Online retailers struggle with challenge of increasing order volumes

Online retail has undoubtedly been one of the fastest moving developments in retail history. Fierce competition and improvements to infrastructure have resulted in growing customer expectations and as a result has generated increasing parcel volumes for even the most recently established online retailers. This is especially true here in the UK, where according to the BBC the average online spend per household is higher than both Norway and the US, which is placing enormous pressure on our online retailers.

We wanted to see just what pressures internet retailers are under and how they’re dealing with the challenges that the industry currently faces. As a way to get under their skin and learn more about who they are and how they’re addressing such a rapidly changing marketplace, we interviewed 100 mid-tier online retailers to get some insights.

Peak volumes

We found that internet retailers who handle up to 50,000 parcels per day are facing major human resource issues in the warehouse, as 45% of them claim that they have had insufficient warehouse staff to cater for the large volumes of orders that they receive.

According to respondents, inefficiencies in the warehouse have contributed to slow order processing, increased risk of errors and damaged goods, while fast turnaround of stock is causing depletion and unexpected order delays. In the midst of strong competition, online retailers are forced to maintain high standards both in delivery timelines, and in warehouse handling.

Arguably the biggest challenge that online retailers face in this climate is the pressure to deliver to these high standards during peak order periods. Over two thirds of respondents reported potential order increases of at least 25% during peak periods, with some seeing a rise of as much as 75% or 100% in parcel volumes. Often peak periods occur during national holidays or in response to a trend or sale events, which can be an issue when staff numbers have not been correctly planned for.

 

Customer demands

The diminishing presence of the high street has perpetuated itself as shoppers are not only choosing to shop online due to convenience but are actually becoming reliant on click to buy. 48% of our respondents predicted the death of the high street as we know it within 5-10 years. With fewer high street options the bulk of retail is rapidly moving to online channels.  Simultaneously rapidly increasing consumer demands have been continuing to push online retailers and their infrastructure to the limit. The consumer now expects a host of premium features, including next day delivery, order tracking and very often the ability to return deliveries within a 48 hour time frame.

 

Slow to automate

Despite recognising these growing pressures online retailers have been surprisingly lethargic towards implementing warehouse automation. Even though 90% admit that automation will be necessary for them to remain competitive within the next 10 years, 89% of our respondents are still at least partly reliant on manual warehouse processes.

There is, however, a growing urgency for online retailers to deal with these rapid changes to industry as 83% claimed that investment in automation would facilitate further growth. In fact, almost half of the online retailers we spoke to were already planning to execute warehouse automation projects in time for the next peak period

 

About Conveyor Networks:

Daresbury-based Conveyor Networks is a systems integrator and solutions provider founded in 2009. Working from design and build through to servicing and maintenance, it offers retail and eCommerce businesses of all sizes, best-in-class warehouse software and automation solutions. It engineers imio software, its own modular warehouse management system and can run everything from conveyors and sortation to packing lines, fully automated processes and carrier integration.



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