5 ways to transform retail logistics

When we shop online, we expect goods to be in stock and readily available. That doesn’t always mean next-day delivery, but it does mean getting our items in a timely manner; and when we need to return them, we expect the process to be convenient and seamless.

The PwC Global Consumer Insights Survey 2018 asked 20,000 shoppers about the most important factors in choosing a retailer other than price, and a quarter cited fast/reliable delivery and a good returns policy.

To compete with Amazon, which is prepared to shoulder multi-billion dollar annual losses on shipping, according to GeekWire, all retailers must look to improve processes in packing, distribution and last mile delivery in order to compete.

Many are looking to new technologies like AI and robots to give them an edge. Here’s our round up of the hottest prospects.

Immersive technology

Gartner has singled out immersive technologies as one of the trends to watch in logistics. Virtual reality (VR) will enable businesses to enhance workforce, partner and customer digital experiences.

Warehouse employees, for example, normally carry out multiple tasks when picking and preparing online orders. VR combined with AI can help warehouse operatives pick out where products are located much faster. DHL, for example, will be one of the first companies to standardize on VR across its operations, following a successful pilot of its "vision picking" program. The smart glasses provide visual displays of order picking instructions, where products are housed and where they need to be placed in the trolley. Without needing to refer to an order form, pickers can work faster. During the pilot, productivity went up 15 percent.

Predicting the future

Predictive analytics is an important capability in online logistics, allowing companies to anticipate events and supply, avoiding risks where possible.

Predictive analytics is used to make forecasts by reading algorithms fed with current and historic logistics data. Tools and methodologies search for patterns in the data. This insight enables logistics companies and departments to better plan resources. It can also address issues like damaged inventory and supply and demand miscalculations and how events such as the weather may disrupt shipping schedules. Spanish fashion retailer Zara, for example, can pinpoint its data right down to the size of its customers in different stores and online locations. This enables it to predict what styles will sell well and where.

Robots and cobots

Robots are fast changing the logistics vista. By 2020, 30 percent of the top 100 retailers will be using or piloting robots within their ship-from-store fulfilment processes, according to IDC. This will help to reduce the cost of ship-from-store orders by up to 20 percent.

Robots and cobots

British online grocer Ocado, for example, is using a swarm of robots to fulfill its grocery orders. Robots can pick fifty items in a basket in five minutes, a task that previously took a human up to two hours.

Cobots, designed to interact with humans in a workspace, are one of the fastest growing areas of the robotics market, which is forecast to hit a staggering $135 billion next year, according to IDC. In Amazon’s warehouses, nearly 50,000 cobots find and bring entire shelves to human pickers with the products they need to fulfill orders.

Previously humans had to walk miles along aisles to pick orders. Amazon maintains the cobots have cut order completion from an hour to around 15 minutes.

Reducing online returns

Managing online returns is one of the most difficult sectors for retailers. How clear a company is about its returns is central to customer loyalty. Managing online returns is complex; reducing them is the answer.

In the U.S., online retailers have a return rate of between 20-40 percent, according to the National Retail Federation. Henri Lloyd, which produces premium leisure sailing clothes, has adopted the Rakuten Fits Me app, for example, and has decreased returns by 70 percent. Using rich data on body shapes and the preferences of individual shoppers, the app provides contextual fitting advice. This means shoppers are given recommendations on garments that best suit their body shape.

Furniture giant IKEA has introduced IKEA Place, an augmented reality app built using Apple’s ARKit developer kit. The app lets users design rooms and visualize products in situ in their homes. The app automatically scales products, based on room dimension, with 98 percent accuracy according to IKEA. By virtually road testing furniture, customers can be sure it fits in their home, without taking measurements on the spot. French start-up Augment has created an augmented reality e-commerce app for Manutan, Europe’s largest office supplier, which shows products at scale in the workplace. Customers can also take photos to show company decision makers.

And the last mile

The increasing use of online ordering on everything from office stationary to take-away meals, together with the challenges of urban delivery – including pollution, road congestion and safety – are forcing retailers to look at new final-delivery solutions.

Last mile deliveries have taken on huge importance as traditional retailers have adopted omnichannel to compete with online giants. With the battle lines drawn, Amazon for example has been piloting drones for last mile delivery. In the U.S., Workhorse Group has built an electric utility vehicle, eliminating the need for drones to return to the warehouse after each trip. Domino’s is piloting DRU (Domino’s Robotic Unit), a robot that is able to deliver pizzas from the shop to the customer’s door.

These are just a few of the innovations we’ll see as retailers vie to get their products to us the fastest route possible.

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