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Smart Warehousing Aug 24, 2021 5:36:34 PM 11 min read

Retail vs. E-Commerce: What to Know About Food Logistics

How consumers and retailers interact with the food and beverage industry is constantly changing. Food fads, changes in supply and regulations, and lifestyle changes keep the demand for different food items (and methods of delivering those foods) in constant flux. 

One of the biggest factors to change how both markets buy food is online services. With the growing presence of e-Commerce, both B2C and B2B order fulfillment is becoming more complex.

In fact, according to MarketWatch, "The global Food Logistics market size is projected to reach USD 134410 million by 2027, from USD 83170 million in 2020, at a CAGR of 6.6% during 2021-2027."

This growth is because consumers are continuing to demand increasingly varied foods, in increasingly varied formats, that suppliers of all types will need to manage. See how food fulfillment is changing for both retailers and e-commerce stores and how partnering with the right 3PL can make all the difference.

What is Food Fulfillment?

As e-commerce continues to become more popular, it's expanding into the perishable food and beverage industry. Meal subscriptions, grocery delivery services, and even specialty meat subscriptions are more accessible (and more cost-effective) than ever to consumers. However, they can cause additional complications to your supply chain.

Food fulfillment requires constant refrigeration and paperwork verification to back it up. The FDA and other regulatory bodies require frozen and refrigerated goods to have a clear history of staying within a regulated temperature range throughout their entire journey. Perishable foods also have a limited timeline; unlike other e-commerce purchases, your inventory can't be stored in bulk for weeks or months. 

However, with the right warehousing network and order fulfillment software, you can easily manage food orders and a product catalog that includes perishable items.

Retail Food Logistics

Third-party logistics services (3PLs) focus on two different types of food logistics and fulfillment: e-commerce food sales, which is a growing direct-to-consumer market that doesn't involve intermediary points like grocery stores, and retail food, which includes deliveries to grocery stores, big box stores, and other traditional retailers that have customers come to them to complete their shopping.

While 3PLs are building up their supply chain support to handle e-commerce food shopping, retail food logistics still makes up the bulk of food fulfillment orders.

Retail conglomerates and their supply chain services are benefiting from increasingly smart supply chain systems. Predictive inventory management tools, real-time analyses of both orders and consumer purchases, and increasingly connected food manufacturers are changing how retailers can adapt to food trends and changes in consumer eating habits. 

However, even these fast-paced changes and technologies aren't giving consumers the convenience and personalization they prefer. So consumers are increasingly turning to e-commerce food sales.

The Rise of E-Commerce Food Sales

The direct-to-consumer food sales market has existed for decades. Boston Market and food catalogs were at the helm of this style of food sales in the latter portion of the 1990s, but modern direct-to-consumer food sales are much different. They're taking the form of:

  • Online groceries: Consumers can order groceries online from suppliers like Thrive Market or Whole Foods. This experience is similar to shopping in a grocery store, except it's entirely online. Food can be delivered directly to the consumer's door.
  • Subscription boxes: Consumers can subscribe to box plans that lead to weekly or monthly deliveries. Some delivery services will deliver a select combination of goods, such as a combo plan of specialty meats from ethical sources. Others offer a 'mystery' subscription box full of perishable and non-perishable food items centered around a specific theme.
  • Meal plan services: These e-commerce food sales package goods for individual meals rather than groceries or prepared meals. These are oriented toward consumers that want more direction and structure in their groceries so they can cook without feeling overwhelmed or purchasing groceries they don't need.

Overall, this market reached $66 billion in 2020, growing in part due to increased supply chain flexibility and due to the COVID-19 pandemic. This expanding market was (and continues to be) a huge opportunity for e-commerce businesses, but it comes at a price. Some of the challenges these companies need to prepare for include:

  • Fluctuating, volatile demand
  • Quick fulfillment timelines
  • Potentially low margins due to small quantities of goods in individual, personalized orders
  • Constant marketing needs and omnichannel sales maintenance

A third-party logistics service can help businesses manage the unique fulfillment challenges of e-commerce food orders. Look for a warehouse company with an established network that covers your region or the entire continental United States to ensure fast, safe delivery of perishable goods to your customers.

This distribution network, especially with facilities conveniently located near major hubs and in optimal remote locations, can speed up the fulfillment process and ensure your organization can fulfill its order timeline requirements consistently. 3PLs can also offer:

  • Refrigerated storage units and transportation systems
  • Technology for real-time tracking, order routing, analytics, and customer interactions
  • Scalable support to meet the fluctuations in demand that e-commerce food sales often face
  • Economies of scale, which reduce costs for companies and allow them to more easily scale up their business

Omnichannel Food Fulfillment

When you're planning to start or expand your e-commerce food sales business, make finding the right fulfillment partner a priority in your process. Without the support of a reliable 3PL, it can be difficult to meet your commitments, either in terms of order fulfillment, meeting your deadlines, or creating an enjoyable customer experience

However, a 3PL is even more essential for businesses that have both an online business and a traditional retail business. Managing dual business structures on your own is challenging, and working with two or more different fulfillment partners is inefficient. Instead, choose a fulfillment service that offers:

  • Omnichannel capabilities, such as software integrations that can organize orders from on-site and online locations, B2B and B2C orders, and more.
  • Inventory management software that can optimize the order and inventory process so fulfilling orders from multiple sources is as efficient as possible.
  • Experience in managing goods in refrigerated, frozen, and room temperature conditions so all of your products maintain excellent quality and compliance with industry standards.

Partner with Smart Warehousing for Food Fulfillment Support

At Smart Warehousing, we specialize in technology-first order fulfillment practices that can keep up with fast-moving omnichannel business practices. Our network of distribution locations across the United States includes cold storage options to keep frozen and refrigerated food at peak freshness to ensure excellent customer service and brand reputation.

We also have smart inventory software so our clients can manage their goods and orders from their mobile devices or computers. Contact us today to learn more about how we can support your food logistics needs.

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