Ahead of the Trend: The Rise of eCommerce in the Wine and Spirits Industry

rise of ecommerce in wine and spirits industry blog header image
rise of ecommerce in the wine and spirits industry blog header image

Online sales directly to the consumer in the wine and spirits industry used to be a tiny niche, compared to typical distribution methods, but the newest trend, fueled by COVID, is anything but.

In 2020, bars and restaurants shut their doors, leading consumers to make the decision to shop online. U.S. E-commerce sales of alcohol increased more than 80% in value during the pandemic (IWSR). A year later, the sales have plateaued, but are still 15% to 20% higher than pre-pandemic levels. Consumers turned to online shopping because of an external factor, and a surprising number have stuck around after that factor has been eased.

Online liquor stores have seen increases in sales, spurring investor interest. Last February, Uber purchased Drizly for $1.1 billion (Barrons). Consumer interest is certain to increase in eCommerce purchasing as users adopt the buying behavior, and experience the benefits over traditional liquor store visits. Along with Drizly, a few other online liquor stores run in the races, including:

Uptown Spirits

ReserveBar

Thrive Market

Wine.com

Bright Cellars

Nestor Liquor

Minibar

Flaviar

Wine.com

How does this affect the wine and spirits industry? Supply chains will have to accommodate for order fulfillment, that is having the necessary material handling solutions in place to ensure an order gets packed, labeled, and sorted to its end destination. This is quite different from what is typically processed in a wine and liquor distribution operation.

Cartons (usually packed within 6 bottles) are sent to be palletized or loaded in a truck, which makes deliveries to liquor stores, bars, and restaurants. With an online order, each package is customized and can contain a variety of items (kitting).

Wine and liquor warehouses will have to store individual items, accurately pick and pack them, apply a shipping label, and send them to the customer’s doorstep safely and within a few days’ time.

Integrating order fulfillment is a carefully planned and engineered project, but the long-term growth and profits will dwarf the initial investment once implemented fully.

Order fulfillment is one of Century’s specialties. We’ve had experience in the past engineering systems specifically for eCommerce operations, and we’d like to pass along our recommendations on the solutions that are used.

1. Storage and Pick Modules

Managing a fully stocked wine and spirits warehouse can get complicated when a large variety of products are offered. This creates a need for both short-term and long-term pallet storage. Automation in the form of an ASRS (automatic storage and retrieval system) can rapidly retrieve pallets that need to be distributed or store long-term inventory in the most optimal spot within a racking system.

An ASRS uses a crane attached to a horizontal and vertical track, scaling the racking structure, and using extendable forks to handle pallets. The operator terminal provides information on what product is stored where, and the ASRS operates when a retrieve or store command is inputted.

2. Conveyor System

A tried-and-true conveyor system will be the most accurate, simple, and efficient solution for a wine and spirits warehouse. Conveyors are dynamic in the sense that there are hundreds of additional solutions that can be integrated in the layout. Being highly customizable, each conveyor system is engineered according to the layout of the wine and spirits operation.

In the wine and spirits industry, the key to stable operations is ensuring cartons avoid damage. A zero-pressure accumulation conveyor (like this conveyor, manufactured by Hytrol) does not allow cartons to touch, by properly maintaining space between each and stopping the rollers when the accumulation zone is full. This is especially important when fulfilling specific customer orders that may include unevenly sized items.

3. Pack Tables

In order fulfillment, stations are positioned at infeeding operations so that orders can be packaged and sent to a label application. A worker or autonomous robot picks the products and brings it to a pack table. The worker checks to ensure that the order is correct in places in any invoicing documents, and places the items in the package with void-fill.

Pack tables are simple to integrate, and sit aside a main conveyor, so that workers can simply push orders from their tables onto the conveying surface.

4. Print and Apply Stations

Affixing identifiable tags on packages is crucial to ensuring their deliverability. Scanners and sensors across the line depend on a readable tag for it to make it to its destination. Print and apply systems do exactly that. However, there are multiple systems depending on the identification process use and where the box must be marked. Applications can roll-on, wipe over, corner wrap, air blow, and stamp labels.

The direction the box must be scanned also plays a role in a solution selection, but it will outpace manual operations regardless.

5. Sortation

Sortation systems separate products for induction into individual lanes typically associated with an outbound destination. Various types of sortation and conveyor systems are often connected to comprise a fully functioning material handling solution.

The type of sortation integrates highly depends on what product is being moved. For a fragile wine and spirits operation, care must be taken in selecting a stable method of diverting the packages. Sliding Shoe and Narrow Belt sorters are best suited for safely, yet quickly, sending items to where they need to be.

narrow belt sortation
Narrow belt utilizes thin belts so that rising directional skate wheels activate when a package is to be diverted down a destination lane.

sliding shoe conveyor sortation
Sliding shoe uses segmented plastic slats that gently divert cartons to an outfeeding conveyor.

6. Warehouse Management System

The ability to have complete visibility of your warehouse inventory at all times is paramount to operating effectively. A warehouse management system (or WMS) stores vital information such as alcohol percentage, storage location, best-by dates for rotation, and a multitude of SKU data for ordering. A WMS can even offer a best shipping rate selector and presents data with correct state alcohol regulations applied.

Besides being a source of important product information, a WMS can apply that information within your warehouse operations. For example, if the wrong item is picked and placed on an outbound conveyor, the scan tower will read the label and the WMS will recognize it is in the wrong batch, stopping that section of conveyor and sounding an alarm for a worker to remove the incorrect item.

7. Reverse Logistics

Returns are a constant area of disconnect in operations when it comes to order fulfillment. There needs to be a planned intake process to return the items to storage and re-fulfill the order with the correct products.

When returns enter back into a warehouse, they’re put in a separate staging area. Depending on the condition of the item, or whatever the nature of the return is, it may be returned to inventory, sent to another distributor who sells discount items or discarded.

Once a return item has been rescanned in the system, the customer’s order will either be marked as fulfilled (so they can receive their money back) or another order will be placed (in the event they were sent the wrong item, but they still need the correct item sent to them).

Century Systems has extensive experience in integrating warehouse automation systems in the wine and spirits material handling industry. View the video below on a system we engineered and integrated with Fedway Associates.

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7 ways to avoid bottle damage in your wine and spirits distribution warehouse

tips to reduce wine and spirits bottle breakage blog post header image
wine and spirits bottle damage blog header image

Product damage is a constant loss factor

The largest source of product loss in a wine and spirits distribution operation is undoubtedly bottle breakage and damage. Human error, product movement, and difficult storage methods can all be factors that result in damages.

In the case of one of Century’s wine and spirits clients, implementing our solutions resulted in a 75% decrease in product breakage. To give an example of how impactful that change is, imagine a distributor processing 30,000 cases a day. Each case, on average, is valued at $100 dollars. If their breakage rate is 1.25%, that’s $37,500 dollars lost on product damage from a total of $3,000,000.

A 75% decrease in the breakage rate would result in a much more manageable loss of $22,500- and that number can lower even more depending on the level of automation. That’s close to $5.5 million saved per year.

If your damage rate is on the higher end, it may be worth your time to evaluate your material handling operations. We have some valuable recommendations on where to look first.

  • Indexing Belt Accumulation
  • Warehouse Control Software
  • Cascading Release Function
  • Skewered Roller Design
  • Telescoping Extendables
  • Robotic Palletizing
  • ASRS

1. Indexing Belt Accumulation

An effective method of preventing product breakage is the use of an indexing belt accumulation conveyor. These powered conveyors do not allow products to touch each other, using an array of sensors to properly gap infeeding operations, and stopping when the accumulation zone is full.

The product can be placed normally on the conveyor, and it’ll automatically speed or slow down zones to achieve safe spacing between each package.

2. Warehouse Control Software

Setting the operating parameters on a system play an important part in preventing product breakage. The software, depending on the system manufacturer, controls conveyor zone functions like speed, braking, idling, and more. When a system is first installed, or being upgraded, these settings are fine-tuned for efficiency and safety and can be easily changed in the future if need be. Warehouse Control Systems are versatile and offer a variety of customized system settings.

3. Cascading Release Function

A cascade release function staggers conveyor zones as the product begins to move. This provides a small gap between each product when operations start and stop. This function helps exponentially with end-of-line operations where a truck is being loaded, and the product is accumulating as it’s being moved from the conveyor to the bay.

Instead of the product pushing against each other, the conveyor can stop and move when space is available, to maintain proper gapping so that product never touches.

4. Skewed Roller Design (Herringbone)

To increase product safety, a skewed roller (herringbone) design can be used to avoid product from making contact with side railing and guards.

Skewed rollers are pointed diagonally inward, keeping cases positioned in the middle of the conveyor. Advancements in the packaging of alcohol mean solutions must accommodate a variety of carton dimensions and material types. Skewed roller designs provide additional flexibility and stability in any automated warehouse operation.

5. Telescoping Extendable

Typically, a warehouse worker picks up packages from an outfeeding source, walks over to the truck, and loads it. Even in this simple operation, it’s where most breakage mistakes occur, as employees can drop or jostle cases.

The solution is to eliminate the extra risk of having the worker walk over to the truck. A telescoping extendable conveyor attaches to an outfeeding source and can be operated so it extends into and out of the trailer as the worker loads. This allows for a much more stable operation and minimizes product damage by conveying the product directly to the worker, who places it into the trailer. Extendables can be simple skateroller conveyors on mobile casters or powered units such as the Adjustoveyor.

6. Robotic Palletizing/Depalletizing

For warehouses that use pallets, robotic palletizing solutions automatically handle and can build or deconstruct pallets. A wide variety of robots and end of arm tooling can accommodate most carton sizes and complex layer build configurations for pallets.

The speed and stability of robotic palletizing greatly outpace that of manual pallet building and even lift trucks. For further automation, completed pallets can be conveyed from a robotic cell to an inline stretch wrap operation, replacing tedious manual wrapping.

7. Automatic Pallet Storage

In warehouses that store a high volume of products, stacking pallets is a common sight. The issue is when pallets are being stacked over two high. This creates stress for cartons on the bottom of the supporting pallet, which could compress cartons, cause leakage, or topple the stacked pallets. The risk extends further when considering possible operator error in the action of stacking, such as dropping the pallet from too high or placing it unevenly.

Reducing breakage during storing and retrieving is best achieved by the usage of an ASRS (Automatic Storage and Retrieval System). An ASRS is a rack-supported structure with a track-mounted crane that can be programmed to navigate itself to a racking space to either remove or place a pallet. The advantages are clear, stacking does not need to be used, an automated crane is exponentially more accurate and stable than a forklift, and warehouse space is regained (as racking allows higher stacking, and the aisle for the cranes are thinner than typical racking structures).

Century Systems has extensive experience in integrating warehouse automation systems in the wine and spirits material handling industry. View the video below on a system we engineered and integrated with Fedway Associates.

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