A HISTORY OF DISTANCE SELLING AND WHAT CHANGED IT

Here is a simple description from Google as to the difference between warehouses and fulfillment centers, “The primary function of a warehouse is to store inventory, while a fulfillment center’s goal is to turn inventory over quickly and ship orders.” From the website “A History of Fulfillment Centers”, they necessarily evolved to ensure that orders get processed on the end of the supply chain. They are essentially in charge of warehousing, locating the item ordered, packaging it and shipping it to the desired address.  They also have to address customization requirements such as gift wrapping and engraving.

The following information is the result of Internet searches.

1861    The first modern mail-order service was established in Newtown, Wales, UK. According to the BBC website, A History of the World, Pryce Pryce Jones, worked as an apprentice to a local draper (yes, sold drapes).  He took over the business and, in 1859, started trading under his name. In 1861 he took advantage of the new national postage service and began the first-ever mail-order business.

1872    Montgomery Ward establishes a mail-order business in Chicago with no physical storefront

1887   Sear Roebuck published their first mail order catalog

1898   According to the website PartnerShip,  Cleveland horseless carriage maker Alexander Winton sold his first cars in 1898. The same year he created the semi-trailer truck, today’s tractor-trailer, in order to deliver the cars. He sold the first one the next year. (Note this image is from Google and is not the first one)

1924 UPS builds the first conveyor belt system specifically for handling packages

1960s (Early) Several businesses adopted EDI (Electronic Data Interchange) which sets standards that allowed businesses to electronically share data with each other. The exchange of invoices, shipping orders and many other vital documents was proof of the value of digital communication

1960s (Late) The US Defense Advanced Research Projects Agency (DARPA) initiated a research program to investigate techniques and technologies for interlinking packet networks of various kinds (ARPANET).  On October 29, 1969, ARPAnet delivered its first message: a “node-to-node” communication from one computer to another.

1971 The Telnet computer protocol provided email as text between computers.  I used this method in the 1980s to communicate to TRW, one of my architecture clients in Los Angele, using a Commodore 32 computer and a dial-up connection. I also used the online Dow Jones News Service for prospective client research.

1973 (per Wikipedia) Robert Kahn and Vinton Cerf developed Transmission Control Protocol and Internet Protocol, or TCP/IP, a communications model that set standards for how data could be transmitted between multiple networks.

1979    Michael Aldrich invented online shopping, still referred to as “teleshopping” in the UK, initially using the telephone. Compuserve became the first commercial online service in the US, followed by Prodigy, Genie and AOL. Compuserve still maintains a website and its email is AOL, still around.  The other two are gone.

1989    Tim Berners-Lee, a British scientist, invented the World Wide Web (WWW) while working at CERN. The Web was initially conceived and developed to meet the demand for information-sharing between scientists in universities and institutes around the world.

1991 Computer programmers Marc Andreessen and Jamie Zawinski developed the NCSA browser, funded by the Federal Government under the Gore Bill (yes, it was by Al Gore).  It was released commercially as Mosaic in1993.

1994    Amazon was founded on July 5 with a website selling books. It’s not known when the first sale was made. Other sources mention a private sale around the same time, but this date is more significant.

THE TYPES OF FULFILLMENT CENTERS

Fulfillment centers are. for the most part, the last stop before the delivery to the buyer, which might be a small business’s own process or subcontracted to a large provider. Large companies, such as Walmart and Target have their own. Amazon has its own, which can also be accessed by small sellers. Some large retailers who do a great deal of e-commerce may use third party fulfillment centers such as shown on this list

Fulfillment centers, because of their function of sending to the customer, are more labor intestine than warehouses.  The Red Stag website has written that all successful eCommerce businesses have one thing in common: terrific fulfillment services.

Fulfillment centers started out as completely human-based. Employees had to walk, reportedly, as much as twelve miles per day to pick up stock items to make up an order. Google reports that Amazon currently has 110 fulfillment centers in the US and 185 globally. The centers averages around 800,000 square feet in size and can employ more than 1,500 full-time associates. In these buildings, Amazon employees sort, pick, pack, and ship customer orders such as books, toys, and houseware.

Walmart has 150 distribution centers. It does not have fulfillment centers because it grew up as a bricks-and-mortar retailer. Online ordering offers the option of pickup at a nearby store.

AUTOMATION

There are 375 million SKUs available on Amazon and more than 2 million marketplace sellers, according to Internet Retailer estimates published in the 2018 Online Marketplaces Report. Earlier this year, Amazon said more than 300,000 U.S.-based merchants began selling on their site.

Amazon has automated fulfillment by bringing the product to the picker instead of the old way.  If a picture is worth a thousand words, how many words is a video worth?  Here is a video.(10 min) (Note: you will quickly hear that the facility in the video is in England,. The robotic center, LTN, is near Luton airport, about 80 miles from Birmingham).  It shows Kiva robots, a Massachusetts company, bought by Amazon, lifting shelves and moving them to a picker’s work station.  Note that the robots, which look similar to the Roomba that vacuums your floor, move using the same floor embedded wires used in the Kodak automated warehouse in Part 1.

According to the WSJ Logistics email, “The race to have robots pick up individual items in warehouses is speeding up. Companies looking to more powerful artificial intelligence programs, the WSJ’s Daniela Hernandez and Parmy Olson report, as they try to apply the basics of physical robotics to supply chains. There is a drive to make machines understand the difference between circuit boards and boxes of household goods. Their goal is to have the robot pickers use a combination of machine learning and computer vision to learn on the go and extend fulfillment automation. So far, there are automated pickers but they are slow.

THE FUTURE OF HUMANS IN  WAREHOUSING

A 2018 report by Delloite notes that more than 70% of consumers cite convenience (77%) and free shipping (72%) as their top reasons to shop online. Over 60 percent of that same group also noted the time-saving benefits and home delivery of online shopping was a key factor in making purchasing decisions

A 2021 Price Waterhouse Cooper reports that 72% of Amazona Prime users cite free two-day delivery as their main reason for subscribing to it. The report says that consumer increasing adoption of e-commerce during the Pandemic will confute.  Especially, they predict

  • Technology will continue to revolutionize online and physical retail, forcing rapid change and innovation.
  • Retail consumers will expect frictionless, tech-enabled experiences.
  • Traditional marketing channels will continue to blur as retailers and manufacturers embrace a direct-to-consumer model.t.
  • Traditional marketing channels will continue to blur as retailers and manufacturers embrace a direct-to-consumer model.
  • The fulfillment experience will become an increasingly critical execution point.

I will not make a hard prediction but based on the history of technical advances responding to market needs, the level of fulfillment automation will increase.

THE STATE OF HUMAN-LIKE ROBOTS

So much for fulfillment robots, which will be far from humanoid.  Boston Robotics has been working on the human and four-legged kinds. Here is “Atlas” having fun, and dancing with “Spot” and “Handle”! The Handle may be one machine that shows up in future fulfillment centers.