March 5, 2024

Outsourcing Order Fulfillment to Gig-Work Marketplaces

What Is Workforce Enhance?

The increasing shift towards online shopping by consumers for their grocery needs is not new. However, retailers face many new challenges when fulfilling eCommerce orders.The traditional challenges plaguing eCommerce operations remain. For example, they must ensure that orders match the shopper’s expectations, guarantee freshness, and uphold delivery schedules.

More recently, the complexities of the eCommerce landscape have heightened because of the multitude of channels available to consumers. Customers can select from various front-end platforms to place orders and choose delivery options like curbside delivery, ship-to-home, and marketplace delivery for last-mile fulfillment. The increasing complexity of the eCommerce landscape directly impacts escalating costs, particularly labor costs.  

Labor costs pose a dual challenge. They represent a significant expense that escalates rapidly with growing order volumes. This is largely due to the historical reliance of grocery stores on in-house staff to manage eCommerce fulfillment operations like picking, packing, and staging online orders processed through their eCommerce platforms. 

Upshop eCommerce’s Workforce Enhance functionality, offered as an out-of-the-box functionality, allows retailers to enhance their in-store workforce with gig economy workers thereby effectively reducing labor costs while increasing online order capacity.  

Why Consider Workforce Enhance?
There are four key benefits that Workforce Enhance delivers to retailers who are looking to optimize their eCommerce fulfillment operations. 
  1. Increased Order Capacity: Servicing online orders ultimately boils down to labor availability which could fluctuate depending on the time of week or during long weekends and public holidays. Workforce Enhance assists retailers in outsourcing peak demand orders to third-party marketplace workers, increasing their order capacity by over 20%.  
  2. Marketplace Presence: To maintain visibility and relevance, retailers must establish a presence on popular marketplaces like Instacart, DoorDash, or Uber Eats. Without this, they risk losing market share to competitors with a stronger online footing. While starting on these platforms may yield low order volumes initially, relying on in-store associates for such orders could prove costly for grocers. This is where Workforce Enhance comes in, offering retailers a cost-effective solution. By leveraging Workforce Enhance, retailers can tap into marketplace potential, handle low order volumes efficiently, and manage orders without incurring additional labor expenses. 
  3. Retain Ownership: Outsourcing orders to gig economy workers could lead to increased shrink. Third-party workers could end up bagging items that shoppers didn’t pay for or picking incorrect items. Workforce Enhance’s order audit feature helps mitigate shrink that’s associated with outsourced orders thereby ensuring that the retailer retains ownership of the order.  
  4.  Reduce Labor Costs: Order volume surges can lead to exponential increases in labor costs if grocers were to solely rely on their in-store workforce. Using full-time employees for picking, packing, and delivering online orders can reduce operating margins. Leveraging gig economy workers through Workforce Enhance could help reduce labor costs by as much as 30%. 

How Does It Work? 
Workforce Enhance is made up of two components: the Routing Engine and Order Audits.  

The Routing Engine, as its name implies, houses the algorithmic logic essential for directing online orders to either the in-store workforce or third-party marketplace workers based on factors such as labor availability, order volume, and agreed-upon volume thresholds. Retailers can configure the routing engine to determine the maximum number of orders that in-store associates can handle daily and assign the surplus to marketplace workers. This adaptive approach empowers retailers to boost order capacity and cut labor costs, regardless of fluctuations in demand. 

Order Audits serve as a method for store associates to review items bagged by marketplace workers, aiding in the prevention of potential theft. Grocers have the flexibility to opt for either partial audits or full audits based on the order size. These audits are processed through a specialized “audit” lane rather than the standard checkout lane, resulting in reduced audit time.  

Workforce Enhance Use Cases
Use Case #1 | Increased Order Capacity during Peak Demand Periods

Large regional grocery stores typically accept online orders in 3-4 slots per day, between 10am to 12pm, 12pm to 2pm, 5pm-6pm, and 6pm to 8pm. These limited order acceptance windows may stem from projected staff shortages, perhaps due to an increased allocation of staff to answer shopper inquiries. Implementing Workforce Enhance enables stores to accept online orders throughout the day without being constrained by labor availability. Retailers accept the orders that flow in through their native app or third-party marketplaces and then outsource order pick, pack, and stage to gig economy labor.  

Use case #2 | Meet Fulfillment Delivery Timelines During Holiday Weekends 

Workforce Enhance provides valuable flexibility, especially during local football games, long weekends, and holidays. Retailers dedicate significant efforts to effectively showcase seasonal essentials through digital ads and store displays. However, these peak periods also bring about concerns regarding labor availability, even as orders for guacamole, chips, and chicken wings keep pouring in. 

Workforce Enhance allows retailers the ability to supplement their store staff with gig workers to assist with order picking, packing, and staging during these busy times. This way, retailers can seamlessly process online orders, regardless of the front-end interface – whether it’s your native eCommerce app or platforms like Instacart, DoorDash, or Uber Eats. The added benefit is the ability to adhere to delivery timelines irrespective of in-store associate availability.  

Use case #3 | Engage With Shoppers On Their Preferred Marketplace

Varying zip codes means diverse consumers with distinct behaviors and preferences in different markets. Some neighborhoods may favor Instacart over DoorDash. Depending on the popularity of third-party platforms and the chosen last-mile delivery service, retailers may need to route orders for fulfillment. Workforce Enhance offers a robust routing engine, allowing retailers to tailor routing criteria based on consumer preferences and pre-existing marketplace relationships. 

Use case #4 | Reduce Labor Costs Despite Rising Order Volume 

In eCommerce, as order volume grows, so does labor costs. The correlation is clear: more orders mean more man-hours needed from store associates for order fulfillment. For instance, if a store sold about 600 units per week in the first 6 months of launching its eCommerce operations, it could likely triple this number within 18 months. This growth would inevitably lead to increased labor expenses. 

With Workforce Enhance, retailers can now allocate orders exceeding a specific limit to gig workers, effectively reducing the workload of full-time associates. A prominent regional grocer’s eCommerce operation witnessed a remarkable 30% decrease in labor costs by fully implementing Workforce Enhance. 

Use case #5 | Mitigate Potential Shrink of Outsourced Orders 

Outsourcing the picking and packing of online orders to gig workers presents a common challenge: the risk of theft. There is a possibility of workers walking away with items not ordered by the customer. Moreover, when orders are outsourced, there could be a lack of ownership from gig workers, particularly when they are not involved in the last-mile fulfillment. This is where the Order Audit feature of Workforce Enhance proves invaluable. These audits can be configured to scan the entire basket (full audit) or just a portion of the order (partial audit), saving significant time for store associates managing orders. By conducting these audits, the potential for shrink with outsourced orders is reduced, allowing retailers to maintain the integrity of their orders. 

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