Ready for Black Friday?

A busier but more elongated Black Friday peak should play well for manufacturers of automated handling, storage and picking solutions. For one, more retailers are considering automation simply to keep on top of rapidly escalating order volumes. Secondly, a less peaky but longer peak period has a better chance of smoothing out bottlenecks, whether they come with couriers or at the packing bench, and allow fast automated systems to prove their worth for longer.

Having made a huge investment in automation, retailers will be keen to leverage this technology for as long as possible. While retailers must respond to consumer desire, the smarter brands will be nudging users towards options that make most sense for them.

MetaPack data analysis and market insight forecasts the significant and strategic change during this year’s ‘Peak Period’. While parcel volumes are predicted to reach record numbers over the Black Friday weekend and in the run-up to Christmas, it believes that the industry is much better prepared than in 2014 and will be providing more flexible delivery offerings to ensure the delivery network can support commitments made to customers.

MetaPack anticipates this shift in retailer’s strategies will result in deliveries being offered and managed over longer time periods. The challenging next-day delivery offers of previous years will be replaced by a more measured approach and a number of tailored promotions, for example, prioritised delivery may only be offered to customers signed up to premier services or will be clearly available as a ‘one-day-only’ offer. In addition, three or even five-day arrangements will have the effect of levelling-out the process from initial order through to final delivery. The fundamental aim will be to meet delivery promises and ensure clear communication to customers.

Although MetaPack fully expects orders to hit record numbers over the Black Friday weekend and parcel volumes to reach twice their average weekly rates as a result, it anticipates that sustained high volumes will run throughout December with a second delivery peak forecast to reach the highest numbers immediately after the Christmas break and before New Year.

A leading think tank has recommended owners and occupiers future proof their warehouses in the face of massive market disruption from eCommerce.

Businesses have been urged to give serious consideration to warehousing plans in the wake of profound market disruption caused by the growth of online retail, says the eCommerce Logistics Think Tank. The think tank comprises thought leaders from Total Logistics, Colliers International, UMC Architects and KAM Project Consultants.

The group says a ‘generational shift’ is taking place with online retail changing two key aspects of warehousing. 

The first is a shift to greater single item picking and packing, as opposed to traditional pallet-in, pallet-out operations. The other shift relates to growth rates. With much higher growth rates than traditional retail business, facilities are reaching capacity much more quickly.

The report outlines that it is not uncommon for an online retail business to post 30% annual growth figures, while a more traditional business would grow at something more like 5% per annum. If this business growth is reflected in warehouse floorspace required, a traditional business can expect to need 16% more space by Year 3 and 48% more space by Year 8. In short, after 8 years the business will need about one and a half times the space it started with.

In contrast, if online retail growth rates persist – at Year 3, the business will already need 2.2 times the original space. At Year 8, the business will need more than eight times the warehousing it started with.

The report says: “The eCommerce market is fast-moving and a new build can take 12-18 months minimum, assuming a good planning scenario. Specifications need to be flexible enough to future-proof change to avoid new buildings becoming outmoded as growth changes occur.”

The report predicts that mechanisation and automation of either storage or picking will become more common in eCommerce for larger scale operations. Other predictions for the next three years include that:

· Urbanisation – eFulfilment will move nearer cities.

· Cost-to-serve for eFulfilment will represent a business agenda item as multi-channel matures.

· Pure-play eCommerce businesses’ power will increase.

· Co-locating retail and eCommerce in the same warehouse may not always be the correct answer.

The report urges planners to get warehouse design right at the start.

The think tank urges to look carefully at warehouse sites with regards to future proofing them, to, for example, have the floor loading capacity to support point loads from automated systems.

A must-read for anyone planning warehousing in the retail arena, you can view the full eCommerce and Warehouse Challenges report here. www.total-logistics.com/downloads-centre.html