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West Coast and California Logistics Blog

Impact of COVID on eCommerce fulfillment operations

Thu, Jul 29, 2021 @ 07:30 AM / by Todd Naramore

In the pre-pandemic world of 2019, eCommerce accounted for 15.8% of all sales in the U.S. That figure ballooned with the COVID-19 pandemic to 21.3% – an increase of 44% – in 2020. This extreme growth in such a short period of time has led to growing pains that are still being felt within the eCommerce industry. In this article, we’ll examine some of the key effects of the pandemic on eCommerce fulfillment operations and explore ways that your company can mitigate these effects by partnering with a 3PL provider.


5 effects of pandemic on eCommerce fulfillment operations

1. Warehousing space is much harder to come by

The surge in eCommerce sales has eCommerce companies seeking more warehouse space to store and ship products. Companies of all sizes – from small eCommerce businesses to big-box retail and eTail behemoths – are competing for this space, so space is becoming scarcer.

eCommerce-fulfillment-operationsIn May, industrial real estate firm Prologis reported that warehouse vacancy rates are at 4.7% nationally, which is nearly an all-time low. Such vacancy rates are even lower in hot warehousing markets like the Inland Empire in Southern California, where the vacancy rate in Q2 2021 dropped to 1.4%.

The space scarcity also means that you will pay more for space if you’re lucky enough to find it. According to another leading real estate firm, CBRE, warehouse rents increased from Q1 2020 to Q1 2021 by 7.1% to an all-time high of $8.44 per square foot nationally. Year-over-year increases are even more steep in the hot markets of Northern New Jersey (33% increase over the same period) and the Inland Empire (24% increase).

What you can do: If you’re seeking warehousing space, especially newer space tailored for eCommerce fulfillment operations, you can enter the battlefield and try to obtain your own space, or you can partner with a 3PL provider that already has the space you need. Many 3PL providers offer shared warehousing in which you simply pay for the space you need as you inhabit the warehouse alongside other companies. Your 3PL can also handle key logistics operations like eCommerce fulfillment and retail replenishment on your behalf.


2. Parcel carriers have more business than they can (or want to) handle

Obtaining the warehousing space from which to base your eCommerce fulfillment operations is only part of the battle. From there, you need to perform pick and pack operations and lean on parcel carriers to get your product out to online customers quickly. As with warehousing space, the laws of supply and demand are currently making this very difficult.

The rise of eCommerce over the past year has inundated parcel carriers with more business than they can economically handle. The carriers, in turn, have resorted to various measures such as introducing more surcharges, turning away new customers, and even suspending service to contracted customers. Importantly, these policies are affecting customers of all sizes.

What you can do: Your best bet in securing the parcel services you need is to diversify your shipping. Work with multiple transportation providers, from the major parcel carriers to local and regional companies, to better your chances of getting the coverage you need when you need it. You can also partner with a 3PL that already works with a diverse carrier base on a large scale.

Read the Free Weber eBook,  A Guide to Outsourcing Omni-Channel Fulfillment to a 3PL


3. Retail sales are growing again

While retail took a major hit in the past year, and eCommerce took a major bite out of the traditional retail sales pie, retail is making a comeback in 2021. According to the U.S. Census Bureau, retail sales between April and June 2021 were up 31.5% compared to the same period in 2020.

If your company ships to both B2C and B2B customers, you need to be able to meet the needs of both.

What you can do: To maximize the efficiency and cost-effectiveness of your fulfillment operations, you need to establish a true omni-channel fulfillment strategy. Such a strategy enables you to satisfy the demands of both customer bases from a single instance of inventory, while having the flexibility to adjust to changing market demands quickly. Many 3PLs are adept at such strategies and have the systems and expertise to fulfill eCommerce orders and comply with retail vendor requirements simultaneously.


4. Safety stocks of inventory aren’t always possible

Speaking of inventory, the many supply chain disruptions of 2021 have disrupted the supply lines of many companies. Shortages of raw materials have slowed manufacturing, leaving companies unable to keep up with demand.

What you can do: Ideally, you can set aside ‘safety stock’ of inventory in order to weather the storm during times of disruptions. In light of raw material shortages described above, however, it may be a while before you can get your safety stock levels back where you want them.

But even with raw material shortages affecting manufacturing, 3PLs can still be of service. For instance, a client of Weber Logistics manufactures product that has been severely impacted by these shortages. To help the client keep up with demand, we’ve basically transformed the client’s warehouse into a giant transloading operation. Products comes in on a truck, are immediately processed and then sent back out on another truck for final delivery.


5. The labor shortage continues

Last but certainly not least, there is a labor shortage that permeates nearly all aspects of the logistics industry. Even before the pandemic, there has been a driver shortage as more drivers leave the profession and there aren’t enough new ones to replace them. This shortage is only expected to get worse over the next several years.

In the warehouse, the pandemic has kept good associates out of the work due to fear of catching the virus and childcare responsibilities that are incompatible with full-time hours. In some cases, state and federal unemployment benefits have provided disincentives to return to work. Result: there is a severe shortage of warehouse labor to meet current volume of eCommerce orders.

These same factors are causing dock worker shortages at ports. In states like California, there are also significant regulations in place that affect the types of drayage workers you can hire.

What you can do: For all types of logistics work that your company performs, you have two basic options: spend the time and resources to attract, hire and retain employees yourself or entrust these logistics workforce functions to a 3PL provider. These functions are a core part of every 3PL’s business, and they often have the infrastructure, brand recognition and resources to fill in labor gaps where individual shippers and manufacturers may not.


Entrust your eCommerce fulfillment operations to Weber Logistics

With 13 warehouses across California, Weber Logistics has the infrastructure your business requires to run your supply chain smoothly and efficiently. We have made significant investments in automation and in state-of-the-art facilities to meet the demand and customer expectations associated with eCommerce fulfillment.

We also have robust HR resources dedicated to ensuring adequate staffing for all Weber operations. This includes seasonal staffing initiatives, close relationships with temporary agencies, and the ability to shift labor between warehouses to meet volume demands.

To learn more about partnering with Weber Logistics for eCommerce fulfillment operations from the West Coast, contact us today.

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Topics: Public Warehousing, eCommerce Fulfillment

Written by Todd Naramore

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