Retail ecommerce accounted for more than 19% of retail sales globally in 2023 and is expected to make up nearly a quarter of total sales by 2027. Shoppers are comfortable with online shopping and enjoy the convenience of shopping from anywhere in the world. With global internet access at more than five billion users in 2024, ecommerce sales are expected to surpass $6 trillion.
It’s easy to see that ecommerce continues to grow, but how is that growth impacting ecommerce warehouse management?
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The Amazon Effect on ecommerce warehouses
The “Amazon Effect” has forever changed consumer buying behavior, resulting in the need for fulfillment logistics companies to adjust their strategies. Amazon not only helped shoppers feel comfortable shopping online, driving the astounding ecommerce growth, it set the expectation for a variety of reasonably priced goods available with same or next-day delivery.
To meet the evolving demands of consumers while ensuring profitability and driving growth, 3PL companies must adopt solutions that offer a combination of flexibility, convenience and competitive pricing. By utilizing the latest in fulfillment software, like Logiwa’s fulfillment management system (FMS), Logiwa IO, warehouse operators can successfully evolve to meet ever-changing consumer demands.
Challenges facing ecommerce warehouses
Everyone from direct-to-consumer (DTC), business-to-business (B2B) and hybrid fulfillment operations is experiencing the strain of ecommerce growth as it highlights inefficiencies and unnecessary costs. Legacy warehouse management systems (WMS) are often not prepared for all of the activities within a modern fulfillment center.
This is what led Logiwa to develop its industry leading FMS with an emphasis on AI-driven receiving, putaway, picking and packing, shipping, and replenishment. All built with a headless architecture to provide a flexible system that is easy to integrate with ecommerce platforms.
Watch the brief video above for a glimpse of what Logiwa IO’s pioneering architecture can do.
Here are just a few of the ecommerce warehouse challenges that are addressed by advanced fulfillment management systems like Logiwa IO. We’ve highlighted three that are of particular importance during high-volume periods like Peak Season.
Managing real-time inventory and preventing stockouts
LogiwaIO offers complete visibility and control over your inventory. Real-time tracking between all your online sales channels and fulfillment centers ensures accurate stock levels to prevent overstocks and stockouts. Our fulfillment management system uses artificial intelligence and smart algorithms to optimize putaway and reduce picking time, as well as minimize errors and improve order accuracy.
Labor shortages and workforce management
A major challenge for fulfillment organizations is attracting and retaining workers. High turnover rates and the time needed to train new employees can significantly impact overall warehouse efficiency.
Organizations are looking for ways to enhance worker productivity and reduce problems associated with turnover, including worker injuries, mistakes, and higher costs.
One way to combat these challenges and enhance worker productivity is with labor standards. Historically, fulfillment organizations struggled to set meaningful labor standards due to the lack of complex data collection throughout the fulfillment process. Many relied on arbitrary standards, historical data from warehouse management systems, or time studies by consultants.
Today, AI and predictive analytics enable the creation of realistic labor standards based on accurate data. Warehouses, no matter how automated, will always need workers. How you train and manage employees will determine how to attract and retain the right people.
Handling returns efficiently
The issue of returns is particularly important to ecommerce. With ecommerce returns more than three times as high as for brick-and-mortar stores the value of returns is estimated to be more than a trillion dollars.
For 3PLs, the cost extends beyond mere monetary value, and includes added labor time, transportation, and the need for additional warehouse space. Offsetting the cost of returns is imperative and requires advanced fulfillment management systems.
With the power of AI-driven systems, like Logiwa IO, high-volume fulfillment operations can get goods back to the supply chain faster, recover higher profits on returned goods, and route returns to the best fulfillment centers. And perhaps most importantly can help to understand the underlying causes of returns.
Technological advancements in warehouse management
Warehouse operations can be slow to adopt new technologies. But to keep up with the growth of ecommerce and changing consumer demands, smart warehouses are automated for improved efficiency and accuracy.
Technologies like IoT, sensors, and barcode scanners automate manual, time-consuming, and error-prone tasks in warehouses. Drones and robots enhance picking processes for faster order fulfillment, while AI and machine learning optimize operations from putaway to shipping. At the center of all these technologies is the warehouse management system.
A modern fulfillment management system (FMS), like Logiwa IO, integrates easily with other warehouse systems. The system uses the vast amounts of data collected from all of these sources to reduce labor-intensive tasks, minimizes errors, and optimizes operations, resulting in significant time and cost savings.
Systems like Logiwa IO provide real-time data access for enhanced visibility and control. Loigwa IO provides:
- Continuous optimization
- Greater flexibility
- Increased accuracy
- Reduced pick and pack times
- Enhanced safety
- Higher customer service
Future trends in ecommerce warehouse management
Amazon was primed to meet the changes in consumer demand and set the bar for ecommerce fulfillment. Thanks to the Amazon Effect, we are seeing continued change in the way suppliers and businesses deal with this growth. Legacy WMS are not able to keep up with the continually evolving ecommerce landscape.
The future of ecommerce warehouse management is being shaped by several key trends, reflecting the rapid evolution of the industry. From the integration of advanced technologies to the adaptation of new fulfillment strategies, warehouses are transforming to meet the demands of the modern consumer.
Automation and Robotics
Automation and robotics are at the forefront of warehouse innovation. Technologies such as automated picking systems, autonomous mobile robots (AMRs), and drones are increasingly being adopted to enhance efficiency and accuracy. These advancements reduce the physical strain on workers and significantly speed up fulfillment processes. Companies like Logiwa are making these technologies more accessible, facilitating the transition for businesses aiming to modernize their operations.
Omnichannel Fulfillment
Omnichannel strategies are essential as customers now expect seamless shopping experiences across various platforms. Advanced inventory management systems that provide real-time updates and dynamic order fulfillment methods, such as ship-from-store, are critical in meeting these expectations. These systems ensure efficient order processing and reduce delivery times and costs by leveraging inventory from multiple locations.
Data Analytics and AI
The use of data analytics and artificial intelligence (AI) is revolutionizing warehouse management. Predictive analytics tools help optimize supply chain efficiency, implement predictive maintenance strategies, and minimize transportation costs. AI applications in demand forecasting, inventory optimization, and automated sorting and picking systems enable more responsive and proactive operations, giving businesses a competitive edge.
Last-Mile Delivery Innovations
The final leg of delivery, known as last-mile delivery, is seeing significant innovations. Drone deliveries and autonomous vehicles are becoming more prevalent, allowing for faster and more efficient delivery to remote areas while reducing labor costs and environmental impact. These technologies, combined with crowd-shipping models, are reshaping the logistics landscape to better meet the growing demands of ecommerce.
Sustainability and Efficiency
Sustainability is a growing concern, and warehouses are adopting greener practices. The use of electric vehicles for deliveries, energy-efficient warehouse designs, and the implementation of sustainable packaging materials are becoming standard practices. These initiatives not only reduce the environmental impact but also improve the overall efficiency and cost-effectiveness of warehouse operations.
Conclusion
In summary, the future of ecommerce warehouse management is being driven by technological advancements, omnichannel strategies, data analytics, last-mile delivery innovations, and a focus on sustainability. These trends are reshaping the logistics and fulfillment landscape, enabling businesses to meet the increasing demands of consumers while maintaining operational efficiency.
Ready to future-proof your warehouse operations?
Concerned with meeting the demands of high-volume fulfillment time like Peak Season?
Wondering how to take your 3PL to the next level?
One of Logiwa IO's fulfillment specialists can address all these questions and more with a quick chat. Schedule a call with one of them today!
FAQs about ecommerce’s growth
What is the Amazon Effect?
Amazon set the standard for online shopping with its fast service, varied selection, attractive pricing, and intuitive technology. Consumers rapidly came to expect this new standard for all of their online shopping.
The Amazon Effect created new challenges for optimizing warehouse operations for brick-and-mortar stores as well as ecommerce. 3PLs must find ways to improve services, streamline shipping, and optimize their fulfillment networks.
Why is ecommerce successful?
Ecommerce has the advantage of ultimate convenience—allowing consumers to shop from any location at any time. There are no lines and no need to travel to a physical store. With an online presence businesses are “open” to customers around the world.
What are the biggest ecommerce challenges?
With ecommerce’s astounding popularity come a variety of challenges including growing competition, constantly increasing customer expectations, low customer engagement, shopping cart abandonment, and the need for easy returns or refunds.
How does ecommerce affect inventory management?
Ecommerce complicates inventory management by introducing a variety of challenges including maintaining real-time inventory availability in multiple locations, streamlining omni-channel fulfillment, and meeting customer expectations.
What is the future of ecommerce warehouse operations?
The future of ecommerce lies in personalization, sustainability, and advanced technologies. Fulfillment management systems (FMS), like Logiwa IO, will leverage AI and data analytics to offer optimization, while prioritizing ethical and eco-friendly practices to meet consumer demands.
Warehouses and 3PLs need to adjust to new challenges. These challenges include social commerce, live shopping, and automation. They can do this by enhancing their operations and customer interactions. Omnichannel fulfillment will continue to become more complicated as enhanced payment options, including digital currencies and BNPL, will offer greater transaction flexibility.
Overall, the ecommerce landscape will become more immersive, efficient, and aligned with consumer values.
