E-commerce is transforming traditional retail, as well as other sectors, to create new models of competition and to blur the lines between B2C and B2B. As the online consumer experience sets the standard for businesses, it’s becoming essential for companies to make e-commerce an integral part of their thinking.
We are even seeing some major companies that have been at the forefront of the e-commerce revolution begin to develop their capabilities in physical brick and mortar stores, showing that it is not merely digital disruption of an industry, but rather a still ongoing change in the way we all purchase goods.
Urban consumers continue to demand solutions that make their lives easier – convenience, flexibility and costs are all themes that have emerged as relevant to both e-commerce players and transport operators.
The online B2C business has grown enormously in recent years, recording worldwide revenues of around 1,100 billion euros in 2016, with expected revenue to reach almost 1,500 billion euros in 2018. With this enormous growth, the e-commerce market provides opportunities for businesses of all sizes, anywhere in the world, to sell their products and services to a broader audience. Those who wish to take advantage of this growth, however, must be agile and flexible in catering to the increasingly demanding expectations of urban consumers, in particular.
Cost pressure is high
It is an incredibly competitive space, both for retailers and logistics providers, and the cost challenges that it creates mean that many companies are still fighting to generate a sustainable profit. The cost pressure remains high and the investment required for developing and implementing new technologies and flexible delivery solutions can put a squeeze on profitability.
In our new white paper “Shortening the Last Mile: Winning Logistics Strategies in the Race to the Urban Consumer” we have developed a model for balancing three key aspects for logistics operators to focus on to increase their competitiveness in last mile delivery – the so-called F.A.D. model: Flexible delivery networks to make more efficient use of transport capacity; Automation for processing in fulfillment centers, but also for use of autonomous vehicles and robotics to decrease labor costs and enhance services; and Data management to enable operators to better forecast inventory and create greater visibility of supply chain flows.
Logistics providers need to carefully calibrate how they implement this F.A.D. model in different markets, depending on needs and potential for business growth. There is no one-size-fits-all solution, as infrastructure, regulations and business environments vary significantly from market to market.
Market players can gain competitive advantages if they are able to implement artificial intelligence and big data analytics effectively and can work towards the more adaptive and flexible models needed in the industry. Today logistics providers are collecting data in real time and using machine learning to expand the use of learning robotics in warehouses and peak planning in inventory management. This will help us deal with the intensive spikes in volumes over the holidays or other high-volume commercial periods and also to compensate for labor shortages.
As the use of robotics and intelligent automation continue to expand in all fields of the industry, we will need to become even more flexible in our business models and more agile in the way we work. I don’t believe that robotics will be taking over human jobs in the near future, but we will increasingly see humans and robotics working side by side and an ever increasing level of automation in back-end processes, which will be a given in the future.
The lines between B2C and B2B blur
In e-commerce the differentiation between business-to-business and business-to-consumer is increasingly disappearing. We have noticed with many of our B2B customers that they no longer exclusively cater to business customers and are increasingly tailoring their service and product offerings to end-consumers as well. The pharmaceutical industry, a market with a high degree of B2B trade, is an example of this, as is the automobile industry, where many manufacturers have adjusted their online portals to cater to retailers as well as to private customers.
With its strong growth forecasts, the global e-commerce market offers opportunities for players of all sizes. In particular those who can take advantage of synergy effects between B2B and B2C will especially be able to profit. By investing in the collection and analysis of real-time data as well as automation and artificial intelligence technologies to make use of such masses of information, providers will be able to deliver faster, predict future purchases, and thereby increase their efficiency and profitability.
E-commerce is a vertical that is impacting each and every sector. I am deeply convinced that “thinking in e-commerce” is a fundamental necessity for retailers, logistics providers as well as for businesses of all sizes in virtually all sectors as the dynamic market for online sales continues to evolve.