Established, traditional retailers are increasingly booking online success now that they have their logistics processes in order. They are setting up dedicated fulfilment centres for their online sales. And this is not harming them.
According to The Wall Street Journal, major retailers such as Home Depot and Target are succeeding in delivering their goods to consumers more profitably. Construction chain Home Depot, for instance, saw online sales increase by a quarter compared to a year earlier. It also managed to post higher margins through improved logistics, thanks to increased productivity and lower transportation costs. Target also saw online sales rise by 30 per cent, while overall sales increased by only 2 per cent.
New fulfilment centres alongside existing logistics chain
This is quite an achievement for the traditional players in the market. E-commerce may be driving the number of sales; but it requires considerable expansion in addition to the expensive retail outlets that retailers already have. Distribution networks also need to be completely redesigned. The positive figures of late are said to be due to the deployment of independent fulfilment centres for e-commerce. Last quarter, for instance, Walmart opened four new centres of one million square metres per building, with two more new locations coming this quarter. This should ensure that 90 per cent of online shoppers receive goods within two days. Target also opened six new fulfilment centres. The existing logistics chain is said to be bursting at the seams, so the opening of six new centres gives it breathing room. Target is spending a billion dollars on optimising its logistics this year alone.
Consumer choice
Emerce writes that companies are realising that consumers today demand convenience and choice when it comes to e-commerce. Existing distribution centres were not geared to this, as they were mainly suitable for pallet and bulk handling and not the distribution of individual items.
Editorial LogistiekProfs
