e-Commerce: Turning a Great Idea into a Great Business

Adding e-commerce capabilities to a warehouse or distribution center requires more than installing new equipment or revamping workflows


You want to be sure that your existing systems—ERP, WMS, inventory management, etc.—are fully integrated and automated, and that your e-commerce front-end can be integrated into that system.

The biggest culture shock to organizations that are used to shipping cartons or pallets to stores is the timeframe of order fulfillment. While that business may seem hectic, it’s nothing compared to the pure chaos of picking mixed lots of items in small quantities at high volume—particularly if you carry a large number of SKUs.

Then there are the challenges of customer expectations. With store shipping, you can plan according to a set schedule, which gives you time to work your processes to the way that best suits the business. With e-commerce, everything is reactive, yet customers have been conditioned by their online experiences to expect that orders they place today ship today. As experienced sellers get better at managing their processes, the cutoff time for same-day shipping moves later and later. You need to ensure that your processes can keep up with the established industry standards and expectations of your market niche. Otherwise, you may become a distant second choice—or the last resort.

Plan Your Space

If part of your process planning results in a need for new equipment and/or separate operations, you need to find adequate space. There are three options:

  • The first is to remove part of your current operation and replace it with an area devoted to e-commerce. If your business is shifting away from store fulfillment into more direct sales, that could be the right decision.
  • If you’re looking to add e-commerce capabilities without affecting your current business processes, however, you need to add more space. One way to do it, of course, is to build out—add on to your current facility, build a second facility for e-commerce or consolidate operations in a green-field building designed for both. We’ve had clients do all three.
  • The third possibility is to build up by adding a mezzanine. That way, the main floor can remain dedicated to your traditional distribution systems while the second story is specifically designed for e-commerce. It may take a little additional work and planning, but it is worth it if you can add new capabilities without disrupting the current ones.

Look for Ways to Drive out Cost

If the purpose of moving into e-commerce is to increase profits, then it stands to reason that the more you can drive cost out of your operation, the better you can fulfill that mission. The primary drivers of cost are delivery labor, space and equipment. The winners in e-commerce are those who can deliver reliably, swiftly and at the lowest cost.

Picking is one of the most cost-intensive areas of the process because it’s one of the most labor-intensive. It often accounts for 60 percent of the overall cost of fulfilling an order, so employing automated solutions drives down your costs.

In a traditional DC, automated storage and retrieval systems (AS/RS) automate picking of cartons or pallets. But those are of little value when it comes to picking two boxes of pens, three staplers and five reams of paper for an order in an office supply warehouse. New technologies (such as a system that combines pick-to-light and put-to-voice), however, are taking an important step toward automation.

In these hybrid systems, pickers are able to pick multiple orders at once rather than one at a time. Orders are grouped together by like product as best as possible, reducing the number of times the picker has to go to the same bin to pull those items. The voice technology then directs how many of each product to put into individual totes to complete those orders.

Down the road, advanced systems will bring products to robotic pickers that will have the ability to scan and recognize SKUs, select the correct number for each order and place them in the appropriate totes. This level of automation will further drive down costs while improving order accuracy and efficiency. It’s likely these robots will come to market in the next few years, so consider them for your long-term plans.

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