E-commerce survey finds evidence of retailer delivery problems

Business is booming for online retailers but only half are happy with their fulfilment operations, with almost two thirds admitting to not always shipping on time.

Business is booming for e-commerce retailers according to a new global market study announced today by Peoplevox.

Peoplevox’s “The 2017 E-Commerce Fulfilment Report” finds sales of 82 per cent of the e-commerce and multichannel businesses taking part had increased in 2016, with only 6 per cent reporting a decrease in orders. While many voiced concerns over increasing competition, Brexit and currency fluctuations, the majority (88 per cent) expected a further increase in orders during 2017.

Despite such positive results and the generally upbeat outlook for this year, only 53 per cent of respondents say they were happy with their fulfilment and warehouse operations. Purchasing and Forecasting was highlighted as the most common challenge overall with almost a quarter (24 per cent) saying this was the one area requiring the most improvement in 2017.

Furthermore, many of those businesses questioned (63 per cent) admit to not always shipping on time with 34 per cent citing the unavailability of stock being a key reason. When it comes to rectifying shipping errors, the majority (80 per cent) appear accepting of the additional carriage, customer service and warehouse labour expenses as an inevitable cost of order fulfilment. One in five admit to not knowing the cost of shipping mistakes.

A majority (78 per cent) of businesses questioned also find meeting the additional demand for orders at peak times an ongoing challenge in 2016, with just over half (52 per cent) resorting to hiring temporary staff. Paying overtime to existing staff and pulling in staff from other parts of the business were other common solutions.

While 62 per cent of respondents say their business used a WMS, 70 per cent of those that don’t ‘will not’ or ‘may not’ implement one in 2017 for reasons such as complexity, unclear benefits, or believing their business just isn’t ready. A significant minority (30 per cent) say they still rely on their ERP/e-commerce platform for managing the basics of warehouse management.

However, specific business challenges or key IT events appear to impact directly on a retailer’s decision to invest in a dedicated WMS platform. Less than half (40 per cent) state that an increase in picking errors was the main reason they would or had implemented a WMS while other common reasons included sales growth, warehouse expansion, or the implementation of new e-commerce platforms or ERP systems. Just over 10 per cent say poor online ratings had also inspired a move towards implementing a WMS.

Jonathan Bellwood, founder & CEO, Peoplevox, says, ‘While it is encouraging to see so many survey respondents reporting continuing sales growth, which is broadly in line with figures for the online retailing sector as a whole, our report has identified a number of growing pains. These will become increasingly challenging for businesses as they continue to expand rapidly.

‘First and foremost, in this super-competitive era of E-commerce Fulfilment retailers can no longer afford to paper over the cracks. With expectations of next day/same day delivery, customers just won’t accept the apparent inability of online businesses to accurately ship on time, every time, or inadvertently sell items that just aren’t available.

‘These fundamental warehouse and fulfilment issues need to be addressed before they grow into more serious problems that may risk customer loyalty, cause increases in the number of returns, a failure to maximise available sales opportunities, and an escalation in avoidable overheads.’

Bellwood adds, ‘For those still without or delaying investment in the latest technology, the availability of affordable, fit for purpose e-commerce fulfilment solutions now makes it easier than ever to equip their warehouses with the tools necessary for maximising productivity, accuracy and profitability.’

Further reading on e-commerce

Owen Gough, SmallBusiness UK

Owen Gough

Owen was a reporter for Bonhill Group plc writing across the Smallbusiness.co.uk and Growthbusiness.co.uk titles before moving on to be a Digital Technology reporter for the Express.co.uk.

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