As consumers’ buying behavior continues to shift from brick and mortar shopping to online, e-commerce is one of the fastest-growing industries. As a result, in the past few years, giant brick and mortar retailers like Target and Walmart have invested billions of dollars to enhance their online presence and build their distribution centers across the country to provide seamless shopping experiences.
With consumers’ increasing demands for faster shipping, a customized receiving experience, and a hassle-free return process grow, e-commerce companies face constant operational challenges, especially in their order fulfillment operations. For example, same-day delivery is increasingly becoming the norm in select metropolitan areas with companies, such as Amazon and Macy’s, offering such options.
From the business owner’s perspective, when it comes to order fulfillment operations, the biggest pain point is around managing the ups and downs of staffing needs. Whether you are an e-commerce company with an in-house operation or a 3PL company managing fulfillment operations for e-commerce clients, matching workforce needs with order demands flexibly is one of the most challenging operational problems.
Due to the unpredictable and seasonal nature of the e-commerce business, this is indeed quite the challenge. Many fulfillment operations constantly find themselves in two situations: overstaffing or understaffing. In general, many companies find themselves staffing up to address a sudden surge in demand due to seasonality, a new product launch, or marketing/promotion campaigns. In addition, they overstaff in order to proactively deal with the high employee turnover associated with the industry. But this overstaffing comes at quite the price: high overhead cost.
Illustrative Cost of Overstaffing
Other companies find themselves constantly understaffed. Their overhead may be more manageable, but whenever demand surges or employee turnover is higher than expected, they scramble to find workers. This dynamic similarly brings about added costs, as they incur an uptick in their recruiting/staffing costs, as well as reduced customer satisfaction (and potential lost revenue) due to delays in shipping customer orders.
Illustrative Cost of Understaffing
So what’s a business owner to do? To address this decade-old problem, many high-growth e-commerce companies and 3PLs have started utilizing on-demand staffing solutions where they can access staff immediately based on their real-time needs. Instead of planning for projected staffing needs several months away, they will adjust their staffing levels almost daily, similar to the concept of “just-in-time” manufacturing. Here’s how an e-commerce business can implement its own on-demand staffing approach.
- Assess the minimum level of staffing required and set it as a baseline. This is how many staff you need to have at your warehouse at all times year-round.
- At the end of each day (or week), a warehouse operations manager decides how many additional staff he/she will require the following day (or week) based on real-time information regarding orders received.
- The operations manager then makes a job request through an on-demand staffing platform of his/her choice, such as Wonolo.
- The following day (or week), the exact number of qualified workers requested via the on-demand platform show up and get the job done.
- The operations manager oversees the performance of workers, as well as payroll, directly via the on-demand platform.
The On-Demand Staffing Model
The benefits of the on-demand staffing model are clear:
- Significant cost reduction
- Improved management of variable cost
- Reduced administrative burden on recruiting, onboarding and managing staff
With increasing innovation in staffing technology, e-commerce companies and 3PLs can substantially remove friction around finding staff and address peaks and valleys of customer demand in a way that’s significantly more flexible and cost-effective than in the past.
How are you currently managing unpredictable staffing needs at your fulfillment operation? Contact us today to schedule a demo and learn how Wonolo has helped e-commerce businesses transform their fulfillment operations.