Given the growing influence of e-commerce, the buying and selling of products over the Internet and the need for food companies to develop their products digitally is greater than ever. As consumers get used to the ease and convenience of buying food and beverage products online, e-commerce promises to be an important growth area for this category. When the coronavirus (COVID-19) pandemic swept the country earlier this year, almost every company felt its repercussions, but the virus had a particularly dramatic impact on the food and beverage industry. The accumulation of buyers, severe disruptions in the supply chain, and the intensification of sanitation requirements changed the landscape almost overnight.
The pandemic also caused significant changes in shopping habits. Confined to their homes during quarantine, consumers began cooking and baking with abandon. They bought more food, meal kits and other food products online. Recognizing the need to sell where their customers shop, grocery retailers and food and beverage companies are expanding their offerings: adding grocery delivery and curbside pickup, creating web stores and mobile apps, adding subscription services and selling through third-party marketplaces.
Online channels pose challenges for order fulfillment. While the possibility of adding an e-commerce channel can be attractive, companies often underestimate the associated complexities, especially when it comes to order fulfillment. They wrongly assume that traditional warehousing and distribution operations are equipped to handle online orders. Understanding the complexities of order fulfillment and preparing for potential challenges early on can help prevent problems in the future.
For companies used to traditional warehouse operations, e-commerce order profiles can come as a surprise. Picking up individual parts requires much more labor than handling entire boxes or pallets of product. The challenge is compounded when items must be strategically selected due to a concern for shelf life. The volume of online orders can be difficult to predict and can vary dramatically from day to day or month to month.
This makes it difficult to plan for space and labor needs. What seems excessive one day may be woefully inadequate the next day. On average, space and labor costs for e-commerce operations tend to be two to three times higher than those of traditional warehouses. That can have a significant impact on the final results.
Finding ways to generate efficiencies and control costs, without sacrificing customer service, is a top priority. Meeting the unique needs of multiple sales channels simultaneously can be difficult, but it's important to offer consumers a seamless experience, whether they're shopping in a store, over the phone, or online. Grocery retailers and food and beverage companies must consider these challenges when designing an e-commerce logistics solution to help ensure customer satisfaction. Today's consumers have high standards for online orders and are rushing to buy elsewhere if the shopping experience doesn't meet their expectations.
The following strategies can help provide a positive e-commerce experience that helps build customer loyalty:. Using multiple distribution centers in strategic locations allows companies to meet consumer expectations for fast and free shipping, often through a more cost-effective ground service. The closer the products are to the end customer, the faster and cheaper they can be delivered. For greater responsiveness, labeling, labeling, assembly and other customization functions can also be brought closer to the customer.
While some grocery retailers handle orders from stores, this can cause congestion and make it difficult for customers to experience in-store. Obscure distribution centers or micro logistics centers may be a more effective option. If products are stored in multiple locations, it's important to maintain a single view of the company-wide inventory to ensure accessibility. Using an order management system (OMS) can help improve visibility and determine the best source from which to fulfill orders for optimal service.
A WHO can also help provide information on the availability of products and identify the possibility of running out of stock and pending orders. To provide a responsive service, logistics operations must be able to manage maximum potential volume, even when business slows down. Flexible space and staffing are critical to adapting to business fluctuations and avoiding service failures. The correct design of the premises (with the optimal corridor width, shelves and shelves, etc.).
When it comes to shipping, it's important to achieve a balance between cost and service. Package and purchase rate analysis software can help find the most efficient and cost-effective shipping options to meet service expectations. Establishing relationships with carriers can also be helpful. Strategies like these can help grocery retailers and food and beverage companies attract and retain customers online.
However, implementing them internally can be difficult, especially in today's environment. Outsourcing to an outside logistics provider often proves to be an effective option. With an established distribution network, flexible resources, strong technology and experience in e-commerce, an experienced third-party logistics provider (3PL) can serve as a reliable guide in an uncertain landscape. Ideally, a 3PL should be able to handle direct consumer orders, as well as larger orders from distributors.
Using a single partner for both order profiles is not only usually more practical, but it also helps to control inventory costs, since using a unified inventory across all sales channels makes it possible to better adapt to fluctuations and manage seasonal demand. With so many opportunities on the horizon, companies should take all necessary steps to excel in food and beverage e-commerce. Researchers forecast that online sales will represent between 15 and 20% of total sales in the food industry, 26% of sales in the food industry in 2025. If you have an ERP system like SAP or Microsoft Dynamics, you already have at your disposal an incredible ERP for the food industry. The food supply chain continues to demand that all actors adhere to strict operating practices to ensure food safety and quality.
From exclusive interviews to the latest product news, trends, associations and events, Total Food Service covers every aspect of the national foodservice industry. So what can your food and beverage company do to overcome today's industry challenges? First of all, it's crucial to know your buyers and what challenges you're facing. They have already accessed the food and beverage industry with Amazon Fresh, which offers delivery times of just one hour. The food and beverage industry deals with perishable products that must be sold quickly to maintain the high quality that buyers expect and that regulations demand.
The short time to market and the rapid flow of products within the company are what sets the food and beverage industry apart. But what does the increase in e-commerce food purchases mean for food brands eager to introduce new brands to consumers and for food retailers seeking to reach new audiences with their products? This means that we must devise creative and innovative solutions to attract consumers who move through physical stores instead of strolling through them.