4 trends in fashion e-commerce for fulfilment providers to cope with

By Gregor Baumeister

1. The skyrocketing returns

One trend that is obviously impacting fashion logistics facilities is the skyrocketing rate of returns. What is referred to as the “returns culture” has been driven by the omnichannel shopping environment where returns are a normal part of the customer experience and central to retaining customers.

According to SalesCycle, fashion e-commerce has the highest rate of consumer returns and studies estimate that returns rates may actually exceed 60 percent for e-commerce fashion retailers. It means returns have evolved into a highly complex endeavour, imposing staggering costs on fashion logistics companies.

Returns management is, therefore, becoming a critical component of supply chain management, requiring new strategies, tools and best practices. The ultimate goal of reverse logistics in fashion is to maximise the asset recovery rates and supply chain efficiencies to ensure the lowest possible costs.

For many fashion logistics facilities, pouch sortation technology is suddenly emerging as a way to both help reduce handling times in warehouses and optimise the time items are available in the sales channel.

2. The seasonal peaks

Seasonal peaks and the fact that they are no longer limited to the holiday seasons is another trend in fashion e-commerce. The soaring rates of returns, together with the globalisation of regional holidays, means that fashion distributors are now dealing with an annual wheel of multiple peak seasons, placing stress on systems, equipment and resources.

With each peak comes a consistent set of challenges for fashion warehouses. These common experiences can be summed up as follows (although many of these challenges may also be operational challenges between seasonal peaks):

Seasonal peaks call for timely planning, at both the operational and maintenance levels. This may include consulting data from past holiday seasons, running simulations, running preventive maintenance programmes, crafting emergency response plans and ensuring adequate staffing and training.

However, fashion logistics facilities are starting to get on top of the demands of seasonal peaks by utilising automation solutions and emerging robotic technology to fulfil labour intensive functions.

3. The SKU’d effect: SKU proliferation

A further trend that fashion e-commerce logistics is seeing is SKU proliferation. This phenomenon, generated by a high demand for specific products and fast order fulfilment, both helps and hinders operations for fashion logistics providers. As companies cater to customer preferences, they create new product varieties and new SKU numbers to identify different types of the same kind of product.

While consumers enjoy the variety in product lines, SKU proliferation impacts fashion logistics facilities in a number of ways:

• Increased carrying costs: More shelf space and labour is needed to accommodate more products being offered to customers.
• Accuracy in picking: Smaller quantities of similar-looking products in greater numbers and denser locations means there’s a higher risk of errors, resulting in costly returns and lost income.
• Efficiency in picking: Individual products are more spread out on the warehouse floor, meaning it takes longer to pick full orders.

But there is also a new development emerging which is actually reducing SKU proliferation. Rather than just making as many variations as possible, retailers are starting to ask more questions. What would be appealing to the customer? What does that person actually want?

This is producing a much more restrained approach, with production of one targeted product, instead of several less targeted ones. Furthermore, manufacturers are now recognising that 80 percent of sales are made from “core products”, and that less space on the shelves for these products negatively impacts sales.

4. The appeal for environmental sustainability

With environmental concerns high on the global agenda, the spotlight is increasingly now on not just the manufacturing side of the supply chain, but sustainability in the warehouse and transportation. It is therefore more pressing than ever for fashion logistics providers to find ways to reduce their environmental impact, such as ensuring low-carbon equipment with enduring life-spans.

One of the biggest trends in trying to cut the carbon footprint is the use of technology and data. Fashion logistics are drawing on data from across their operations to calculate optimal handling and loading requirements for containers, trucks and the warehouse.

Data is being used to automate decision-making around sustainability, such as tracking assets and performing maintenance at the right moment, optimising routes and fuel efficiency. Machine learning tools are also providing visibility into the sustainability of supply chains.

And increasingly, automated robotics that reduce transportation between and inside warehouses as well as automated delivery robots and unmanned delivery trucks are being seen as potential solutions to save both costs and emissions.

Conclusion

We have covered just four trends in today’s fashion e-commerce that impact upon fulfilment performance and the bottom line of fashion logistics facilities. Each development can be genuinely challenging for fashion logistics operations and profitability as consumers demand variety and speed, while wanting to see measurements around climate change impacts, energy consumption and emissions. But each also presents an opportunity which fashion logistics suppliers can leverage. The changes can be seen as positive if logistics providers can meet them with flexibility and adaptability.