When stay-at-home policies were introduced to combat the COVID-19 pandemic in 2020, warehousing and distribution services were forced to cease business operations temporarily. Fortunately, quick action was taken to restart manufacturing, warehouse operations, and global distribution networks, following industry restrictions and quarantine measures.
Fulfillment warehouses were crucial in meeting customer demand and providing logistics services worldwide throughout the pandemic. Although we are progressing towards post-COVID normality, personal protective equipment (PPE) and social distancing may remain standard practices across the industry.
Despite the closure of businesses and the widespread loss of jobs, global demand for goods is reaching record levels. Major eCommerce platforms open consumers up to the global marketplace, so order fulfillment is essential. The warehouse fulfillment center and associated services are even more critical during a worldwide pandemic.
Reduction in Overall Fulfillment Volumes
Many warehouses and distribution centers remained open to some extent throughout the pandemic. However, some couldn’t operate at full capacity due to restrictions and pandemic-related circumstances, so overall fulfillment is down.
Coinciding with a reduction in fulfillment volumes, there was an increased demand for orders, particularly in the U.S. Warehouse fulfillment solutions are vital in meeting this order volume and delivering goods to consumers and retail stores.
Despite worldwide pandemic restrictions and the mass rollout of vaccines reducing virus cases, people are still contracting COVID. A sudden infection outbreak can force a center to close at a moment’s notice, further reducing fulfillment capacity.
Keeping Businesses Operational
Businesses are reliant on fulfillment services to stay operational. While eCommerce was growing rapidly even before the pandemic started, lockdowns and the closure of storefronts has caused the online marketplace to explode as customers turned online to purchase a wide range of products.
Unless eCommerce businesses have their own network of fulfillment centers, distribution warehouse locations (e.g., access to international warehouses), and other logistics resources, they need the services of a dedicated fulfillment company to take care of their needs.
Unfortunately, some businesses had not met their monthly order minimum due to the pandemic, permanently forcing them to close down. Others could not operate in-store but adapted their business models for the digital sphere, even for a short time.
A business owner with no previous experience selling online must rely on at least one fulfillment partner, plus third-party logistics services and eCommerce experts, to function effectively.
The role of a fulfillment company is to help keep business operations running, enabling the average individual company to stay afloat. This positively impacts local, regional, and global economies in the long term.
Facilitates Consumer Purchases
Customers also rely on the services of a logistics and fulfillment company. With limited access to physical stores and despite a decrease in buying power, consumers were forced to rely on online sellers to order essential items.
Although many local businesses offered drop-shipping services or “click and collect” type services with same-day shipping (or within one business day at the minimum), there were challenges. For instance, depending on the customer’s geographic location, certain goods travel long distances (e.g., international shipments) to reach customers’ doorsteps, increasing the delivery time and shipping rates.
During a pandemic, those with underlying health conditions are often advised to stay indoors unless it’s necessary to travel. These people depend on others to live healthily. Fulfillment services facilitate consumer purchases of all types, including critical hygiene, sanitation, and medical supplies.
The pandemic certainly didn’t ignite the rise in eCommerce, but it has undoubtedly accelerated its growth. In May 2020, online sales experienced a 60% increase from the previous year. While much of this surge is circumstantial, it is suggested that consumers who shopped online instead of in-store because of COVID have continued to do so due to convenience, competitive pricing, and cost savings.
Although warehousing services and third-party logistics businesses are well equipped for eCommerce, the increased demand makes it challenging to maintain the workforce needed to meet the fulfillment process without delays. This has led to an increased number of incidents during inventory management, such as wrong items and damaged packing boxes.
Retains Employees’ Jobs
While some sectors, such as tourism, textiles, food, and retail, suffered from inactivity and closures, others are overburdened. The health, agriculture, and transportation industries had to work in overdrive while being compliant with pandemic-related restrictions.
Other fields, like the automotive industry, were hit on multiple levels. Lockdowns forced factory closures, slowing production and keeping workers at home. This led to global supply chain disruptions, which further affected profitability.
According to the International Labour Organization (ILO), the automotive factories that ceased to produce vehicles were used to make emergency life-saving equipment such as ventilators and facemasks.
Warehouse fulfillment services are crucial for keeping businesses operational and their customer base supplied with goods, but they also provide essential employment for their industries. Throughout the pandemic, employment rates peaked at a level not seen since 1946 in the U.S.
Before the pandemic, a research study carried out by Zebra Technologies set out to determine the biggest challenges facing the warehousing industry. They cited labor as the biggest problem for the average fulfillment company warehouse. 60% of study participants claimed that labor recruitment, efficiency, or productivity was their most challenging task.
From warehouse managers to delivery drivers, fulfillment warehouses were steadily recruited throughout the pandemic to meet demand. This kept the economy healthy and provided income to those who became unemployed due to the pandemic.
As warehousing & fulfillment businesses were understaffed before the pandemic, most of the roles filled during the pandemic continue, giving workers long-term stability.
Changing Inventory Management
Before the pandemic, the warehousing industry standard for inventory management and fulfillment operation relied on lean warehousing techniques, which borrows its principles from the lean manufacturing techniques developed by production facilities.
A lean warehouse minimizes resource and warehouse space consumption, eliminating excess inventory levels and prioritizing sorting, streamlining, and optimization over storing inventory in bulk. Lean warehouses cost less to operate, meet demand in a shorter period, and allow for lower shipping costs than traditional warehousing methods.
However, after the pandemic hit, many warehouse locations were hit with a unique fulfillment challenge: inventory shortages and an inability to meet sudden increases in demand due to the lack of buffer stocks and emergency inventory reserves.
In response, warehousing business owners have been looking for ways to change their fulfillment strategy and increase the amount of available storage space. This rush for more storage units has created a new problem: a warehousing and industrial space shortage, dubbed “space crunch” by industry specialists.
This phenomenon caused a significant increase in storage fees, forcing the average eCommerce fulfillment company to pass on these costs to the customer through increased shipping costs.
The Warehousing Boom
However, these issues are in the short- to medium-term. Fulfillment providers and the warehousing industry respond to rising demand and dropping warehousing vacancy rates by building new warehouse locations.
The United States is currently experiencing a warehousing boom; the average fulfillment service provider is building more facilities, moving to bigger ones, and increasing their total square feet of storage space by building taller.
For instance, older warehouses typically featured 22’ or 24’ of clear height (usable vertical space inside the warehouse). Nowadays, average warehouses have a clear height of at least 32’, some even possessing 36’ or 40’ of clear height.
Brings Long Term Benefits for Warehousing & Fulfillment Businesses
Warehouse fulfillment services are projected to grow at a higher rate than traditional warehouses (those that don’t support eCommerce companies) post-pandemic. This is not only due to increased online sales, but it also incorporates knock-on effects like the growth of individual package volume and capital expenditure investments.
With such a healthy future, the fulfillment business looks set to continue to support businesses, customers, and employees in the coming years, well beyond the pandemic. These long-term benefits will result in better customer experience, increase overall customer satisfaction, and keep employment rates high and shipping costs low.
Warehouse automation is a byproduct of the pandemic. Although most industries are transitioning toward a digital approach, the COVID-19 crisis has undoubtedly accelerated digitization and automation.
Technologies such as warehouse management systems (WMS) and automated storage and retrieval systems (ASRS) create a more efficient organization and better quality control and provide employees with a safer working environment. They also help make more efficient use of the warehouse’s available storage space, optimizing each usable cubic foot inside the facility.
Increased reliance on warehousing & fulfillment services in such challenging circumstances allows these businesses to invest in their future, which positively benefits the consumer in the long term.
For International Shipping, Choose Asiana USA
Order fulfillment is a crucial business element, but it is only one aspect. When distributing internationally, it’s vital to work alongside a reliable shipping and 3PL company.
Asiana USA is a world-class international shipping organization that can help your business with its distribution needs, particularly during challenging times. Call our customer service team at (855) 500-1808 for more information on our services.