THE CLICK THAT IS TRANSFORMING STORAGE

Users are looking for fast deliveries and returns at no cost, which is why warehouses and distribution centers have undergone several changes to adapt to current market needs. Large warehouses were used to handling large volumes of pallets and bulk boxes, which were distributed to the different points of sale; however, e-commerce handles large volumes of individual orders.

With that said, warehouses require more SKUs (stop-keeping unit) to quickly locate inventory items and be able to fulfill orders in a timely manner. Before the e-commerce sales boom, warehouses had less SKU variety, as traditional fulfillment processes operated with fewer products in inventory.

Stocking products in inventory has become more demanding with online sales; traditionally, if a customer went to the physical point of sale and couldn't find the product, they would return for it sometime later. Now, when shopping online, users have increased their expectations in terms of speed of delivery and their experience, which has urged companies to have the right stock and deliver it to customers within the agreed timeframe. This has completely transformed warehouse logistics.

To meet users’ expectations for speed and low-cost shipping, e-commerce warehouses must now be as close as possible to their market. This need has boosted the demand for logistics space near cities, driving up the price of such space.

Logistics companies and industry giants have relied heavily on technology and its advances. Automation has been pushed in warehouses to streamline order processing, more advanced inventory management systems have been implemented with the help of AI and its predictions, and warehouse design has been optimized to facilitate picking and shipping of products. The existence of robots in warehouses has made it possible to make the most of space in warehouses, as they can access and supervise very small or difficult-to-access spaces.

Just as we have seen several improvements within the industry and progressive changes in terms of technology adoption in supply chains, technological advances and e-commerce have left a couple of damages in the labor supply.

One example is Walmart, the retail giant is anticipating a reduction of nearly 2,000 positions in e-commerce centers in the United States. The company has begun to look for ways to re-accommodate its employees rather than cut them.

Another example can be seen in a call center in India called Dukaan, which provides customer service to merchants who need to incorporate their business into e-commerce.  This company laid off 90% of its employees to replace them with artificial intelligence, specifically Chat GPT, because this AI was more responsive.

Dell Technologies announces 5% of layoffs in its workforce, due to a restructuring. Many large technology companies joined the wave of massive layoffs in 2023, due to restructuring in their workforces and due to the economic uncertainty, that is being experienced.

E-commerce is here to stay, and the pandemic has accelerated its growth, which is expected to continue to grow over the years. This transition has revolutionized logistics and warehousing and has made hundreds of companies question whether it is profitable to invest in opening new physical stores or opening new warehouses for e-commerce.