Supporting Rapid Growth in e-Commerce: The Thrive Market Story
Tom Rentschler, Head of Marketing WDS Americas discusses how Swisslog helped Thrive Market increase productivity by 20 percent.
3 October, 2016
According to the U.S. Commerce Department, e-commerce sales rose 14.6 percent between 2014 and 2015, continuing a trend of double-digit growth since 2010. That steady growth, combined with rising customer expectations, has strained the capabilities of many e-commerce fulfillment centers.
Imagine what would happen if that growth rate were 500 percent instead of “just” 14.6 percent.
That’s the challenge Thrive Market faced as its model of using e-commerce to make healthy living easy and affordable took off in the market. Thrive opened for business at the end of 2014 and already has more than 200,000 members with about 20,000 members joining each month. The company offers more than 4,000 products—with more being added through the launch of a private-label line--and typical orders feature 12-13 items. Between March 2015 and March 2016, sales rose 500 percent.
The company needed a new distribution center to serve its expanding membership base on the east coast. They understood the benefits automation could deliver, but the cost of a fully automated facility would divert too much of the company’s resources away from other growth initiatives.
The solution turned out to be a semi-automated system that relies on advanced warehouse execution software (WES) to support both wave and waveless picking based on SKU volume. Pickers use wrist-mounted screens and finger-mounted scanners to communicate with the WES. Fast-moving and bulky items (such as potato chips) are loaded directly from pallets next to the conveyor system while medium volume products are located on a carton flow shelf, with multiple items side by side in lanes next to the conveyor. Slow movers are picked manually from bin shelves, away from the conveyor.
Through this approach, the company was able to increase productivity by 20 percent, cut delivery times by one day, and enable future growth. The warehouse is designed to accommodate two additional pick modules when required and to grow from 24 pick stations to 168 pick stations. It is also serving as a model for a new west coast distribution center.
When it comes to automation, some e-commerce companies have felt like they are between a rock and a hard place: they believe they can’t afford automation but they also know they need to do something to deal with shifting customer expectations, double-digit sales growth and SKU proliferation.
As the Thrive Market story demonstrates, automation doesn’t have to be an all-or-nothing proposition. A strategic approach to automation that focuses investments on the highest volume products can deliver the desired results at a fraction of the cost of a fully automated warehouse. In Thrive’s case, full automation would have cost three times as much as the solution that was implemented. That’s a smart approach to automation that is ideal for growing e-commerce companies.