Facts & Challenges
The e-commerce sector is one of the most dynamic and fastest growing industries in Germany. It includes online trading and online services. In recent years, online retail has become an integral part of retail companies and has enjoyed steadily growing popularity among consumers, especially since the coronavirus pandemic. The total turnover of online retail in Germany is around 100 billion euros. During the pandemic, online retail sales increased, particularly in the food industry, with online pharmacies and streaming services. Large online retailers such as Amazon experienced a huge increase in orders. Smaller companies and retailers that had previously neglected online business also jumped on the e-commerce bandwagon. During the coronavirus years, sales rose by around 20% in each case. As expected by German E-Commerce and Distance Selling Trade Association (bevh), sales growth in online retail is now slowing down due to various factors such as the declining corona effect, inflation, recession, war and unsettled consumers.
The increase in online retail has led to a sharp rise in demand for fast logistics and omnichannel strategies from companies and their customers. Nowadays, customers expect fast, precise and faultless delivery of ordered goods within specified time frames to heir home or to pick-up stations. For logistics, online retail and omnichannel strategies mean an enormous effort. Essentially, the aim is to offer customers a seamless and consistent shopping experience or customer journey, regardless of whether they buy from an online store, a retail store or other channels. All sales channels are integrated in the omnichannel strategy and omnichannel logistics. This means that orders are not picked separately in dark stores, but are recorded centrally in the same system and processed independently of the sales channel. Other features of omnichannel logistics and omnichannel strategy include real-time inventory monitoring, flexible fulfillment options (click & collect, same-day delivery, etc.), AI-based analysis of customer data, consistent customer journeys and the transparency and traceability of orders and order status. Another challenge in omnichannel logistics is reverse logistics. E-commerce has to contend with a very high returns rate of up to 50%.
Significant developments in e-commerce include mobile and voice commerce, personalised shopping experiences, the growing use of augmented reality (AR), live shopping on social media, effective marketing, the increasing importance of branding and branding experiences, social commerce and sustainability. As everywhere else, the importance of artificial intelligence (AI) is increasing.
Trends in e-commerce and retail
Online retail is characterised by a wide range of products with sometimes small batch sizes and a highly fluctuating demand. Digital inventory monitoring in real time by means of an inventory management system (IMS) helps to keep track of stock levels.
Omnichannel logistics:
In omnichannel logistics, various online and offline sales channels are integrated and recorded by a common system. Orders are processed independently of the sales channel. The omnichannel strategy is characterised by flexible fulfillment options, a high return rate and very fast delivery options such as same-day delivery, among other things.
The complexity of omnichannel logistics in e-commerce requires flexible and efficient warehouse systems. The combination of manual and automated warehouse systems is frequently encountered here. Partial automation can be worthwhile for many companies. Comprehensive monolithic solutions with a high degree of mechanisation are often no good solution for economic reasons and the risk of losing flexibility.
Industry 4.0, digitisation and automation are also shaping online retail:
The following fields, among others, can be optimised with the help of AI:
- Procurement
- Demand forecasting
- Warehouse management, supply chain
- Customer experience
- Returns management
- Route planning
In addition, the resilience of supply chains will be strengthened.
Many new sales and marketing trends are constantly emerging in online retail:
Examples include mobile and voice commerce, live shopping, social media commerce and the use of VR, e.g. when trying on clothes digitally. The shopping experience or customer journey is becoming increasingly personalised. Efficient marketing and branding are a major challenge.
Online retail is caught between quick commerce and sustainability. The European Green Deal obliges companies to adopt more environmentally friendly practices. Examples include reducing packaging materials, promoting recyclable products and using renewable energy in operational processes. Another new trend is the so-called re-commerce of used items and clothing in online and stationary retail.
Persisting in a difficult economic environment:
Inflation, recession, conflicts and political uncertainties are affecting customers' willingness to consume, as well as companies' supply chains and operating costs. Countermeasures include creating an exceptional shopping experience on various channels, outstanding services, attractive offers and customer service, efficient marketing, and an emphasis on values and branding.
What are the requirements for logistics?
The various channels in omnichannel retail require flexible and efficient logistics and a combination of manual, automated and semi-automated warehouse systems. The implementation of an inventory management system (IMS) or a warehouse management system (WMS) is a prerequisite for full or partial automation in the warehouse. The purpose of an IMS or a WMS is to manage and optimise internal warehouse processes. Different handling capacities and access times in manual and automated warehouses must not only be taken into account in warehouse planning, but also when goods are stored and retrieved and orders are assigned to pickers by the WMS. SMEs and start-ups in online retail in particular should consider an efficient and cost-effective solution such as the cloud-based BITO PULPO WMS. Implementing the PULPO system results in greater cost efficiency by reducing warehouse operating costs, eliminating manual processes and shortening order throughput times.
Plastic bins and containers are widely used as loading units. This means that storage systems must be adapted to the bins or containers in use. Since they are too small to be handled by forklift or hand pallet truck, warehouse operators need to install a conveyor system to link workstations. Bins and containers are also used in automated storage and retrieval systems (ASRS), miniload or Autostore systems. Miniload systems are fully automated storage and retrieval systems for storing and picking bins, cartons and trays (i.e. smaller unit loads or small parts). They considerably increase storage capacity, handling speed, safety and warehouse throughput. Flow racks for fast-moving items and multi-tier systems for simultaneous order picking on several levels are particularly suitable to speed up picking in e-commerce warehouses. In addition, automated guided vehicles (AGVs), autonomous mobile robots (AMRs) and collaborative robots are being frequently used in e-commerce warehouses to assist with a wide range of tasks. Since online businesses usually have a very high rate of returns, there is an interest in handling returns as efficiently as possible.
Storage systems from BITO enable the efficient management of small to medium-sized portfolios that are typical of online mail order businesses. For sectors with a large number of items, BITO offers systems that score with an extremely low error rate. In e-commerce, errors in order picking must be avoided whenever possible, as they lead to the loss of customers. With storage systems from BITO, companies can react flexibly and very quickly to changing item quantities, order volumes and mixed orders. BITO storage systems have a modular design and are therefore particularly suitable for fast-growing companies and start-ups in online retail.