January 29, 2014
What the Matrix Can Teach Us About E-commerce and Fulfillment.
By Brandon Brooks, VP of Strategy and Marketing
In the movie The Matrix, one of the lead characters, Morpheus, tries to convince Keanu Reaves’ character, Neo, that he isn’t actually living in a real world. Neo has a hard time grasping the notion that he is just tethered to a farm of machines that are feeding him through a tube and manipulating his brain waves. Early in the show, Morpheus gives Neo the choice to take a red pill that will wake him up to the reality of his situation or to take a blue pill that will allow him to keep believing what he has always believed. Of course, Neo took the red pill, and woke up to reality.
Reality is something in short supply when it comes to understanding e-commerce and fulfillment. People use the two words interchangeably, but they are as different as the choices Neo faced when deciding between reality and fantasy. In an e-commerce world, almost everything happens electronically where even a high school kid with rudimentary knowledge of HTML can create a professional storefront and a shopping cart in a matter of hours. Combine that with easy-to-find drop-ship and affiliate programs offered by thousands of retailers, and voila, you have a “real” website that collects “real” money and promises “real” delivery of goods.
However, the truly real world doesn’t start until these e-commerce orders have to be fulfilled. It’s here in the fulfillment world where the rubber meets the road and online orders have to be picked, packaged, sorted, and delivered. In other words, something physical has to happen.
“welcome to real world…”
Now don’t get me wrong. A lot of work went into the creation of the online world, and many companies like Amazon should be given a lot of credit for transforming retail business into something much easier and less expensive for the consumer. Life is better with e-commerce. Let’s just not forget how difficult it is to actually “make good” on all the things promised by e-commerce.
This past Christmas season, UPS and FedEx came under a lot of heat for failing to deliver last-minute packages before the 25th. Lost in the anger and media hoopla was the fact that there was a 37% increase in orders placed during the last weekend before Christmas, as well as a growing population that is unable to distinguish between the online world and the real world. Neither UPS nor FedEx forecasted such an increase, and the volume overwhelmed their truck and air fleets. Remember, you can’t just go out and hire 50 more planes and pilots at the last minute. Physical infrastructure takes years to build and fine tune and must be deployed in a semi-consistent state in order to get an acceptable return on investment.
Amazon and Walmart, among others, are vowing to never let the Christmas fiasco happen again and have started to take steps to build their own delivery networks controlled solely by them. Jeff Bezos even famously went on CBS’ 60 Minutes to tout his drone delivery program of the future. I think it’s always healthy to push the innovation envelope, and I wish them success. However, they might discover what multi-billion dollar, 100-year old companies full of very bright people such as UPS have already discovered—working in the real world is a bit tougher than working in the electronic world.
In the meantime,
Companies such as Packsize are helping bridge the gap between e-commerce and fulfillment by providing end-to-end supply chain transparency and smarter packaging solutions. Through On Demand Packaging® technology, Packsize can reduce the average box size by 40%. Imagine how many more packages could have been delivered by Christmas, if UPS’s customers had packaged their products in boxes that were almost half the size.
At the end of The Matrix, Neo conquers the virtual world and begins working to expose others to the reality of their situation. Unfortunately, not everyone wants to live in the real world, and some would even choose to go back to a fantasy life created by the machines. In our world, you soon won’t have the luxury of deciding to only operate in either e-commerce or fulfillment. The two are becoming one, and logistics companies and retailers will have to share the successes and burdens of each other.