Ecommerce fulfillment—the process of storing, picking, packing, and shipping products and delivering them to online shoppers’ doorsteps—is now a top priority for retailers, and understanding current and future trends around the process is key to growing your business.
Once considered a back-office supply chain function, ecommerce order fulfillment is now a core element of the online shopping experience and an area where retailers can carve out a significant competitive edge.
Indeed, if you get your order fulfillment right, you can get your ecommerce business on the right track. But ensuring your order fulfillment operations run smoothly from click to delivery—so that you can keep customers happy while keeping operating costs down—is a major challenge.
How are online retailers coping with the challenges of using ecommerce fulfillment services and capitalizing on opportunities? How can you transform ecommerce order fulfillment into a competitive differentiator for your business? What do you need to do to prepare for the future of omnichannel fulfillment services across your sales channels?
To answer these and other critical questions, Amazon commissioned Forrester Consulting to conduct a survey of 300 ecommerce executives in the US and produce a study From click to delivery: Unleashing the power of ecommerce fulfillment.
Based on the findings of this study, we’ve identified five key ecommerce fulfillment trends that are shaping the future of ecommerce fulfillment services.
#1: Shoppers’ expectations for ecommerce order fulfillment speed continue to accelerate
One trend that we see playing out in the ecommerce world is that online shoppers continue to demand increasingly faster order deliveries.
According to the Forrester study, ecommerce leaders say that in 2019, customers expected a click-to-delivery speed of 5.7 days on average, while customers today expect a click-to-delivery speed of 2.5 days, and in 2029, customers will expect a click-to-delivery speed of 1.5 days.
Additionally, 85% of ecommerce executives state that their customers have become far more demanding over the last five years in terms of delivery speed expectations, and 80% predict that this trend will continue over the next five years.
If you want to meet your shoppers’ need for speed today and in the future, you must invest in continuously improving your end-to-end logistics capabilities or engage a third-party logistics (3PL) provider like Amazon Supply Chain Services (ASCS). ASCS has the fulfillment network and expertise to ensure ongoing click-to-delivery excellence.
Multichannel Fulfillment (MCF) is a service within the fulfillment arm of Amazon Supply Chain Services (ASCS), Amazon’s broader end-to-end logistics solution. ASCS services cover every step of the supply chain, including inbound transportation, storage and distribution, fulfillment, and parcel shipping, and businesses can create adopt their choice of services based on individual needs and budget.
#2: Customers are interested in omnichannel fulfillment services
Another trend that continues to have a huge impact on ecommerce order fulfillment is multichannel shopping. Today’s consumers are becoming increasingly accustomed to completing transactions online and are shopping across more and more online sales channels, including brand websites, ecommerce marketplaces, and social media stores.
The Forrester study reveals just how extensively multi-channel ecommerce has taken hold. In 2019, online retailers sold through 4.3 channels on average. This number shot up to 5.4 channels by 2024, and is expected to reach 6.5 channels by 2029.
To drive revenue growth in this complex retail landscape, you must be able to maintain:
- A multi-channel presence, ensuring that you can meet your shoppers wherever they are online.
- A consistent, first-class order fulfillment experience, regardless of which channels shoppers use. And, if your sales channels include in-store, ensuring your omnichannel fulfillment services create a seamless experience.
- Ecommerce integrations, which can connect your back-end systems for automated ecommerce fulfillment.
- Effective inventory management, to keep your products in stock across all of your sales channels.
Many businesses find it hard to handle the challenges and complexity of multichannel fulfillment, so they outsource their logistics operations to a 3PL, like ASCS, that can help them effectively manage order delivery across any channel they sell on.
#3: Order fulfillment plays a major role in online shoppers’ purchasing decisions
The Forrester study also sheds light on another fascinating phenomenon: Ecommerce order fulfillment has a major effect on shoppers’ decisions to purchase and purchase again from online retailers.
Over 80% of ecommerce leaders say that shoppers’ purchasing decisions are influenced to a meaningful degree by the retailer’s delivery speed and costs (and the way these are communicated to shoppers).
The Forrester study showed that order fulfillment has a huge impact across various stages of the customer journey, including:
Conversion: 82% of surveyed ecommerce leaders state that offering faster order delivery speeds has enabled them to increase shopper conversion.
Amazon—maybe more than any other company out there— understands how fast, reliable fulfillment can help drive greater customer conversion and business growth. As the CEO of Worldwide Amazon Stores, Doug Herrington in an article about Amazon’s record-breaking Prime delivery speeds: “We now offer more than 300 million items with free Prime shipping, including tens of millions of products available with Same Day or One-Day Delivery. That is over 20 times more products that we can deliver twice as fast compared to when Prime first launched.”
And that’s why we enable online retailers to provide a fast, free delivery experience not only on Amazon.com, but also on brand websites through Buy with Prime. By offering fast, free delivery to shoppers on their websites with Buy with Prime, businesses have been able to dramatically increase conversion.
Retention: Effective order fulfillment can also help you turn online shoppers into loyal customers. By delighting shoppers with speedy, seamless order delivery and returns experiences, retailers can boost customer retention.
According to the Forrester research, nearly 80% of ecommerce executives say that order fulfillment and return experiences can significantly impact whether a customer purchases from a retailer again.
From click to delivery: Unleashing the power of ecommerce fulfillment
#4: Many businesses struggle to manage ecommerce order fulfillment operations
Although order fulfillment is such an essential part of the online shopping experience and can fuel greater shopper conversion, retention, and top-line growth, many retailers have difficulties handling their pick, pack, and ship operations.
The Forrester study found that today’s ecommerce businesses face numerous order fulfillment challenges, including:
- On-time delivery: Many retailers are struggling to keep delivery promises to customers. On average, only 86% of orders are delivered on time, and 63% of retailers say that at least one in 10 of their orders is delivered late.
- Peak season performance: On-time delivery becomes an even bigger challenge during busy peak shopping periods like the end-of-year holiday season, which typically accounts for a large percentage of annual sales revenue and requires extra capacity (in terms of both storage and workforce) to handle the seasonal spike in orders. In fact, 64% of ecommerce businesses are unable to consistently deliver during peak times as fast as they believe their customers expect.
- Data management: Many online retailers face difficulties collecting and analyzing order fulfillment data and using it to drive improvements. Although 82% of ecommerce leaders say that robust fulfillment data and insights can help them increase the efficiency of their operations, most are unable to track and utilize their data to make informed business decisions. Only about 50% of ecommerce businesses are tracking critical KPIs such as on-time delivery rate, average cost per order, and inventory turnover rate.
To tackle these and other order fulfillment challenges, online retailers must have the right logistics network, systems, processes, and people in place. And—as many businesses lack these resources and capabilities in house—they turn to 3PL providers for help.
#5: 3PL providers and cutting-edge technologies are transforming fulfillment and supply chain automation
A growing number of online retailers are realizing that, as order fulfillment is not their core competency, it would require a major investment of capital, time, and effort to optimize their click-to-delivery operations and consistently meet shoppers’ ever-increasing expectations. Instead of trying to develop order fulfillment expertise in-house, many businesses are opting to outsource.
According to the Forrester research, nearly two-thirds of ecommerce businesses managing fulfillment in-house plan to outsource these operations to a 3PL provider, and 91% are at least interested in outsourcing.
Why are so many online retailers looking to engage 3PLs? The Forrester study reveals a few key reasons.
Business benefits of outsourcing ecommerce order fulfillment
Retailers that outsource their ecommerce order fulfillment to a 3PL can achieve substantial business benefits, such as a 29% improvement in on-time delivery rate and pick-to-ship cycle time, a 28% reduction in cost per order, as well as a decrease of nearly a day in their delivery time, on average. It should be noted that retailers that outsource their order fulfillment to best-in-class 3PLs (or as the Forrester report calls them—“high maturity” 3PLs) have experienced even greater improvements.
Additionally, 79% of ecommerce leaders stated that outsourcing to a 3PL has freed up their time—so they can focus on other critical aspects of their business.
Access to state-of-the-art technologies with a 3PL partner
According to the Forrester study, 82% of ecommerce leaders state that advances in ecommerce order fulfillment services through cutting-edge technologies like AI and robotics will significantly improve their company’s ability to serve customers. Many 3PL providers utilize these innovations and, in fact, gaining access to these technologies is the top reason why ecommerce executives decide to outsource.
Indeed, the breakthrough logistics technologies employed by many 3PLs can help revolutionize ecommerce order fulfillment operations. By working with ASCS’ fulfillment service MCF, for example, your business will benefit from Amazon’s latest and greatest innovations, such as:
- AI-powered warehouse robots, including Sparrow—a robotic arm that can detect, select, and handle inventory, Proteus—Amazon’s first autonomous mobile robot, and Titan—a robot that can lift and carry items up to 2,500 pounds. Amazon is the world’s largest manufacturer of industrial robotics, and uses more than 750,000 robots globally to fulfill customer orders.
- Amazon’s Supply Chain Optimization Technology (SCOT), which utilizes deep learning and huge datasets to accurately forecast demand and automatically decide how to distribute inventory across Amazon’s fulfillment network so it’s as close as possible to customers.
- Route design and optimization software systems, which use machine learning and generative AI to determine the best route for Amazon drivers to take to deliver packages to customers’ doorsteps.
Outsourcing ecommerce fulfillment services and gaining the ability to scale
For ecommerce leaders, the second most important reason for outsourcing fulfillment (right behind gaining access to the latest technologies) is having the capability to expand their business across new channels, markets, or product lines. A 3PL provider—with its expansive network and extensive expertise—can empower you to scale your growth and handle the increased supply chain complexity that business expansion brings. For example, when you engage ASCS as your 3PL, you get access to Amazon’s world-class logistics network, which stretches across 27 countries and has over 2,000 facilities (including more than 200 fulfillment centers) and 1.5M+ employees and partners. You can leverage this network to fuel the growth of your ecommerce business around the globe and across various sales channels.
Turning ecommerce fulfillment trends into your business reality
Is your business ready for the future of ecommerce order fulfillment? Will you be able to meet shoppers’ ever-increasing expectations for order delivery speed across various channels, manage dynamic supply chain challenges, and make order fulfillment a driver of competitive advantage?
In the years to come, the ecommerce landscape will change, but one thing will undoubtedly remain the same: Order fulfillment will continue to be an essential element of the online shopping experience for customers and a critical capability for retailers.
The Forrester study—From click to delivery: Unleashing the power of ecommerce fulfillment—provides invaluable insights on ecommerce fulfillment trends and information on how, by leveraging the power of 3PL providers and cutting-edge technologies, you can set your business up for success in ecommerce order fulfillment today and in the future.
