Retail Logistics Automation: 5 Core Functions to Focus Upon 

With an average rise till 2024 and an impending fall in 2025, global sales revenue is the tangible manifestation of the grim reality of this hyper-agile sector. Not long ago, McKinsey stated that retail is pressed for revenues from all sides – the margins are slimming down, the brands are paying higher costs to manage e-commerce supply chains, and stakeholders are making higher investments for matching new competition. Further, labor costs are steadily rising, and customer expectations are ballooning up as digital natives and disruptors keep on raising the bar for personalized service offerings, which are again founded on costly structures. 

Zooming out on retail logistics also unearths multiple retail logistics management challenges, as outlined by the National Retail Federation – e-commerce fulfillment (51%), meeting customer delivery expectations (55%), and transportation and logistics costs (58%). Another survey reveals that Last Mile delivery is a significant logistics challenge for 71% of retailers, and reverse logistics is challenging for 69% of them. Finally, Deloitte also reports that supply chain disruptions lead to an average of USD 4 billion in annual losses for retailers. 

While all the industry leaders are looking askance at automation and digitization as potential solutions, what are the key considerations to focus upon, and how to get started with retail logistics automation? 

Here, we share the 5 core retail logistics functions that every retailer should start with.

Automating Retail Logistics – 5 Core Functions to Get Started With 

#1 – Order Fulfillment

Once the customer has placed an order, right from the order allocation to delivery orchestration and order fulfillment, every step should be planned with efficiency and optimization as the focal points. Leveraging automation for automated order allocation to the most profitable vehicle-rider duo and using in-built workflows for delivery orchestration can weed out the process redundancies and inefficiencies from order fulfillment operations. 

Further, rider selection, order clubbing, and batch processing can help businesses bring down their leasing costs, fuel costs, rider payouts, and overall order fulfillment costs.

#2 – Shipping

Creating a winning shipping strategy requires a highly efficient and effortless plan seaming together multiple stakeholders and business functions. Owing to the size and complexity of the retail functions, it cannot be achieved manually. This is why it is one of the most crucial factors to consider while automating retail logistics. 

Partnering with multiple logistics providers (3PLs/carriers), creating intelligent rules for automated carrier selection based on multiple shipment/delivery/route characteristics, and optimizing every process and person with AI/ML-powered solutions – retailers can increase on-time dispatch by 28% and reduce order-to-ship time by 12% with smart automation.

#3 – On-Field Operations

The retail logistics ecosystem is rife with disruptions and unpredictable events, such as delivery rescheduling, parcel thefts/damages/loss, customer unavailability, untraceable rider behavior, and much more. Hence, in order for the automation to be effective,  ensuring a firm grip over real-time events, people and processes is a must. 

Intelligent retail logistics automation platforms offer on-the-go optimization in multiple forms, such as en route order clubbing, dynamic routing, re-routing, delivery (success/failure) validation and authentication, and smart NDR/RTO management. Retailers can check whether a rider is deviating from the system-suggested behavior and ensure high levels of performance via smart KPI management and gamification etc., thereby reducing the cost of operations as well.

#4 – Returns 

As mentioned in the beginning, returns remain challenging for retailers. While the average rate of returns in online retail is 30%, the actual loss incurred by them is even more in terms of returns processing and lost sales. Thus, it is another crucial retail logistics function that needs to be optimized. 

AI-powered retail logistics automation solutions help minimize shipment returns by 4%, manage returns intelligently and club them with deliveries/pickups and ensure efficiency via smart routing and warehousing. Retailers can get access to returns analytics and identify hidden trends in customer return behavior to reduce the returns processing costs further.

#5 – Inventory Distribution

While getting, processing, and managing the inventory efficiently is crucial for retail operations, when it comes to retail logistics automation, inventory distribution is one of the first functions to focus on. Dispersing inventory across multiple warehouses or fulfillment centers should be done to put the products closer to the end customers and to shrink the delivery times while reducing shipping costs. 

Planning a smart network of warehouses/dark stores/mini-fulfillment centers, serving them with AI-powered 3PL or distribution system, and managing the stocks with smart predictive analytics are some ways to automate inventory distribution in an optimized manner.

Optimizing processes via automation is an ongoing process, and retail automation is a problem statement that goes much deeper than eCommerce and online selling. Hence, opting for flexible, feature-rich, and AI-powered automation platforms that offer customizable functionalities is the best way to get started.