The Retail Supply Chain and The Future of Fulfillment

With the holiday season coming to a close, retailers are constantly evaluating their supply chain and transportation providers to ensure they are able to get products to their destination, either the store or the customer’s door. UPS and FedEx have projected record shipments between Thanksgiving and Christmas Eve, a demand that’s driven higher each year by e-commerce. Holiday deadlines for domestic shipping are right around the corner, reigniting conversation on innovation in fulfillment. UPS has already indicated some challenges in keeping up with deliveries this season.

Turning a store into an online fulfillment center is a leading example of omnichannel retail. In 1999, multichannel retailer Circuit City pioneered the option to buy a product online and pick it up in-store. Today the bar has been raised beyond store-based fulfillment as retailers are turning bricks-and-mortar stores into local distribution centers. Startups like Postmates are making it happen for Apple in San Francisco Bay area ZIP codes and now most of Manhattan.

Retailers Using Instacart
Target
Whole Foods Market
Gelson’s Markets
Yes! Organic Market
Costco
Petco Now
Safeway
Harris Teeter
Magruder’s
(Source: Forbes and The New York Times)

The rise of same-day shipping has many retailers experimenting with Google Express and Instacart in big cities. And then there’s Uber; the service has already revolutionized the transportation industry and it continues to diversify its offerings. From UberTREE to testing a standalone UberEATS app, the “uberization” of holiday delivery could be next. But this could be only the tip of the fulfillment iceberg: It’s only a matter of time before retailers start utilizing drones for delivery in a limited area — Amazon is reportedly testing an air cargo operation of its own.

Retailers Using Google Express
Staples
Walgreens
Toys “R” Us
Giant Food
Costco
Ulta Beauty
PetSmart
Sur La Table
Guitar Center
Kohl’s
Barnes and Noble
Payless ShoeSource
L’Occitane
Logan Hardware
(Source: Internet Retailer)

Meeting these demands is achieved through continuous planning and close coordination among all parties. A disruption at any point, whether it’s port congestion, lack of capacity or available drivers or weather delays, can have an impact on getting holiday merchandise to stores or homes on time. It was only a year ago when disruptions from a labor negotiation caused massive cargo congestion at West Coast ports, which had a negative impact on the retail industry and others throughout the year.

Most of the complexities inside the retail supply chain — from inventory management to delivery — can be taken for granted as the pressure to create a seamless customer shopping experience intensifies. The pace of innovation isn’t slowing down and regulations must keep up. Legislation at the state or federal level should not stifle innovation or prohibit the creation of efficiencies in the supply chain, whether it be the use of technology, people or a mode of transportation.

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