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3 Distribution Trends that are affecting the Warehousing Industry

3 Distribution Trends that are affecting the Warehousing Industry

August 30, 2022

In the past, warehouses serviced, for the most part, consumer stores where the customer could browse and select what they wanted to purchase. As a result, distribution costs and delivery points were, on the whole, fixed and relatively easy to manage.

This model has been slowly changing with a steady uptake in online purchases, although much more prevalent in first-world countries than with us in Africa. COVID-19, however, has completely reshaped the industry with a massive increase in online sales worldwide, including in our local economy.

The switch to online transactions requires each company to become much more dynamic in responding to shifting customer ordering patterns. It also means a complete overhaul of distribution networks as customers look to have their goods shipped to them as quickly as possible and most conveniently.

In this article, we talk about three trends that should feature in the strategic planning of every warehouse operation that wants to stay ahead of the curve.

E-Commerce is Growing

As e-commerce grows and online orders become more popular, many businesses must adapt. For example, Statistica projects South Africa to reach US$8,46bn in revenue from e-commerce in 2022, with forecasted annual growth rates of around 17-18%. According to these projections, South Africa should be at US$13.8bn by 2025 in revenue through e-commerce. As a result, warehouses and their associated industries need to ramp up to handle the rise in e-commerce and satisfy more discerning customers. As a result, many warehouses have opted for a more comprehensive warehousing network, a more robust distribution system, or a combination of both.

A More Discerning Customer

Customers demand that their orders are fulfilled correctly and as quickly as possible. Therefore, keeping customers happy is a strategic imperative for the warehouse industry.

On that point, if customers are not satisfied with a purchase, they want to be able to return them with little friction and fuss. Returns can be complicated. Thus, you need processes and supporting systems, such as a warehouse management system, to handle these complex and often costly functions. Efficiently run returns departments help companies to get their inventory back on the shelves for resale quickly, providing additional revenue opportunities.

Customers want what they want, how and when they want it leading to pressure on all aspects of the including last-mile delivery. This trend forces distributors to look at all avenues to get their goods into their customer’s hands in the least possible time. So, more companies are using both internal fleets as well as external carriers, leading to a trend called omnichannel fulfilment.

Omnichannel fulfilment

This is where businesses use multiple selling channels to give customers what they want. Customers demand more ways to shop, and warehouses must adapt to omnichannel fulfilment to stay relevant and competitive. Customer demands and a short-term influx of orders (over Christmas, for example) have led to some companies opting for pop-up warehouses, a temporary place to store and sell their products. For example, a potential customer might want to go to their local retail store for a specific product but wants to check online to see if that store stocks it. Or the customer might want to buy online and pick it up in-store. Or the customer sees something in-store and buys it online later.

Of course, many more trends affect the warehousing and distribution industry: robots, autonomous machines, big data, millennial employees, and the like. Apex upcoming blog articles will cover some of these trends in more detail.

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