics: Returns are a significant challenge for retailers, especially in eCommerce. Retailers must have a good reverse logistics process to handle returns efficiently.
- Sustainability: Retailers are under pressure to adopt sustainable fulfillment models. This can be challenging, especially when it comes to last-mile delivery.
- Fulfillment Capacity: Retailers need to have enough fulfillment capacity to meet demand. This can be challenging, especially for smaller retailers.
- Lack of Visibility: Retailers need to have visibility over orders en route. This can be challenging, especially when working with multiple retail fulfillment providers.
- High Volume of Orders: eCommerce sales have been growing rapidly in recent years, and this has led to a high volume of orders for retailers. This can be challenging, especially for smaller retailers.
How to Tackle Delivery and Fulfillment Challenges
Addressing these challenges will require retailers to leverage new strategies and technologies. Thankfully, there are already plenty of turnkey solutions available that can address these issues, and many retailers have pioneered new strategies for selling in the current digital environment.
Here are some of the most important strategies for addressing delivery and fulfillment challenges.
Enhance Decision-Making with Real-Time Insights
Harnessing real-time insights can significantly elevate a retailer's decision-making process, paving the way for more efficient delivery and fulfillment practices. Through the integration of real-time data, retailers can better understand demand trends, enabling them to anticipate fluctuations and adjust their inventory and delivery capacities accordingly.
Sharing this data transparently with suppliers can also establish a more agile and responsive supply chain, ensuring that supply levels align with real-time demand.
Leveraging supplier data offers an additional layer of insight. Suppliers can provide a broader view of market trends beyond a retailer's business, encompassing an industry-wide perspective that includes competitor activities and overarching market shifts.
This valuable information can inform a retailer's strategic decision-making, guiding adjustments in product offerings, pricing, promotional activities, and more. By engaging in this data-driven approach, retailers can enhance their operational efficiency, supporting improved delivery and fulfillment processes.
Promote Strategically Based on Demand Forecasts
Strategic promotions can be an effective tool for retailers to exploit demand spikes, manage inventory, and stimulate sales during periods of low demand. Predictive analytics and real-time data insights can aid in forecasting demand, enabling retailers to identify the optimal timing for promotions.
When demand is high and outpacing supply, a retailer might choose to delay promotions to avoid stockouts and ensure a smooth customer experience.
Conversely, during periods of low demand, strategic promotions can help move products and maintain a fresh inventory. Promotions can clear out products that are nearing the end of their shelf life or seasonal items that need to be sold before the season ends.
This approach can also help maintain a consumer’s shopping experience, making sure that out-of-stock items do not dominate their view.
Keep Inventory Fresh and Reduce Out-of-Stocks
Keeping inventory fresh and reducing out-of-stocks is crucial to maintaining customer trust and loyalty. Customers expect to find their desired products available when they choose to make a purchase.
If a particular item is consistently out-of-stock, customers may seek alternatives, leading to a potential loss of sales and customer loyalty. Regularly refreshing the inventory ensures that products are available when customers want them, allowing retailers to fulfill orders promptly and maintain a positive shopping experience.
A fresh inventory contributes to the overall image and reputation of a retailer. It showcases the retailer's ability to keep up with market trends and meet customer demands timely.
On the other hand, a stale and out-of-stock inventory may suggest poor management, resulting in a damaged brand image. Implementing an efficient inventory management system that leverages real-time data can help retailers predict demand, manage inventory levels effectively, and avoid the pitfalls of out-of-stock scenarios.
Keep Consumers Engaged by Offering Alternative Products
Offering alternative products when a customer's desired item is out of stock is a powerful strategy to keep consumers engaged and prevent shopping cart abandonment. This technique, known as product substitution, involves suggesting similar items or alternatives when a particular product is unavailable.
Retailers can leverage data insights to understand customer preferences, browsing history, and buying behavior to recommend products that align with their tastes. This personalization can significantly enhance the customer shopping experience, making them feel valued and understood.
Product substitution can reduce the likelihood of lost sales and increase customer retention.
Master Your Delivery and Fulfillment Challenges
Other challenges can arise during delivery and fulfillment, especially on the logistics side. For example, it can be challenging to find drivers who can haul heavy or bulky products at a moment's notice.
However, by leveraging data, strategic promotions, and personalization, retailers can reduce their delivery and fulfillment issues substantially.
To learn more, don’t miss eTail Palm Springs, happening from February 26th to 29th at the JW Marriott Desert Springs, Palm Springs, CA.
Download the agenda and register for the event today.