e-commerce’s rapid development over the past 10 to 15
years. As a result, we recognize the risk of a similar head-
wind being presented to parcel providers if the migration to
free ‘one-day’ becomes adopted and expected in customer
preferences.”
So where will the industry go from here? To get a better
understanding of emerging fulfillment trends, DC VELOCITY
teamed up with ARC Advisory Group, a Dedham, Mass.,
management consulting firm, to examine warehousing
and fulfillment practices in the age of online shopping.
Together, we conducted a broad industry study that looks
at how practitioners are currently meeting the demands of
e-commerce as well as their plans for the future.
The study was conducted among 59 logistics professionals from a variety of industry sectors (see Exhibit 1) and is
a sequel to a 2016 research project, allowing us to measure
the trajectory of change in warehouse operational profiles,
market pressures and priorities, warehouse order-fulfill-ment profiles, and warehouse technology. What follows is a
look at some of the key findings.
MORE CHANGES AHEAD?
Industry trends aside, what ultimately determines how a given DC operates—from its processes and priorities to its equipment and technology—is the type of fulfillment it’s engaged
in: traditional store replenishment, DC replenishment, drop shipping, or direct-to-consumer
shipping. A facility that mainly handles bulk
orders for store replenishment will look quite
different from one that primarily plays in the
e-commerce arena.
To learn more about the study participants’
operations, the researchers asked them which
types of fulfillment their facilities supported.
DC replenishment topped the list in this year’s
study, followed in rank order by direct-to-con-sumer/e-commerce fulfillment, direct fulfillment of a retail partner’s customers’ orders (drop shipping), and traditional store replenishment.
However, it appears the situation is in flux. When the
study participants were asked how they expect those ful-
fillment activities to change over the next three years, their
responses indicated that a big shift is under way. Some 41
percent said they expected direct-to-consumer fulfillment
to increase “extensively,” and a similar proportion said they
expected a significant rise in drop shipping. A somewhat
smaller number said they expected to see an increase in
replenishment shipments to partner DCs or retail stores.
(See Exhibit 2.)
What the study makes clear is that DCs fully expect
to continue focusing on e-commerce direct-to-consumer
orders and drop-ship work, where they essentially serve as
the fulfillment arm of their downstream partners such as
e-tail websites, says Clint Reiser, director for supply chain
research at ARC Advisory Group. Reiser, who led the study,
i
%
Other
13. 6
Wholesaler
15. 2
Direct to consumer (e-commerce or other direct channel) 40. 7
Direct fulfillment of retail partner’s customer orders (drop ship) 37.0
DC replenishment (to downstream or partner DCs) 33. 3
Traditional store replenishment (to retail locations) 18. 5
EXHIBIT 1
Respondent profile by industry sector
(Percentage of respondents)
EXHIBIT 2
How do you anticipate the fulfillment of these
order types to change over the next three years?
(Ranked by those who said the tasks would
increase “extensively”)
(Percentage of respondents)
