Welcome back to The New Warehouse Podcast, where today we are joined by Mike Simpson, the VP of e-commerce at NFI. With a 90-year history, NFI is a provider in the third-party logistics (3PL) industry and is known for its expansive operations across the United States and Canada. In this episode, we focus on the e-commerce aspect of NFI, exploring the trends and challenges they have faced in this rapidly evolving sector.

NFI’s Dive into E-Commerce Operations

The shift towards digitalization has been a significant aspect of NFI’s growth strategy over the last decade. Alongside other services like trucking, port operations, and warehousing, e-commerce has increasingly become a focal point for the company with its NFI eCom solution. This change came after six months of rigorous market research involving over 100 interviews with brands and retailers. The findings showed a significant gap in the market, especially in the mid-market brand segment.

Mike elaborates on two significant challenges they found in the market:

• Limited Scalability – Many 3PL providers promised growth but lacked the operational infrastructure to handle the rapid scaling requirements of mid-market brands.
• Inefficient Customer Service – Another stumbling block was the lack of high-level customer service to assist brands in their growth phases.

This comprehensive research prompted NFI to focus on offering solutions tailored for the mid-market, providing the reliability and scalability often missing from smaller 3PL providers.

Leveraging Automation and Robotics for Scalability and Efficiency

A noteworthy point from the conversation revolves around the role of automation and robotics in NFI’s operations. According to Mike, NFI invests in innovation to stay ahead of the curve. This focus is not just to replace human labor but to supplement it, given the low unemployment rates in the logistics sector. Technologies like goods-to-person systems and robots that assist workers in trailer unloading are being tested and implemented. The goal is to enhance operational efficiency while tailoring solutions to meet specific customer needs.

These innovations range from complete automation to semi-automated solutions, and they are all aimed at increasing efficiency while balancing the cost to serve customers effectively. NFI considers automation a spectrum where the application depends on multiple factors, including customer requirements and operational efficiency.

Navigating the Future of E-commerce Fulfillment

As we move into peak season and beyond, the e-commerce landscape expects to continue its steady growth. While the astronomical growth rates seen during the pandemic may not be sustainable, Mike anticipates that the sector will continue to chip away at the market share of brick-and-mortar retail stores. He also mentions that this peak season will indicate the rate at which different players in the retail market grow, potentially favoring mid-market brands that have successfully leveraged marketing and advertising.

Key Takeaways

• In the U.S., E-commerce currently accounts for about 24% of retail sales for physical goods. Experts predict this will rise to around 33% by 2027.
• NFI strongly emphasizes employee retention through a culture-driven approach that starts from the top down, focusing on attracting, retaining, and developing as their mantra while prioritizing safety at all levels of the organization to support and sustain growth.
• The speed of deliveries could potentially determine the future of e-commerce fulfillment, not just the quantity delivered.

EP 426: E-Commerce Fulfillment and Growth with NFI