Fulfillment and Logistics Insights for Moving Your Business Forward in a Time of Crisis | Coronavirus Series
Editor’s Note: This article is part of a series that explores the impact the coronavirus crisis is having on the world of ecommerce. Explore daily insights surrounding the coronavirus crisis or check out these additional resources to help you navigate your marketing strategy during this time.
Let’s face it—these are tough times for many businesses. Whether your sales are down or up, brands are asking themselves, “How am I going to get my product to my customer who wants it? Businesses are worried about their supply chain breaking down and wondering, “Do I have enough inventory? Is my warehouse going to be shut down? Will shippers stop delivering to my customers’ doorstep? Will I be able to fulfill this precious order?”
Over 66 percent of respondents in Klaviyo’s COVID-19 survey from March 24, 2020 highlighted supply chain problems as a risk to their business today or one they anticipate very shortly. The problems vary from difficulties getting raw materials to manufacturing delays, closed warehouses, and shipping bottlenecks.
In order to get a deeper understanding of what is happening and what will happen next, you need to dig deep into the logistics space.
Sarah Watt, senior director analyst with the Gartner Supply Chain practice, highlighted the main challenges fulfillment operations are experiencing, which includes keeping employees safe while working, keeping warehouses and factories operating, and keeping products moving. Below, find our learnings for each.
Taking steps to keep logistics workers safe—and working
Getting a product from your online store to your customer requires one person to pick it off a warehouse shelf, another person to pack it up, and yet another to deliver it to your customer’s doorstep. That’s three people at minimum working during a time when the government has mandated 17 states (half of the US population) to stay at home.
Fortunately, both the federal and (many) state governments recognize that our supply chain is critical to US infrastructure. The Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (CISA) issued guidance for state and local governments implementing “stay-at-home” orders, defining transportation and logistics workers as essential employees.
Many states have explicitly adopted this exemption for supply chain workers from their stay-at-home orders including, but not limited to, California, New York, and New Jersey. It’s worth highlighting the importance of these exemptions on keeping the three largest ports in the US—Long Beach, Los Angeles, and Newark/New York—operational.
Beyond government action, companies have also had to make significant changes. ShipBob, a tech-enabled third-party logistics (3PL) that fulfills ecommerce orders for direct-to-consumer brands, operates eight fulfillment centers. All eight centers are open and operating due, in large part, to the company taking early steps to prepare their employees, their business, and their customers “for the worst.”
Casey Armstrong, CMO at ShipBob, told us that the company started preparing in early February, thanks to COO Divey Gulati’s foresight, and started purchasing and requiring the use of personal protective equipment (PPE) in their facilities in early February before the United States fully recognized the scale of disruption that was coming.
Over time, the company increased protective measures at their fulfillment centers, including eliminating merchant site visits, implementing temperature checks, prohibiting overtime to reduce employee exposure, and increasing wages.
Far from business as usual, but open and operating
Keeping employees healthy through safety measures like those described above is, of course, critical to the continued and effective operation of warehouses and fulfillment centers. Amazon initiated this intertwined nature of safety and operations recently when a warehouse employee tested positive for COVID-19 leading to the shutdown of one of their fulfillment centers in Queens.
But that’s not enough. Amazon’s example of shifting to prioritize its fulfillment and shipping operations to focus on Prime Members and “essential” goods first is a clear example of a dramatic shift in facility operations. They’re not alone, though. ShipBob has adjusted its service-level agreements (SLAs) to customers to allow for prioritization of essential goods orders at its fulfillment centers.
One trend that may accelerate as a result of the current crisis is increased demand for “on-demand warehousing.” The characteristics of on-demand warehousing—including pay-as-you-go leases and more nimble inventory management—may actually be of greatest interest to small and medium businesses (SMBs).
So what should an ecommerce business dealing with fulfillment disruption be doing right now? Casey shares three ideas:
- “Be proactive in your communication with your logistics partners, both your 3PL and fulfillment partner. Are they operating at full capacity? Have expectations or SLAs changed? If their operations are themselves strong, ask them if they are monitoring the carriers and shipping partners. What are they hearing at the national and state levels? Can they help you understand what’s happening?”
- “Be proactive with your customer communication. If your fulfillment partners are running at full capacity, let your customers know you are open for business. If you’re expecting delays, share that. Share expected delays on your website and through email. Empathy levels are generally high, especially in uncertain times like now, with appropriate communication. Then, if the product actually does arrive on time, your customers will be delighted. We have seen many customers of ours copy and paste our updates on both expectations and safety measures in our facilities in emails and sitewide updates.”
- “Some companies are thriving amidst the chaos. It’s worth noting why and how and adapting your business. For example, many people are stockpiling goods, so can you create bundles to increase your average order value and units you are moving? Also, some businesses are seeing an influx in slower moving goods because of the demand for essentials, so monitor order volume by SKU and showcase those products in both your ads and website’s homepage.”
Despite delays, shippers are getting products to doorsteps
Even with warehouse and fulfillment centers working safely and the operations at these facilities running fairly smoothly, a third piece of the fulfillment puzzle—shipping—can also generate significant disruption to an ecommerce business.
The disruption is not tied to the safety of packages themselves (the WHO has stated that the likelihood of an infected person contaminating commercial goods is low and the risk of catching the virus that causes COVID-19 from a package that has been moved, traveled, and exposed to different conditions and temperature is also low) but rather to the virus’ impact on the shipper and carriers.
For example, effective this week, both FedEx and UPS announced a suspension of their service guarantees. Drivers for both companies are getting sick from COVID-19 causing both carriers to struggle with their attendance rates. And when you consider the volume of packages these companies move (FedEx on average delivered over six million packages per day in 2019), even a modest reduction in drivers will have a significant impact on customers.
Reliable and fast delivery of the product to the customer’s home is a pillar value proposition for many ecommerce businesses. To help restore more typical service levels and meet customer expectations, both FedEx and UPS are hiring aggressively.
Beyond just these two carriers, aggressive hiring is occurring throughout the trucking industry to meet the demand of increased purchasing grocers and other essential retailers.
So what steps should ecommerce (or other businesses) experiencing shipping delays or other disruptions take now? Andrew Brueckner, chief customer officer at VeriShip, a shipping expense optimization company, shared two pieces of advice:
- Shippers who sell household goods and medical supplies that can be used to support health and safety during the COVID-19 outbreak may need to suddenly implement new practices with their carrier. Contact your carrier representative as soon as possible to manage your shipping volume changes. Make sure the carriers are prepared to handle those changes and offer you competitive pricing.
- For anyone else, with the rapidly changing situation at hand, contact your carrier representative as soon as possible to discuss locking your discount tier or arranging new pickup methods and frequencies.
Although there are clear disruptions across the supply chain for many businesses, product is still moving—just more slowly. And there’s broad recognition across the public and private sectors that both the people and the facilities making up the supply chain need to be protected given how essential they are to commerce.
Clear and transparent communication with all of your supply chain partners, and most importantly with your end customer, won’t make products move faster or more smoothly, but it may help to keep expectations aligned as the world navigates this time.
Looking for more information to help you adjust your marketing strategies as you navigate the coronavirus crisis? These resources may be helpful.Back to Blog Home