“If you cannot measure it, you cannot improve it,” said famed British physicist Lord Kelvin about scientific experimentation over 100 years ago.

It’s still pertinent today as you seek to improve ecommerce operations, remain competitive and improve our profitability and customer service. In order to improve operations, you first need to measure key fulfillment metrics such as total cost per order (CPO), shipped cost per carton, cost per line and cost unit. Once you understand what these metrics show, you can then develop options for processes that reduce steps and cost, or improve service levels such as order turnaround time.

What key fulfillment metrics do you monitor and use to improve your performance? Here are 16 we recommend you use as a starting point.

Read the article here.

Total Retail’s Caitlin Sullivan and Joe Keenan discuss the National Retail Federation’s (NRF) new Package Coalition, a lobbying group in support of the U.S. Postal Service.

The coalition is being led by Amazon.com and other retail businesses, including QVC and Columbia Sportswear. In addition to analyzing the merits of the Package Coalition, the hosts offer tips for retailers to optimize their shipping rates.

Watch the video here.

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In the midst of the kickoff to the busiest shopping season of the year, news emerged that both the U.S. Postal Service and Amazon experienced data glitches that exposed customer information.

The USPS may have exposed the personal data of more than 60 million customers via a security hole, including access to information on when checks and other critical documents were set to arrive. Amazon meanwhile told an unknown number of customers their names and email addresses were exposed due to a technical error on its ecommerce site.

Read the article here.

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Amazon.com Inc.’s retail operating income could take a 5% hit from shipping cost inflation if the U.S. Postal Service’s proposed price hikes go into effect, according to calculations by Barclays analysts. The proposed uptick in shipping and mailing fees at the U.S. Postal Service could cost Amazon more than $1 billion in 2019, according to Credit Suisse, which cut its near-term estimates for operating profit on the e-commerce behemoth.

“As we roll forward the sensitivity analysis to 2019, we arrive at a potential incremental Shipping Expense range of $400 million to $1.1 billion range with the assumption that 40 percent to 50 percent of U.S. packages are shipped via the Postal Service,” analyst Stephen Ju wrote Monday. “Our math …suggests Amazon will have 5% lower retail operating income from this shipping cost inflation, if we assume there are no offsetting factors,” Barclays said. The changes would go into effect on Jan. 27, 2019.

“Specifically, the USPS shipping rates for small and medium boxes, typically used by e-commerce companies, are proposed to be increased by 10% and 5% respectively,” Barclays analysts led by Ross Sandler wrote. “[T]he price increases for packages suggested by USPS this year are higher than in prior years.”

“If other Amazon shipping partners like UPS, FedEx, On-Trac, etc. raise their prices, which has happened in the past (but we are currently not factoring in), every 5% hike for last mile would weigh down operating income by an additional 3%, all else constant,” the note said.

President Trump said the USPS is Amazon’s “delivery boy” in a tweet earlier this year, and blamed the e-commerce giant for its billion-dollar-plus losses in the second fiscal quarter. However, the USPS said it’s actually government policy that’s hurting the group’s finances. The USPS said “legislative and regulatory changes” would be necessary for financial stability.

“To be clear, our current estimates already factor in [a] shipping cost increase by a modest level, consistent with prior years,” Barclays said. “However, the steeper increase proposed for 2019 could weigh further on Amazon’s FY19 profitability.”

Barclays forecast that Amazon shares could take a hit after third-quarter earnings if they are in line with guidance and forecast below expectations. And in the fourth-quarter, the $15 minimum wage hike will add about $310 million to expenses.

Amazon will already see declines due to the $15 minimum wage hike, analysts say. Barclays analysts think the minimum wage hike is just one of a few coming initiatives that could impact operating margin expansion.

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The U.S. Postal Service has proposed a 9 to 12 percent increase in fees for the shipping service used by Amazon, just months after President Donald Trump criticized the USPS, saying it gives Amazon too good of a deal.

The parcel select service, which is also used by United Parcel Service and FedEx, is the last and typically the most expensive step in the shipping process that gets the packages to customers’ doorsteps. The USPS proposed a 9.3 percent increase on this service for packages weighing over one pound and a 12.3 percent increase on lighter packages.

Trump issued an executive order in April to set up a task force to examine the USPS, claiming that it was on an “unsustainable financial path.” He’s also tweeted that the USPS is Amazon’s “delivery boy” and doesn’t make money from Amazon’s business.

Read the full article here.

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Amazon.com Inc. and Target Corp. have opened the floodgates on free shipping. Web orders with the free service have increased 13% in 2018. Offer can boosts sales but wreaks havoc with profit margins.

Recent moves by the two retailers to eliminate minimum-purchase amounts for free shipping have boosted the share of online orders that get delivered gratis, according to data from retail analytics company DynamicAction. Orders with the free service included have risen 13 percent so far this year through Nov. 16, including an 18 percent spike in the week that began Nov. 5., when Amazon unveiled its offer.

Free Falling

Amazon and Target have eliminated shipping fees for online holiday orders

“Free shipping is the new normal,” DynamicAction’s Chief Marketing Officer Sarah Engel said.

While free shipping can entice customers to buy, it can wreak havoc with retailers’ profit margins, which are typically razor-thin already during the holiday quarter due to rampant discounts and increased marketing costs. Web orders that included some sort of promotion since the end of October have risen 13 percent from the same period last year, DynamicAction found. It also doesn’t help that transportation costs were already soaring this year due to a shortage of truckers.

Target is offering two-day free shipping from Nov. 1 through Dec. 22 on hundreds of thousands of items with no minimum purchase, while Amazon said on Nov. 5 that shoppers without Prime memberships need not buy at least $25 to earn free regular shipping, which typically takes five to eight business days.

Walmart Inc. has thus far declined to match the offers, sticking with its $35 minimum purchase requirement. The world’s largest retailer has suffered from narrowing gross profit margins in recent quarters, even as its online sales have grown.

E-commerce sales overall will jump 17 percent this holiday season, according to data tracker EMarketer, and account for about 12 cents of every holiday dollar spent. Amazon garners just under half of all online sales in the U.S., EMarketer said.

This article was written and published at Bloomberg by Matthew Boyle

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A 5% increase in customer retention can improve a company’s profitability by 75%, according to Bain research. Yet most retailers are more focused on acquisition and conversion than retention. Despite investing billions in this pursuit, ecommerce has created a “customer experience gap” for retailers unable to engage customers at key post-purchase moments. Brands are learning the hard way that lackluster engagement and an afterthought communication strategy is a guaranteed way to lose loyalty.

To address this important issue Pulse Commerce conducted mystery shopping at nearly 500 leading U.S. online merchants prior to the 2017 peak holiday shopping season. The result is a picture of true behavior rather than survey feedback, and benchmarking by product category for comparison to peers as well as to Amazon.

Download the full study here.

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Less than three weeks before the prices take effect the day after Christmas, UPS announced its 2019 rate schedule, including an overall rate increase of 4.9% for its ground, air and international services, leaving shippers scrambling to adapt at the busiest time of year.

Last year UPS announced its general rate increase (GRI) in October, and in September the year before that. FedEx announced its 4.9% GRI for 2019 in early November. While the new FedEx rate schedule takes effect Jan. 7, UPS’s hike happens as of Dec.26, meaning it will hit the first massive wave of Christmas returns.

“This year (UPS) announced it three weeks before the effective date and in the heat of the fourth quarter peak shipping,” said parcel consultant Jerry Hempstead. “Large shippers will have little time nor the IT resources to sift through the nuances of this year’s announced changes.”

Read the full article here.

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How Amazon’s two-day shipping is disrupting retail. The quest to offer fast, free delivery has triggered an arms race among the largest retailers.

Amazon is already making up most of the US ecommerce sales. However, they rely heavily on 3rd party sellers. These sellers experience major pain related to shipping cost and time. Fast shipping is now an expectation, but it is expensive for most sellers. Sellers often limit fast shipping to veru=y samll items or to local addresses. This limits their buy box opportunities.

Alongside life, liberty and the pursuit of happiness, you can now add another inalienable right: two-day shipping on practically everything .
Amazon.com Inc. has made its Prime program the gold standard for all other online retailers, according to surveys of consumers. The $119-a-year Prime program—which now includes more than 100 million members world-wide—has triggered an arms race among the largest retailers, and turned many smaller sellers into remoras who cling for life to the bigger fish.

In the past year, Target Corp. , Walmart Inc. and many vendors on Google Express have all started offering “free” two-day delivery. (Different vendors have different requirements for no-fee shipping, whether it’s order size or loyalty-club membership.)

Optimizing Prime

Amazon’s shipping infrastructure isn’t used just by Amazon. As shoppers who read the fine print know, it’s also available to its retail partners through its Amazon Marketplace. Of the top 10,000 sellers on Amazon—collectively representing about half of Amazon’s Marketplace revenue—at least 90% have one product in the Fulfillment by Amazon program, says Juozas Kaziukėnas, chief executive of Marketplace Pulse, a business-intelligence firm focused on e-commerce. Almost 70% use it to stock and ship at least half of their products, he adds.

Competitors Great and Small

Amazon’s nominal competitor in online retail, Walmart, also offers a marketplace for third parties to sell their goods; the big difference is, it doesn’t assist them with fulfillment—and forbids them from using Amazon’s fulfillment services.
Scale is essential. Mom-and-pop shops and even midsize retailers can no longer assume buyers will put up with getting their goods days later via the U.S. Postal Service. In response, startups are trying to aggregate enough retail customers that they can offer the all-important fixed rates for nationwide two-day shipping.

Read the full article here. 

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Simply put, “pick and pack” is the process of picking a customer’s order off of a shelf (or wherever it’s stored) and packing it in a box to be shipped to the customer. If you’re a new seller with just a few orders a day, you’re probably doing your own picking and packing – maybe out of your living room! The time, energy, and focus it takes to correctly pick and pack order after order quickly overwhelms sellers as they grow, though, which is why most turn to a 3PL and outsource their ecommerce order fulfillment once they get traction in the market. As you can imagine, picking and packing gets a lot more complex in a warehouse optimized for speedy and accurate ecommerce fulfillment. Read on to learn how pick and pack quality impacts your ecommerce store, how the experts optimize their order picking, and how you can find the best pick and pack fulfillment service for your needs.

What is Warehouse Picking?

Warehouse picking is the process of selecting and retrieving products from a warehouse or storage facility to fulfill customer orders. It is a critical component of the supply chain and plays a vital role in ensuring customer satisfaction. The picking process involves several steps, starting with receiving products into the warehouse, storing them in designated locations, and then picking the items as orders come in. Strategic planning, coordination, and execution are essential to ensure efficiency and accuracy in warehouse picking. By optimizing these processes, businesses can improve their overall operational efficiency and deliver a better experience to their customers.

Why Pick and Pack Fulfillment Quality Matters for Customer Satisfaction

Picking speed is an essential behind-the-scenes metric for ecommerce stores because it dictates order cutoffs and on-time delivery. These metrics in turn have a big impact on your conversion rate and repeat customer rate, and therefore your overall growth!

Your order cutoff time is the time in the day before which a customer has to place an order that can be shipped out that same day. Faster, more efficient picking operations can set later order cutoffs. In the days of 7 day shipping, this wasn’t such a big deal. With the rise of 1 and 2-day shipping, though, missing an order cutoff means a customer has to wait twice as long to receive their package. According to McKinsey, almost half of online shoppers will buy elsewhere when the estimated delivery time is too long – so an early cutoff means lost customers.

Picking accuracy is perhaps even more important than picking speed. As more sellers pile into ecommerce, price and advertising competition continue to rise, squeezing margins. Repeat customers who don’t need advertising to convert are critical to a seller’s ability to build a sustainable long-term business model. Sending customers the wrong order kills a brand’s image, likely loses the chance to create a long-term customer, and on top of that incurs return shipping fees.

Finally, intelligent packing can make the difference between a profitable sale and an unprofitable one. How? It’s all in the box.

It’s easy enough to set rules that guide which single item orders are put in which boxes. But what about multi-item or multi-quantity orders? They can quickly get confusing for warehouse personnel, and workers under pressure to go fast default to using too-big boxes to fit all the items. That, in turn, increases the dimensional weight of the box, which increases the cost of the shipping label.

Top ecommerce fulfillment 3PLs like Cahoot have efficient picking operations that work quickly while minimizing errors and cost. Cahoot’s processes enable 2 pm cutoff times that are a full two hours later than the industry standard, while its teams use barcode scanners to eliminate errors. When every single pick is checked by a computer, the order is right every time. Finally, Cahoot software creates intelligent and dynamic rules even for the most complicated multi-item orders that minimize shipping cost, saving you money.

Pick and Pack Warehouse Picking Strategies

How does picking and packing work in an ecommerce warehouse? The answer varies widely based on the sophistication of the operation and what types of items they’re working with. Automation also has a huge impact on how warehouses pick and pack, with the most tech-forward operations leaning heavily on robots and conveyor belts to quickly move items to humans doing the picking and packing. Different warehouse picking strategies can be employed to optimize efficiency and accuracy, depending on the specific needs of the operation.

Piece Pick and Pack

Piece Picking is the most straightforward method. Fulfillment personnel will pick orders one at a time as they come in, moving about the warehouse to pick items before returning to a packing station to prep the package for handoff to a carrier.

In most warehouses, each item will be stored in its own bin or case in a distinct location. When an order comes in, warehouse software will automatically generate a “pick list” that tells the worker where each item is stored in the warehouse. That way, the worker knows where to go to find each item and can grab them one at a time.

While this is the simplest pick and pack method, it’s also the least efficient, and most medium-to-large warehouses have moved past it.

Batch pick and pack

Batch Picking is similar to Piece Picking in that workers still move about the warehouse picking items for individual orders, but in Batch Picking, workers pick items to fulfill more than one order at a time.

Intelligent warehouse management software (WMS) guides this process to its optimal level of efficiency. Larger warehouses with more orders coming in have more opportunities for personnel to pick for multiple orders at once. Let’s say that four orders come in for the same pack of soap within three minutes of one another; in this simple example, the WMS will send just one worker to pick the soap for all four orders, bring it all back to a packing station, and to pack all the orders sequentially. Of course, this saves several trips to the soap shelf and helps the warehouse run more efficiently.

Zone pick and pack

Zone Picking is the first big step up in complexity, and it involves splitting the entire warehouse into different “zones” and giving different workers responsibility for each zone. Order pickers stay in their zone, and they pick items from their assigned zone only. Instead of the worker passing from zone to zone, they pass the picking box or cart over to the next zone from which it needs items. Once all of the needed items have been picked, they’re passed to the packing station, which is a separate and final zone.

Warehouses that use Zone Picking often have automated parts of the process – for instance, many will have conveyor belts that connect different zones to one another. That makes handoffs between personnel in different zones much quicker and more efficient, freeing them up to focus on fast and accurate picking. Each zone will also connect to the packing station via conveyor belt, so that orders of single units can quickly be passed up to the packing station for shipping.

Wave pick and pack

Finally, Wave Picking combines Zone Picking and Batch Picking. Each zone picks a large amount of items needed for orders in a batch, and then that batch is combined with batches from each other zone and sent up to the packing station. Workers at the packing station then grab what they need for orders from the batches packed from each zone to prepare for shipping.

Like Zone Picking, Wave Picking benefits significantly from automation and is frequently employed in large, sophisticated ecommerce fulfillment facilities.

Technology in Warehouse Picking

Technology plays a vital role in enhancing warehouse picking processes. Some of the most common technologies used in warehouse picking include:

• Warehouse Management Systems (WMS): A WMS is a software solution that manages and optimizes warehouse operations, including picking, packing, and shipping. It helps streamline the entire picking process by providing real-time data and insights, ensuring that orders are fulfilled accurately and efficiently.
• Voice Picking: Voice picking uses voice commands to guide pickers through the picking process. This hands-free technology improves accuracy and efficiency by allowing pickers to focus on their tasks without the need to handle paper lists or devices. Voice-directed picking with natural language processing moves beyond simple voice commands to systems that understand more complex natural language, reducing errors and training time.
• Collaborative Mobile Robots (Cobots): Employing collaborative robots (cobots) that can safely work alongside human pickers in shared workspaces, performing tasks like transporting picked items or assisting with heavy lifting. These robots are designed to work alongside human pickers, handling repetitive and labor-intensive tasks, enhancing productivity and reducing the physical strain on workers.
• Barcode Scanning: Barcode scanning, (a.k.a. Pick Scanning), uses barcodes to track and verify products throughout the picking process. This technology improves accuracy by ensuring that the correct items are picked and reduces the likelihood of errors leading to re-picks (which also reduces the likelihood of working putting the mis-pick back in the wrong bin location).
• Automated Guided Vehicles (AGVs): AGVs are robotic vehicles that automate the transportation of products within the warehouse. They improve efficiency by reducing the time and labor required to move items from one location to another, allowing human workers to focus on more complex tasks.

Warehouse Order Picking Best Practices

Implementing best practices in warehouse order picking can help improve efficiency, accuracy, and customer satisfaction, while limiting the amount of financial waste. Some of the most effective best practices include:

• Optimizing Warehouse Layout: A well-organized warehouse layout can significantly reduce travel time for pickers, improving overall picking efficiency. Grouping frequently picked items together and placing them in easily accessible locations can streamline the picking process.
• Implementing Efficient Picking Methods: Utilizing efficient picking methods, such as Batch Picking or Zone Picking, can enhance productivity and reduce labor costs. These methods allow pickers to handle many orders simultaneously or focus on specific zones, minimizing unnecessary movement. Personalized picking instructions based on worker experience tailors picking workflows to individual worker experience levels, optimizing for both speed and accuracy.
• Utilizing Technology: Leveraging technology, such as WMS or VoicePicking, can improve accuracy and efficiency in the picking process. These tools provide real-time data and guidance, helping pickers make informed decisions and reducing the likelihood of errors. Using computer vision to identify items during picking is another technology that reduces errors and speeds up verification.
• Providing Continuous Training: Continuous training for pickers is essential to maintain high levels of accuracy and efficiency. Regular training sessions can help workers stay updated on best practices, new technologies, and safety protocols, reducing errors and improving overall performance.

Common Challenges in Warehouse Picking

Warehouse picking is a complex process that presents several challenges, including:

• Inaccurate Inventory: Inaccurate inventory records can lead to picking errors, delays, and lost sales. Ensuring accurate inventory management is crucial to avoid these issues and maintain efficient warehouse operations.
• Inefficient Picking Routes: Inefficient picking routes can cause pickers to travel long distances within the warehouse, leading to longer pick times and higher labor costs. Optimizing picking routes through strategic planning and technology can help reduce travel time which improves efficiency.
• Labor-Intensive Processes: Manual picking processes can be labor-intensive, leading to higher labor costs and potential errors. Automating repetitive tasks and utilizing technology can help reduce the physical strain on workers and improve accuracy.
• Lack of Training: Untrained or poorly trained staff can lead to mistakes, inefficiencies, and safety risks. Providing comprehensive training and ongoing education for warehouse staff is essential to ensure smooth and accurate picking processes.
• Compliance and Regulations: Warehouses must comply with various industry regulations and standards, which can be challenging to manage. Staying updated on regulatory requirements and implementing compliance measures is crucial to avoid penalties and maintain operational efficiency.

How Does Pick and Pack Work for Fragile Items?

When picking and packing fragile items, speed becomes less important than the safety of the goods. After all, sending items that arrive broken is even worse than sending items slowly; you’ll have to write off the value of the broken items and pay to ship out replacements.

Picking and packing fragile items so that they don’t break in the warehouse or during transit used to come down to the experience and know-how of individual staff. Like most processes in the warehouse, though, guesswork is being replaced by intelligent automated rules to ensure that products arrive safely.

Consider our example below of a host of fragile goods from a fine Italian food purveyor. Each item is a damage risk, making an order with all of them a nightmare for most warehouse personnel.

An intelligent shipping software will make the difficult feasible by splitting the order into a number of shipments that finely balances shipping cost and breakage risk. It will then give guidance to the packing station on how to precisely protect and package each item to fit into the smallest box that will prevent damage in transit.

Many warehouses are set up for peak speed and efficiency, and thus, they don’t have the flexibility to intelligently adapt to different types of goods that need different treatment. That’s where Cahoot sets itself apart.

Future Trends in Warehouse Picking

The world of warehouse picking is constantly evolving, driven by technological advancements, changing consumer demands, and global economic shifts. Some of the future trends in warehouse picking include:

• Adoption of Artificial Intelligence: Artificial intelligence is expected to play a larger role in warehouse picking, automating tasks, and improving efficiency. AI-powered systems can analyze data, dynamically calculate the most efficient picking routes in real-time, considering factors like traffic, order priority, and worker location, and predict demand, enhancing overall warehouse operations.
• Increased Use of Robotics: Robotics is expected to become more prevalent in warehouse picking, automating tasks, and improving efficiency. Advanced robots can handle complex picking tasks, work alongside human workers, and adapt to changing warehouse environments.
• Growing Importance of Sustainability: Sustainability is becoming increasingly important in warehouse picking, with companies looking for ways to reduce their environmental impact. Implementing eco-friendly practices such as reducing waste and optimizing energy use can help warehouses become more sustainable.
• Blockchain for supply chain transparency and tracking: Using blockchain technology to track items throughout the supply chain with up to the minute status and location.
• Increased Focus on Customer Satisfaction: Customer satisfaction is becoming increasingly important in warehouse picking, with companies looking for ways to improve delivery times and fulfillment accuracy. Enhancing the picking process through technology and best practices can help meet customer expectations and drive business growth.

By staying ahead of these trends and continuously improving their picking processes, warehouses can ensure they remain competitive and meet the evolving needs of their customers.

Cahoot: The Best Pick and Pack Fulfillment Service

Cahoot’s nationwide network of over 100 warehouses provides affordable national ecommerce order fulfillment for online merchants. Our wide and diverse network enables us to fulfill a wide variety of needs, from sellers who need absolute peak speed at minimum cost to those that have fragile items or others that require special handling.

Our fulfillment centers are outfitted with dedicated personnel and technology that confers all the benefits of a top pick and pack service:

• Efficient picking enables late (2pm local time) order cutoffs
• Barcode scanning all but eliminates fulfillment defects
• Intelligent pick and pack software optimizes box size for every order, minimizing shipping cost for simple and complex orders
• Lowest cost by design

Unlike other providers, Cahoot also has the flexibility to work alongside existing merchant-owned warehouses (if you have them). We know that many merchants with non-standard items and order profiles carefully manage fulfillment themselves due to how difficult the process can be. Cahoot will analyze your existing network and customer base, then add a few locations of our own to seamlessly extend your network into a nationwide footprint.

With this approach, you can continue to get value out of your existing assets while delighting your customers and your bottom line with affordable fast shipping. Of course, our approach works just as well for merchants who want to fully outsource their fulfillment, and we’d be more than happy to take that on. Getting started with Cahoot is fast and easy – with pre-built integrations for major ecommerce channels like Amazon, Walmart, Shopify, and BigCommerce, we can get merchants started in as little time as it takes to send us your inventory. Talk to one of our experts today and explore how we can be the key that unlocks the next level of your profitable ecommerce growth.

Frequently Asked Questions

What is warehouse picking?

Warehouse picking is an order fulfillment process where item(s) from a customer order are retrieved from their inventory location(s) in a fulfillment or distribution center such as in a bin or on a shelf or pallet. Warehouse picking is the step that occurs before products are packaged and shipped out to their destination.

What is the picking process in a warehouse?

Warehouse picking is the process of finding items within a warehouse or fulfillment center and preparing them for shipment to customers. But there’s a lot of different ways to go about warehouse picking to ensure that it’s done as effectively and efficiently as possible.

What do you do as a warehouse picker?

Warehouse pickers are responsible for finding, picking, and packing goods for dispatch. They work in various locations, including e-commerce warehouses, wholesalers, and cold storage warehouses. It’s a physically demanding role that involves bending, lifting, and carrying products.

How to do picking in warehouses?

There are many strategies for picking in warehouses, which include batch picking, wave picking, zone picking, and piece picking. The best strategy for your warehouse picking setup will depend on the order volume running through your warehouse, the total number of SKUs in storage, your total number of pickers working at the same time, the type of facility you have, and the inventory management system and other technologies you have at your disposal. The different picking methods each have their own advantages and drawbacks.

What is voice picking in a warehouse?

Voice picking is a method of warehouse picking where pickers are equipped with a headset and microphone so they can easily communicate with the warehouse manager about picking details. Some systems are connected with an automated management system, which eliminates the need for a human on the other end of the line. Similar to other wearable warehouse picking options, voice picking has proven to be a time-efficient method and it also cuts down the likelihood of picking errors.