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f+h Intralogistics 2/2015

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f+h Intralogistics 2/2015

E-BUSINESS Integrated

E-BUSINESS Integrated logistic solution from Vanderlande ensures all requirements are met Peter Bimmermann Successful online traders, such as Amazon and Zalando, make no secret of the fact that efficient fulfillment, in addition to other factors, is the basis for their success. Efficient fulfillment without the relevant intralogistics within the distribution center is simply not conceivable. Regardless of whether the business is solely an e-commerce trader or whether it is a traditional tradewith a multi-channel business model: The logistic and IT system must provide an optimum overview of the relevant business model and relevant sales channels to provide customers with a continuously transparent shopping experience. Dipl.-Ing. Peter Bimmermann, Business Development Manager, Vanderlande Industries GmbH, Mönchengladbach/Germany Internet trade is booming and is recording the largest growth rates. The market is developing dynamically and more and more traditional commercial enterprises are increasing their activities on the Internet. The exact opposite to these strategies is also occurring. Companies that currently only Successful e-commerce only possible with suitable intralogistics have an e-commerce are opening outlet stores to be closer to customers. This enables suppliers to meet consumers‘ desire for a shopping experience. Companies that are able to connect with customers through all sales channels, that optimally connect and integrate the various channels, and set up an efficient logistic system that supports all of the relevant processes, will be the overall winners. 36 f+h Intralogistics 2/2015

E-BUSINESS Research has shown that customers who are approached via several channels and who use them not only make purchases more frequently than, for example, customers who only purchase from local stores, but also generate significantly more turnover. The deciding factor is that purchasers consistently take advantage of the shopping experience through all of the channels. Different countries and industries, different figures The development of e-commerce and omnichannel trade is at different stages depending on the industry and geographical region. In Europe, the five leading e-commerce countries are (as at in 2013): UK with €68 billion, Germany (€39.1 billion), France (€26 billion), Russia (€9.1 billion), Spain (€8.8 billion), and Italy (€7.8 billion). These figures only take the actual turnover generated by physical products into consideration. Online trade for services, tickets, music downloads, streaming, travel, e-books, etc. is not included in these figures. The range of businesses varies greatly in individual countries. The only significant constant is that a relative high percentage of the total online trade volume is generated by clothing and shoes. Depending on the country this percentage ranges between 16% (Russia) and 38% (Spain). France and Spain generate the most sales in the food industry (12% in France and 16% in Spain). No other uniform crossnational trends relating to groups of goods can be determined. According to predictions by the German Institute for Commercial Research (IFH) every fifth (exclusively) stationary retailer will no longer be around in 2020. The report also predicts that in six years, online trade will account for a quarter of the total turnover of non-food sales. This means that anyone who wants to run a successful retail business should make it their priority to optimize their sales channels and coordinate their logistic concepts accordingly. What makes omni-channel trade successful? To be able to answer this question, it must first be clarified what functionalities consumers of omni-channel traders expect and effectively use. The following omni-channel functionalities are most frequently requested and used by customers: n Online display of the availability of goods n In-Store orders n In-Store returns n Click & Reserve n Click & Collect n Store finder Other options include combinations of a showroom and, depending on the product, experience and training centers, home delivery, and any required installation or commissioning at home. This business model is already well established for technical equipment such as home entertainment, white goods, and furniture, for example. Logistic challenges for omni-channel traders Traders switching from single or multichannel trade to an omni-channel approach face a variety of challenges: A lot has to be arranged differently with regard to the IT department, staffing and logistic department, as each channel has different picking, packing, and dispatch requirements. Store delivery Consolidated, store-friendly delivery of containers. Deliveries to stores usually arrive on mixed palettes, Düsseldorf pallets, trolleys, or in large containers. They are delivered weekly, several times per week, or even daily. Wholesale deliveries Full pallets possibly with special branding. Deliveries are supplied to the distributor‘s warehouse or directly to the store. They are delivered weekly or monthly. E-commerce orders A lot of shipments each with a few order lines (depending on the sector, typically one to two per order) that are sent directly to the customer in a parcel. Shipments are supplied to parcel services providers several times a day, who then deliver items to customers within 24 or 48 hours depending on the agreed service level. A process for returned goods also needs to be implemented. Returns, for example, in the fashion industry play a very significant role while they are only of minor importance in other sectors. Any attempt to try and distribute online shipments from an existing distribution center that was originally designed to supply stores will not work without significant changes being implemented. Dispatching goods that have been ordered online from stores is not practical or economically viable on a long-term basis if a large volume of shipments is involved. This is because goods pass through too many hands and in-house pickers compromise the shopping experience of customers in the store. No success without a functioning logistic system Stationary retailers who have a functional store distribution system often commission service providers to help them enter the multi-channel market and handle the online business. The service provider is supplied in the same way as a store. This approach does not pose a significant risk and can be set up within a short period. However, separating the online and stationary business often doubles the amount of parallel inventory maintenance and increases overhead costs. The ideal solution would be to implement a seamless channel integration that not only relates to the exact business model but also takes complete fulfillment into consideration. For this purpose, it is necessary to integrate the logistic system for all of the sales channels and to operate it from joint locations that are managed by uniform inventory maintenance. Tesco case study Tesco is a chain of retail stores in the UK that employs more than 500,000 staff who work in twelve countries around the world to meet the needs of several million customers. More than 75 million purchases are completed in Tesco stores on a weekly basis. Tesco has also quickly developed into a multi-channel retailer who increasingly 01 Manual picking system f+h Intralogistics 2/2015 37

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