Ash has spent close to 20 years in technology research on several sectors, including industrial automation and smart manufacturing, smart home, solar power and energy storage, drones and robotics, medical technology and building automation. Ash is Senior Research Director for our robotics & warehouse automation research, amongst other topics.
The internet has most likely never been more important to us in our daily lives than it has during the COVID-19 lockdown. For many of us it has been a lifeline where communicating with friends and family is concerned, but equally important has been its role in enabling us to shop online in greater numbers than we have ever done before. It has been reported that e-commerce across Europe has more than doubled during the pandemic. Such global shocks are game changers. For many people, online shopping was already an established habit, but Covid-19 has recruited tens of thousands of new e-shoppers who are likely to persist with the habit over the long term, long after lockdown has become a distant memory.
While the pandemic has presented a huge marketing opportunity for established online outlets such as Amazon, Walmart and Ocado, who have recruited thousands of operatives to cope with increased online demand, it has been a massive challenge for a multitude of stores, big and small, which pre-Corona relied on physical footfall for their trade. Many stores will go to the wall because of this crisis. Those that survive will have to adapt to the fact that social distancing, even when lockdown is lifted, will have a long-term effect on our shopping habits. Footfall is likely to be vastly reduced. Stores are going to have to respond to the online challenge.
As cars have disappeared off the streets during the pandemic, a notable exception has been the increased presence of online delivery vehicles as contactless delivery boomed. Many outlets have hurriedly adapted to the new reality, and have responded well, though not always with success. Incorrect items have been delivered; orders have been cancelled because of product shortages; plants ordered from gardening outlets have arrived in a moribund state. But the overarching reality is that digital commerce is the future. It only needs to be fine-tuned. The question is, how to tune it?
Let’s start in-store. We have already seen major online distributors such as Amazon adopting a high degree of warehouse automation in order to improve efficiency. As automation becomes the established means for picking, packing and sorting orders, it will trickle down from large distribution centres and become embedded in micro-fulfilment centres (small warehouses stocking goods for the last mile of delivery) established closer to the customer. This could also be the way forward for many high street shops. They could devote floor-space for stock-piling goods in an automated environment, collected by customers using a click and collect service. This is not new. Large department stores, household names in the high street, such as Walmart and John Lewis, were already, pre-Corona, using digital commerce and warehouse automation as a means of long-term survival. The question is, can smaller stores emulate their relative success? Click and collect solves a big problem for smaller stores when it comes to eCommerce because it removes the need to organise last-mile deliveries to consumers. Another major difficulty is likely to be the need to “automate” shoppers. Under click and collect, the store needs to undertake labour that in many cases previously was done by shoppers themselves: literally walking into the shop, picking up the item, and carrying it to the checkout.
Micro-Fulfilment Offers Competitive Advantage
The likely way ahead is mixed distribution, with retailers offering some delivery options but encouraging kerbside collection or ‘click and collect’. With in-store collection, people can order the same day or the day before, then goods can come either from distribution centres – or ideally, as is the case with micro-fulfilment centres – are already located within the retail store where they can be picked up by customers. The advantage of in-store collection to the consumer is clear – browsing and ordering from the comfort of the home and then collecting nearby within a few hours at a time convenient for them. For retailers it offers a competitive advantage against ecommerce companies (i.e. Amazon…) which lack brick and mortar stores and hence have to rely on complex distribution and costly delivery, whilst also saving the retailer on delivery costs. Retailers can also can offer a much wider product range than before as micro-fulfilment enables much greater density of inventory (as there is no need for a physical display on consumer-friendly shelves) and higher number of SKUs which will be popular with consumers.
‘Your parcel will be delivered between 8am and 9pm today’. ‘Your courier is currently on delivery 124. You are number 152’. The online courier works long hours to get our orders to us. Sometimes it can be frustrating for the customer, and delivery can be expensive. But one day we might look back at the current courier service as a quaint and archaic feature of an e-commerce sector in its relative infancy.
The ongoing trend for the establishment of micro-fulfilment centres near the customer, also makes electrification of delivery vehicles a logical next step. This makes sense practically. Electrified vehicles are ideal for short runs, where they can recharge back at base. We could see a proliferation of these vehicles on the streets, offering a more efficient last-mile delivery service. It makes sense environmentally, particularly in the light of the news that the presence of No2 (which can damage the linings of the lungs) in the urban atmosphere has most likely made some of us more susceptible to falling seriously ill with the Coronavirus. After all, having breathed clean air, looked at blue skies, and listened to birdsong during the COVID-19 crisis, are we really, any of us, going to want to return to pre-corona levels of street pollution?
Digital commerce is here to stay and has the ability to be the saviour or destroyer of the brick-and-mortar retailer.