The Pressures of Omni-Channel Fulfillment and Returns Are Growing

The continuing growth of omni-channel commerce is a great thing, right? E-commerce is fueling strong results for sellers, as a record five billion Internet users worldwide contributed to online retail revenues of over $4.1 trillion in 2024 alone. Around the world, e-commerce accounted for 17% of all retail sales last year — and that number is expected to rise to 21% by 2029.

Omni-channel commerce gives shoppers more options, in terms of both retail brands and specific products. It also fuels price competition, which is good for shoppers. And it provides retailers and direct-to-consumer (D2C) manufacturers with limitless access to shoppers around the world. Of course it’s a positive development, driving significant economic benefits.

But let’s be honest. The explosive growth of e-commerce also creates significant logistics challenges for retailers and D2C manufacturers. As they fulfill huge, unpredictable order volumes and process more and more returns in their distribution centers, sellers are often challenged to achieve both high service levels and high profitability.

Retailers and D2C manufacturers are expected to have an enormous range of products available, across the distribution network, ready for same-day or next-day delivery. They need to offer low-cost or free shipping and returns, while also protecting margins. They must track inventory, orders and returns in real time, at all times. And they need to manage their resources, from inventory and labor to forklifts and robotics, with incredible precision — keeping all assets moving productively, while avoiding excess inventory and equipment downtime.

In the case of product returns — which amounted to a staggering $890 billion in 2024 — the warehouse needs to move with lightning speed and precision to capture the resale opportunity and minimize waste.