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How Moving to a Digital World can Impact Customers, Businesses, & Warehouses



How Moving to a Digital World can Impact Customers, Businesses, & Warehouses

Our world is changing rapidly, and today's consumers have changed just as rapidly. Consumer demand for eCommerce has forced businesses across industries to pivot quickly. While customers and companies have seen the positives of an increasingly digital environment, this has also created unforeseen problems that must be resolved.

How the Digital World is Impacting Customers

It can be argued that the move to the digital world has been the most beneficial to consumers, eCommerce makes shopping easier and more accessible to all. With the click of a button, consumers can order goods from across the world. Additionally, shopping online saves time and  offers a wide assortment of products to choose from.

With eCommerce, customers don't have to travel to different locations when items are out of stock or unavailable. With access to omnichannel, consumers can easily search across multiple websites on multiple platforms and order items delivered to their doorstep.

While there are several clear benefits for consumers in the digital world, we must also note the eCommerce boom has also provided some negative side effects. To begin, a small number of companies have set unrealistic delivery expectations for consumers. While many companies are working tirelessly to provide rapid delivery for online orders, there are restraints. Although retail and eCommerce companies have made advancements, there is still a lack of meeting customer delivery expectations across the board.

Another issue consumers and businesses face in an eCommerce world is reverse logistics (or returns). Reverse logistics can be complex – do customers return in-store? Ship the items back? Exchange them for a different item? And complex options mean complex systems are required to handle these processes. As a result, many consumers have found the return process complex and lengthy. Although businesses are working to improve their processes and systems, online returns are rapidly increasing, placing a frustrating strain on both businesses and consumers.

The Effects of the Digital World on Businesses

The digital world has proven positive for businesses trying to reach more consumers on a wider geographical scale. Once, when brick-and-mortar storefronts were the only option, companies were limited to the consumers who could physically come into their locations. Now, businesses can easily set up online storefronts and reach customers worldwide.

Businesses have also benefited from micro-fulfillment. For example, these centers have been instrumental in the rapid rise of eGrocery because they facilitate same-day deliveries for time-sensitive items with goods stored closer to the consumer. Micro-fulfillment centers that use digital technology also see improvements in employee satisfaction and retention, lower operational costs, and savings on time and space.

But as mentioned above, reverse logistics can be complex. Most consumers expect free returns for their online orders, meaning the seller must pay for return shipments of these products. CNBC recently reported that the National Retail Federation (NRF) found that "the average rate of returns for online purchases was 20.8% -- an increase from 18.1% last year". As online returns continue to increase, businesses will have to find a way to distribute the cost back to consumers or accept lower profit margins on these orders. 

Increased consumer demand for rapid delivery is also damaging businesses in the digital world. Finding delivery drivers and employees to provide last-mile deliveries is increasingly difficult in today's labor market. When companies don't have the people or technology to fulfill orders and deliver them in the promised timeframe, there is a high potential for reputational damage or loss of loyalty.

How the Digital World Impacts Warehouses

Traditional warehouses can't adapt to the desire of modern consumers, inevitably pushing businesses to adopt new technology. Automation is becoming more sophisticated, and more companies are willing to invest in automating their supply chains. Advancements in automation reduce the physical strain on employees, alleviating employee recruitment and retention difficulties.

Technology integrations have also made warehouse automation easier to use for employees. For example, when a customer places an order on an eGrocery app, automation can instantly dispatch a warehouse bot to pick the order and deliver it to a human employee for completion, saving miles of walking per day and lowering the chance of errors.

Although automation has made warehouse work less burdensome for employees, the rise of eCommerce has created an unattainable demand for warehouse workers that businesses still can't meet. As labor leaves the industry to diversify their experience and find new opportunities, companies have no choice but to look towards automation as a solution, creating a new task of training skilled workers to handle advanced technologies, like robots. Although automation can solve many issues related to labor shortages in the warehouse industry, it is still necessary to have human employees on hand for many higher-value tasks.

Managing For the Digital Future

Some of the setbacks of our new digital world may still cause concern, but automation technologies offer an optimistic answer. All stakeholders can benefit from more efficient supply chain processes, faster shipping speed, and lower impact on labor. Modern retailers must let go of legacy systems and begin managing for both the world that exists today and the future ahead if they are to see continued success.