Article

Online businesses weather COVID-19

WAREHOUSING
Online businesses weather COVID-19

Based in Charlotte, North Carolina, USA, Datascope is seeing firsthand which businesses are being most affected by COVID-19 and which businesses are weathering the storm fairly well.


AT THE time of writing this article, the world is in lockdown and COVID-19 is running loose. It is in this situation that we get to see some very interesting business dynamics at play.

It is clear to all of us in the midst of COVID-19 that those businesses that are able to operate remotely are in a far stronger position. As an example, our own business has been largely run remotely for the past five years. Our clients and our teams are spread over five continents. Due to this business model, our business has hardly felt the virus; it is business as usual for us.

We have seen a similar trend in the USA and Canada with distribution-intensive businesses. Those that have a large online presence or supply into an online distributor have not suffered like those supplying on a B2B basis or to retail stores. These online businesses, such as Amazon, continue to operate and deliver in vast volumes. In fact, due to the stay-at-home order, we have seen an increase in online demand for goods and services. Note the Amazon share price in the graph. Although there was an initial drop in the share around mid-February 2020, the share has reversed course as traders saw the increase in Amazon’s turnover.

1_amazon

Compare this to the two retail store-intensive businesses below. One is for Kohl’s, a large clothing retailer in the USA, and the other is for GAP, another large retailer with many stores and brands. Both businesses have been badly affected by the virus, and we are only in the first few weeks of the pandemic.

2_kohl

3_Gap

In a recent project in South Africa, we totally automated the processing of online orders from the client’s online store into their ERP software, through the reservation of inventory in their distribution centre, and right through to the automatic release of these orders to the conveyor systems on the floor.

Here, no manpower is needed to talk to the customer, to load the customer’s orders or to release the orders into the distribution centre. All is automated. Orders placed online are shipped within a matter of hours. It is businesses like these that will succeed and grow in the new world.

This shift to supplying into an online market necessitates some fundamental changes to a distribution business. The warehouses supplying this market must be able to pick, pack and ship high volumes of small orders. To do this, the design of the warehouse must change to include efficient picking zones with some level of automation. Businesses that fail to recognise the need to redesign their warehouse layout and to implement optimization software to support such a shift in operations will fail to deliver on customers’ expectations in the long run.

COVID-19 is fundamentally changing the way we do business. Remote interacting teams will become commonplace and businesses will find ways to supply directly to their end customer with fast and efficient distribution centres running effective floor level automation software systems. We are in a new world. Your market is not limited to South Africa or Africa. Your market could be anywhere across the globe. You want to be thinking this way for the future. If you do not, someone is going to move your cheese.

 

www.datascopewms.com

 

 

Written by: Anton Jurgens CPIM, President of Datascope North America
Date: 01 May 2020

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