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 Managing Brick-and-Mortar Transition to E-Commerce

Posted: March 23, 2020 by Ly Phan

Managing Brick-and-Mortar Transition to E-Commerce

The rise of e-commerce has dominated the retail sector for a decade, and that trend looks set to continue. In 2019, the global online retail market grew by 20.7% to $3.5 trillion. Though that figure with strong growth is impressive enough, there remains plenty of opportunity for brick-and-mortar transition to e-commerce. The total retail market reached $25 trillion in the same year, representing an overall growth rate of 4.5%.

As brick-and-mortar stores increasingly look towards e-commerce as a platform for growth, the challenge is for businesses to adjust and refine processes more suited to online retail. For example, distribution centers become more like fulfillment centers, fulfilling orders as they come in rather than bulk shipping products to shops.

Additionally, many businesses are embracing technology to incorporate e-commerce into their physical outlets. By integrating the different processes, stores offer a variety of different buying channels for shoppers. The aim is to make it as easy as possible for customers to come to your business - which usually requires an online presence.

 

Why E-Commerce?

Despite the remarkable growth of e-commerce, it still “only” accounts for around 14% of the total retail market. However, when you break down the figures, you start to get the full picture. For instance, 34.4% of apparel sold in the US in 2019 was through online retail, up 18% on the previous year. The thriving online apparel sector is illustrated by the emergence of e-commerce only brands such as ASOS, which ships to every country on the planet through its global network of fulfillment centers.

The statistics also suggest that e-commerce will continue to outpace the wider retail sector in terms of growth vastly. Each year, online retail will increase its share of the total market, and businesses need to stay ahead of the game to prosper. bE-commerce also allows businesses to reduce the cost of rent, staff, and other overheads associated with physical stores. By selling directly to customers, companies can also increase profit margins and grow their revenues. 

In short, e-commerce is the future of retail. As mobile and internet coverage expands across the developing world, its market can only grow in the next decade. While there is still plenty of life in brick-and-mortar stores, businesses not having an online presence for customers at the very least, run the risk of being left behind. 

 

How to Switch to E-commerce

The key aspect of a successful transition is to manage and organize the different processes involved. Using SmartTurn’s affordable, easy to use technology, business owners will be able to retain real-time visibility and control over the restructuring.

 

Integrated Warehouse Management System

As a brick-and-mortar store begins to move towards e-commerce, the first step is to integrate the two concepts. This means bringing together the flows from the two main purchasing channels, online and in-store, ensuring the data and transactions end up on the same platform. Doing so would help to prevent:

  1. Duplicate data entries: Duplication can affect orders, inventory levels, and several other forms of data. With two separate purchasing channels, there is potential for such information to be duplicated, which leads to costly errors. A fully integrated system, with a single endpoint, can dramatically reduce the risk.
  2. Overstock: While stockouts pose a real risk to retail businesses, the impact of overstock can be equally damaging. If workers are not clear on inventory levels, then they may order excess safety stock, which can narrow profit margins and increase costs. By having a single dashboard with a clear overview, workers can avoid making unnecessary orders.
  3. Lost orders: Channeling the data streams into one platform will make it easier for workers to track orders and transactions. Using an inventory management system, businesses will be able to improve inventory accuracy to 99% through efficiency in the order fulfillment process. 

As a retailer makes the transition from brick-and-mortar to e-commerce, it’s essential to prioritize the integration of processes. Doing so will help the business streamline transactions, fulfill orders, and deliver excellent service customers demand. 

 

Turn Warehouses Into Fulfillment Centers

During the transition from brick and mortar to e-commerce, the nature of warehouse operations will change. Distribution centers that were previously delivering pallets to physical stores become order fulfillment centers, sorting products in much smaller quantities.

For example, online shoppers will place orders online and expect a speedy delivery. This requires having pick and pack teams ready to locate and ship individual items quickly. A flexible, cloud-based inventory management system can enable businesses to bring about those changes on the ground.

A vital part of a successful warehouse operation is to have a system that is easy to use and implement. SmartTurn’s solution is designed with the users in mind, and with a training video as part of the package, workers will be able to hit the ground running. 

It’s also essential to ensure the inventory management software can integrate with other technologies such as barcode scanners and third-party platforms. The flexibility will prove invaluable as the e-commerce operation grows and demand increases.

Online retail behavior is another crucial element to consider, with reverse logistics being a prime factor. Product returns have long been far higher in e-commerce than in brick-and-mortar stores. The return rate in online retail stands at around 30% for all products, while it is under 10% for physical stores. The reality is that fulfillment centers need to have reverse logistics processes in place.

This can include a dedicated area and team to handle returns, assess the condition of each product. The aim is to return as many of those items to resale as soon as reasonably possible.

Additionally, the layout is a critical part of a thriving distribution center, particularly with the pick and pack stage. By placing the most popular products close to packaging and shipping areas, companies will be able to save time and increase productivity significantly.

 

Utilize Real-Time Visibility

A critical aspect of an efficient warehouse management system is the information it delivers and processes. As we enter a new decade, the importance of data cannot be overstated. To successfully transition from a brick-and-mortar store to an e-commerce business, it’s essential to have the ability to track orders, identify trends, and control inventory levels.

For many clients of SmartTurn, it’s the real-time visibility that makes a crucial difference in operational performance. Being able to monitor inventory levels proactively and automate the restock processes helps managers to reduce the risk of costly stockouts. 

Having the ability to see processes and data in real-time can also lead to more efficient pathways for stock to move. A matter of seconds for each product can soon add up to several hours a week of workers’ time. This can also extend beyond the warehouse and to delivery, where shipping teams can identify the most efficient routes for dropping off items.

In the longer-term, the visibility of data can prove invaluable for identifying peaks and troughs in demand. For example, seasonal trends and certain events may spark a surge for particular products such as beer for Super Bowl or sun cream during heatwaves.

 

Secret Lies in the Warehouse

A successful e-commerce business has many crucial components. An easy-to-use website, a clear returns policy, and an SEO strategy to ensure you get found by shoppers are just a few of them. However, the warehouse is the engine room, and it’s essential to have an organized operation in place to hit the ground running.

The new warehouse system implementation process should have flexibility as a core focus. The nature of e-commerce will lead to multiple orders coming in simultaneously, and there’s pressure to fulfill those orders quickly. 

Having a flexible, cloud-based solution that can integrate with different platforms will enable your business to transform a warehouse into a slick, well-organized order fulfillment center that e-commerce demands. The engine room can then drive the successful transition from brick-and-mortar to online retail.

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