Cargo In Action

E-commerce: The door-to-door experience

Having changed the face of retail, e-commerce 2.0 is tearing up the established logistics manual again. By IAN PUTZGER

When Tigers Ltd emerged at the end of 2011, its founders were looking to build up a customer-centric, high-service business model that would encompasses the full supply chains of its customers – minus asset-based activities like warehousing and cross-docking. Today its activities include an airport-based lobster tank operating around the clock to deliver crustaceans flown in from overseas to consumers and restaurants. Orders are made online during the morning and are delivered that same evening.

Tigers’ metamorphosis has been driven by e-commerce. Backed by GeoPost, a subsidiary of French La Poste Group, the company decided to make use of the network of GeoPost subsidiary Dynamic Parcel Distribution to funnel e-commerce shipments to European consumers.

Subsequently, Tigers decided to focus more on the tidal wave of e-commerce traffic into China, primarily by assisting those small and mid-sized e-tailers looking to retain control over their own brand. Earlier this year it launched ‘e-Shop’, a cross-border e-commerce platform and distribution channel which gives small and mid-sized international brands direct access to consumers in China, with a full logistics menu and a mobile payment solution.

The company’s evolution reflects the fast growth of e-commerce and the rapid shifts within this sector. Horst Manner-Romberg, principal of parcel logistics research and consulting firm M-R-U, notes that yesterday’s order patterns are hopelessly passé today. He points to the fact that Chinese consumers are now more likely to order merchandise with mobile devices using social platforms like WeChat than by visiting online sales platforms on their computers or laptops.

The merchandise itself has also undergone some evolution. Product development, marketing and selling have accelerated dramatically, while products are now often tied into social media or online communities – ‘and count for little without these’, Manner-Romberg adds.

By extension, logistics providers find themselves increasingly taking on functions beyond their traditional core activities. ‘We are getting more involved in marketing,’ confirms Brian Bourke, vice-president of marketing at SEKO Logistics.

Meanwhile, customer expectations regarding delivery windows have kept going up sharply. ‘Three years ago customers expected delivery in three days, last year it was two days, now they are looking at one day,’ Bourke adds.

This offers airfreight some insulation from the move to deferred, less costly delivery options that have prompted a shift away from the business. At the same time, carriers have to make sure that their offering is in line with client expectations.

‘Rather than adjust processes to find solutions that suit their own set-up, operators have to align their services with the needs of consumers, as Amazon does,’ says Manner-Romberg.

Industry analysts and operators alike emphasise the importance of technology. At SEKO’s e-commerce fulfilment centre orders pour in at any time of the day and must be managed promptly. Any delay can push out the delivery window by an extra day, which would be a killer in terms of customer retention, Bourke says.

A crucial element in this is transparency in the supply chain, with visibility at piece level in real time.

‘You need the ability to track at piece level,’ said Christopher Shawdon, vice-president of logistics solutions, global transportation at Unisys.

According to a recent study published by DHL, the use of data can lead to 20-30 percent reductions in inventory. The data must flow freely between the parties involved in a transaction. ‘Rather than reside in one operator’s system, they should be in a cloud to be readily accessible by all,’ says Shawdon.

The unfolding freighter fleet plans of Amazon have fuelled debates about airlines reaching out directly to e-tailers. However, in light of their limited role in the parcel logistics chain, most airlines look to postal agencies, express parcel and logistics firms to take the lead in developing suitable concepts.

Even without airlines trying to develop their own concepts to sell straight to online merchants, the dynamics of e-commerce will continue to bring about profound changes in this industry. Operators will have little choice to adapt, particularly with general freight mired in the downward pressure from excessive chasing of higher yield freight categories whose growth trajectory has stalled. And even for airfreight outside the e-commerce stream what is happening in this sector will cast a long shadow over it.