The beginning of another new year – and that means a raft of changes to how 3PLs are meeting both consumer and merchant demands for a fast and effective order fulfillment process.
2020 represented a transformative year for the industry and the wider retail marketplace as it collectively sought to manage the wide-ranging consequences of the COVID-19 pandemic.
With consumers pivoting to ecommerce amid a proliferation of over-stretched supply chains and carrier networks, we’ve seen a rapid acceleration in the move away from brick and mortar towards online channels – with 3PL providers both reaping the benefits and weathering the challenges of this shift.
So, what does logistics look like in 2021? It’s set to be a continuation of high demand in ecommerce, paired with a renewed push to address long-standing issues within the sector via new technologies and approaches.
Here are 4 top logistics trends to watch out for in 2021:
As the COVID-19 pandemic surfaced in 2020, D2C fulfillment has rapidly shifted from an ecommerce offering catering to instant gratification to a vital piece of retail infrastructure.
As in-store shopping restrictions took hold across the globe, many businesses were faced with scaling up their D2C operations to meet consumer demand, resulting in accelerated growth far beyond initial forecasts. It’s estimated that D2C sales were worth $17.75 billion in 2020 – up 24.3% from 2019.
As we head into 2020, reliance on D2C fulfillment has continued unabated – and all signs show that it’s here to stay.
It’s no secret that the D2C model offers businesses some major advantages; because it removes the need for intermediaries and high overheads, D2C helps brands to maximize profit margins and maintain more control over key touchpoints with customers. In fact, many newly-launched brands are choosing to forgo other retail channels altogether, with a further 19.2% growth forecast for 2021.
However, increased saturation in the marketplace will mean greater competition for digitally-native brands. Succeeding as a D2C business in a landscape characterized by both consumer demand for seamless delivery and intense pressure on shipping networks requires a sophisticated fulfillment strategy with the ability to scale efficiently.
As businesses continued to grapple with pandemic-induced order volume increases and same-day delivery expectations, 3PLs are looking for new ways to streamline their operations and increase efficiency.
Automation within warehousing and supply chain management has been around for the past decade, but technological advances and lower upfront costs have made this more widely available to 3PLs with different-sized footprints.
As well as helping to increase productivity and eliminate human error, robotic automation better positions 3PLs to manage seasonal fluctuations in both the labor market and consumer demand. It also enables them to redirect workers to more complex tasks that are more cost-effective and carry a lower risk of injury.
A great example of this is LocusBots, whose machines are equipped with autonomous navigation technology to coordinate pick-and-pack efforts within PLG’s own warehouses alongside human workers. Furthermore, AI enables these robots to provide valuable insights into the most effective travel routes and ‘hot spots’ within the warehouse.
We are also seeing signs of both robotic and AI automation making further inroads into the delivery process itself, with self-driving delivery vehicles and delivery robots seeing higher, albeit localized, usage in major cities, such as Amazon’s Scout delivery bots.
As consumer demand continues to increase, we can expect to see more sophisticated deployments across the supply chain.
There’s a logistical puzzle within the world of D2C fulfillment that’s plagued 3PLs and logistics partners for decades – the so-called ‘last mile’ problem.
The last mile refers to the last stage of the delivery process (when an order is on its way to the customer). Because the mechanics of delivery vary widely according to each customer, the last mile has been historically difficult for 3PLs to streamline. The final journey looks very different depending on whether delivery is urban or rural, a house or a P.O box – meaning it can account for as much as 50% of total supply chain spend.
As costs mount with increased home deliveries, 3PLs are embracing new strategies in 2021 to lessen the impact of the last mile. This includes strategic proximity between customers and facilities via a multi-node fulfillment approach, real-time delivery tracking for customers, and optimized transportation routes for faster delivery.
With both merchants and 3PLs under growing pressure to facilitate faster turnarounds, streamlined last mile logistics are now essential to ensuring customer satisfaction.
Sustainability is no longer a desirable trait; it’s a must-have in 2021. Consumer mindsets and habits have shifted noticeably in the past few years due to an increased understanding of the amount of waste and emissions that order fulfillment processes can create.
According to the CGS 2020 Retail and Sustainability Survey, 56% of U.S. consumers say they are willing to say more for a sustainable product. This gives businesses much greater leeway to pursue sustainability strategies with larger upfront costs – including order fulfillment. Practices such as using recyclable or biodegradable packaging, efficient transportation routes for lower emissions, and renewable energy methods are now common areas of scrutiny from merchants as well as consumers, as they look for new ways to reduce their operation’s carbon footprint.
In sum, it’s no longer appropriate for logistics operators to treat eco-friendliness as a niche fad. With increased numbers of consumers demanding green practices from the brands they support, 3PL’s individual sustainability records are beginning to exert a bigger influence on who merchants choose to partner with.
As consumers and merchants demand more sophisticated solutions for logistics and delivery, PLG is on hand to provide you with the latest in technologically-advanced omnichannel fulfillment.