E-commerce Transforms Logistics as We Know It

E-commerce Transforms Logistics as We Know It

It’s no surprise that e-commerce is on the rise with this new technological era, but even with this in mind, it’s still a sight to see how much it has changed the panorama of logistics. E-commerce as forever changed how we do business and the processes that we need to take on to manage, store and send merchandise. Of course, there are some huge examples like Amazon, which you can read more about on the David Kiger Blog, but they are not the only ones who are making it work for them. In 2015 the biggest e-commerce logistics markets were Asia and North America, followed by Western Europe and then other smaller markets in South America and Central Eastern Europe. The way commerce works because there is a consumer that is more and more impatient, and the supply chain needs to be able to supply for their demand. This is where strategies like “just-in-time” becomes more popular when it seems to be the only way to keep up with the consumer. The level of risk and complexity is finding its way to logistics managers and the challenges they face in the era of e-commerce will come down to balancing service and cost effectively. Strategies like becoming a NVOCC, or non-vessel operating common carrier, are starting to pop up, especially after the e-commerce giant, Amazon, switched its strategy proving to always be ahead of the game. It wasn’t a complete surprise since they can simply subcontract this service and lower costs. For e-commerce businesses it will all come down to reaffirming relationships with providers and setting costs that allow to maintain a decent margin towards the future.

Some of the biggest changes due to e-commerce are global expansion. Many countries, like China, are rapidly finding ways to develop as a country and this way increase their sales in the e-commerce segment. The models that logistics has been using for years will soon get a makeover, and new e-logistic models will begin to surge as the need to address the needs that delivering while crossing borders and expanding e-commerce markets and accompanying their development. Physical distribution networks will also be affected greatly by the rise of e-commerce as e-fulfillment center, parcel hubs and urban logistics become necessities to ensure order fulfillment. Of course, technological integrations will be important when e-commerce shopping carts connect directly with API, web xml and other transportation management systems. This will lead to companies looking for the just the right tools that will ensure that they can organize and track all products, independent the mode of that they are shipped. Online ordering will need to document the whole process correctly, apart from dispatching this documentation along with an invoice and any other necessary paperwork like the bill of lading and freight invoice. Technological tools for the e-logistics will also need to be able to send reminders for payments, have the capacity to integrate with SCM or ERP systems, along with online alerts like text messages, and finally generate reports on the data and history of the purchases. Some of the benefits that these systems can provide is an improved communication between all of the stakeholders, transparency in the supply chain, which will lead to improved customer satisfaction, cost reduction, improvement in efficiency and on-time delivery.

Image courtesy of Caden Crawford at Flickr.com

If we compare how things used to be and the way they are now, we’ll find tons of differences in the procedures and it’s evident that they have evolved as commerce turned into an e-commerce market. To begin with traditional supply chains, brick and mortar retail and bulk deliveries and warehousing have now been replaced by bulk deliveries with individual inventory and tracking process complying with the need to have real-time information available. This will require that instead of having only one warehouse that stores all of your merchandise, you’ll a number of warehouses, dozens of suppliers, and an extensive number of sales channels, which could lead to misplacing orders, but that’s where tracking and technology will be essential. Shipping itself has also changed. Back in the day when freight shipping was just starting, it was all about being the first and fastest, but now it’s all about options. The costs to deliver in record time have gone up, so now it’s all about giving customers alternative pricing for alternative time-frames.

In 2015, the US retail sales reached $3.8 trillion and this will only continue to grow as e-commerce opens new opportunities to companies, and offers just different ways to set yourself apart. As this industry continues to grow, it will be important that logistics, warehousing, shipping and other supply chain processes are up to date and allow companies to be competitive in a world where customers are used to getting everything in the time and at the price they want it in. Competition is huge, but there are still ways to set yourself apart and ways to innovate.

* Featured Image courtesy of Nestlé at Flickr.com

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