Many retailers are still grappling philosophically about what e-commerce means to their business and how to integrate e-commerce fulfillment operations with other distribution channels, he says.
"There has been lot of focus on e-commerce as a stand-alone channel, but the industry buzzword these days is "˜omni-channel,' which is a term that reflects the different ways that customers are looking to purchase products, whether through smart phones, tablets, a traditional PC or even something as crazy as walking in a store and buying off the shelf," he says. "The challenge is to satisfy each of those customers and provide them with a seamless experience in which they can buy and return from different channels - and to make money in the process, which is the fundamental purpose of those organizations."
Even customers not directly involved in e-commerce are feeling its effects in terms of changing service expectations, says Breckenridge. "More customers are looking for fulfillment of small, onesy-twosy orders," he says, noting that this includes companies in the business-to-business sector that don't deal directly with consumers. "Our clients are primarily in the industrial distribution sector, but they also are looking at different requirements from their customers, who want higher responsiveness at the same cost point," he says. Even though this pushes handling costs higher, "our clients have to be able to deliver."
Distribution centers are adopting new technologies to support this type of fulfillment and to drive higher levels of throughput, says Breckenridge. "We are now seeing some deployment and heavy interest in highly automated types of processing solutions that have not been traditional in the U.S. but that have been used extensively in the EU, where people are used to higher levels of automation in operations."
Another trend among retailer that Breckenridge notes is the push back of some functions from stores to DCs in an effort to reduce store costs. "This may mean that suboptimal processes or some additional costs will have to be borne by DCs," he says. "I think this will have a very large impact on both DC and store operations."
