Evolution of the Fulfillment Industry: A 25-Year Retrospective
As we continue to celebrate our 25th anniversary, Capacity Chief Executive Officer and co-founder, Jeff Kaiden, reflects on how the industry has changed over the last quarter of a century – and how it hasn’t.
Back in the late 90s when someone would ask me what I did for a living, I would tell them that I designed distribution centers. Oh, so you’re an architect, they would say. No, I work as an industrial engineer to design the insides of warehouses, you know the conveyor and the rack and sortation and stuff like that. Blank stares. No one really knew that fulfillment existed as a business, as a discipline.
That all changed with the dawn of the ecommerce revolution. And when Amazon started selling everything under the sun, suddenly everyone became aware of our industry. Demand for fulfillment services soared and has shown no signs of slowing down.
And if you think about it, that makes a lot of sense. It’s relatively inexpensive for brands to put their products in front of the right audiences at precisely the right times. The ecommerce experience has become virtually frictionless thanks to the Shopifys of the world. It’s a great time to be in the fulfillment business. Although it would be even better if it were just my little secret from 1999 instead of the competitive industry it has become!
E-commerce hasn’t been the sole driver. While it’s experienced its own series of shakeups, the retail world is still strong. Remember, "U.S. brick-and-mortar retail stores sold $6.183 trillion in merchandise in 2022.” That’s nothing to sneeze at.
With all this growth, fulfillment technology has evolved too. From in-warehouse robotics to order processing software, 3PLs like ourselves have gotten more efficient over the last 25 years. Although I must say that the core storage and processing technologies (think conveyors, pallet rack, shelving, packing tables, cardboard boxes, tape guns, forklift trucks, even RF guns) have changed little in the 27 years I have been walking warehouse floors.
This is still a people business. Brains, heart and muscle have much more value than the latest technology. We see this in our client relationships, and we see this in our team spirit -- they are a critical part of the team.
A look back on the last 25 years of fulfillment isn’t complete without a nod to Amazon, as mentioned earlier. Not only did they raise consumer expectations (particularly around next and even same day delivery), but they made fulfillment a cool industry to work in. It’s far less difficult to woo folks working in other industries to consider logistics.
The last 25 years has also seen the fulfillment world recognize that sustainability efforts are non-negotiable. We’re constantly exploring eco-friendly packaging and materials, we’re optimizing routes and reducing emissions. Even warehouses are generating smaller carbon footprints. People increasingly want to know that what they bought didn’t run roughshod over the environment. That’s become a huge position for brands – and it creates loyalty.
The fulfillment industry is wildly different than it was 25 years ago. But I can tell you this: a lot of it is still the same. Good people. Smart strategy. Doing right by clients.
That formula still works.