How hyperlocalisation is transforming eCommerce

Selazar was recently featured in Raconteur, and CEO Jack Williams contributed his thoughts on the Future of eCommerce and hyperlocalisation.

In the article, he discusses how local fulfilment paired with employing digital technology help to optimise warehouse operations, along with the availability of asset-based financing all drive eCommerce forwards.

 

Local fulfilment, employing digital technology to optimise warehouse operations and the availability of asset-based financing all drive ecommerce forwards, says Jack Williams, CEO of Selazar

The growth in eCommerce since the Covid-19 pandemic has proven just how much consumers value convenience. Same and next-day delivery is now an expectation of an online order rather than a premium that customers are willing to pay for. Today’s demand for consumers and companies to be as sustainable as possible is a significant catalyst for change within the global supply chain, especially
for that important ‘last mile’.

Hyperlocalisation

Hyperlocalisation is the strategic spread of stock across a localised network of hubs, bringing businesses closer to their customers with fulfilment centres, delivery locations and collection points tailored to their regional markets. This drives businesses to leverage warehousing to their advantage, enabling them to reach as many customers as they can in the shortest possible time. Spreading stock across a wide network is becoming the desired goal, and this doesn’t – as many companies believe – mean they must hold a high amount of stock in each location to be able to fulfil same-day delivery expectations.

In fact, through intelligent technology, a whole range of efficiencies can be gained to make the process more cost-effective with a lower environmental impact. This is to be welcomed at a time when economic headwinds look set to impact bottom lines. As inflation rises, fuel costs increase, and business spending cutbacks are universal, getting much more from much less becomes a commercial imperative. Two strands here connect for the greatest success: hyperlocalisation and warehouse virtualisation. They go hand in hand. Hyperlocal operations facilitate same-day delivery next-day delivery expectations and support efficient local returns. What’s more, the shift towards localised stock distribution has far less of an impact on the wider environment.

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For example, there is no need to use big diesel-laden lorries when orders can be sent by bike carriers or electric vehicles. Retailers know their customers want hyperlocalisation. Who wouldn’t like to receive their order fast, whether that’s first thing the following day or within hours of making a transaction online? In the US, micro-hubs have become a necessity due to the country’s vast geography.

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In the UK, they can be employed strategically to enhance customer experience. Hyperlocalisation is a boost for UK exports. For most companies today, competing solely on price is no longer an option. Instead, retailers of all shapes and sizes are turning to customer experience as their key differentiator – and fast delivery times are a significant factor in ensuring that it is a positive one. At Selazar, we plan to offer same-day delivery in 15 cities across the UK from our warehouses later this year through a network of micro-hubs. Not only does this benefit our clients’ last mile, but it also helps them meet environmental and sustainability CSR targets. We aim to achieve this in the US, South America and Europe too.

Growth-oriented businesses need the ability to expand their customer base into overseas markets to increase their turnover and boost profitability – this is especially the case for smaller and more regional brands.

If you are a cosmetics company in the UK wanting to sell to Latin America, it shouldn’t take three weeks to ship your product there to a customer’s home. It also shouldn’t take the same time – or longer – for that customer to return it. According to Shopify, 32% of consumers have abandoned a purchase due to estimated shipping times being too long (37% in North America). That is why hyperlocalisation is a huge opportunity. You ship a product selection in bulk, and then delivery is taken care of locally on the ground.

Not only does this open new markets, but it reduces customs paperwork, delivery and returns times, all while mitigating environmental impacts. No longer is the experience clunky for the consumer or the company they are buying from, which in turn builds brand loyalty and promotes word-of-mouth recommendations. However, the key to successful hyperlocalisation is warehouse virtualisation. This is what makes hyperlocalisation economically viable and provides consistently outstanding service across the globe.

Through warehouse virtualisation, businesses have complete control over their logistical operations globally via cloud-based technology. This ensures consistent fulfilment operations, from guiding storage and packing practice to managing couriers and delivery speeds.

Brands that opt to partner with Selazar have the benefit of clearly understanding how much stock they need to keep at hand and what SKUs are most likely to be ordered. As we make advancements in tech-led fulfilment, it is clear to see that the legacy way of owning and operating dozens of globally filled warehouses comes with high fixed costs, overheads, employee wages, and the initial capital outlay. Replicating stock across them all also means tying up a lot of money; this can be a big challenge for a brand, whatever their size, blocking them from their true growth potential.

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Asset-based financing to free up cash

By working with a trusted partner such as Selazar, companies can take advantage of intelligent stock propagation that is all set up and ready to go via a prebuilt warehouse network. This uses artificial intelligence and machine learning to understand where stock is required, what stock that is and how much must be held in each location. Forecasting promotes efficient distribution. Our systems can tell what is needed where and how to load balance your operations. It does this by analysing historical data and making educated predictions, mitigating many risks. The more data you have, the better the outcomes. Over time this will measure, track and predict seasonal trends and promotional activity. It helps to manage peaks and troughs in demand and supply; real-time oversight allows different stock locations to be turned off and on as order levels dictate. Alongside hyperlocalisation and warehouse virtualisation, there is another solution to a common problem. Many businesses lack the liquidity to make these options work for them.

At Selazar, we offer asset-based financing, with money released against the value of the stock held. We also have 90-day credit terms to ease cash flow worries. Towards localised global fulfilment Since Covid-19, eCommerce expectations have changed. Consumers want things faster; brands want a simple solution to meet that expectation.

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Hyperlocalisation and warehouse virtualisation work together neatly to achieve this, successfully meeting demand, driving revenues and cutting carbon. It reduces management and operational efforts too. Downtime, friction and products being out of stock are dealt with, as is having to find the right talent internally to run warehouses or implement effective logistics technologies and software.

Cost savings come through scalability. As a future-thinking 3PL, we customise everything we do to each of our client’s requirements on a global level and provide a single user interface for 24/7 visibility and control. Shopify’s research suggests early adopters of artificial intelligence-enabled supply chain management can improve logistics costs by 15%, inventory levels by 35% and service levels by 65% – compared with slower-moving competitors. However, a move away from the traditional way of doing things throws up many fears. Some companies, especially bigger ones, have invested significantly in costly warehousing infrastructure or are tied to long leases.

But as eCommerce continues to grow fast, fulfilment will head further in this direction. The choice now for C-suites is how quickly they accept joining this journey. For more information, please visit selazar.com

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