E-commerce Boom Demands Changes to the Logistics Industry

It’s odd to imagine that only three years ago most people made purchases in store. Now with just the click of a button, everyone can get anything they need – from groceries and medication to electronics and clothing. The e-commerce industry has exploded and continues to grow each year. As e-commerce sales soar, there is more responsibility for logistics and supply chains.

Demand Fulfillment: What do Consumers Want

Low Prices and Fast delivery

E-commerce has seen an increase in consumers demanding two main factors: lower costs and faster shipping times. Retailers are faced with the balancing act of minimizing shipping costs whilst also optimizing shipping speeds. Consumers also expect a variety of shipping options such as next-day shipping, free shipping and parcel pick-up from stores or parcel lockers with accurate delivery estimated.

Seamless Returns

Another high demand for the industry is returns. Consumers want a seamless returns experience, which demands for smarter reverse logistics processes. Between 15%-40% of e-commerce purchases are returned. If companies cannot offer seamless returns processes, they face customer dissatisfaction and loss of loyalty. These demands bring the need for changes in e-commerce freight forwarding, such as:

• Ability to process more inventory
• Customer satisfaction as the top priority
• Improved communication with customers and supply chain
• Supply chain transparency
• Advanced tracking and order management
• Accurate delivery estimates and tracking
• Cost reduction
• Lower fuel usage
• Timely delivery that consumers are willing to pay for
• Seamless returns process

Smarter Solutions are Needed

The shift towards e-commerce has seen many businesses need to rethink their organisations, especially how products get into consumers hands. This has resulted in supply chain infrastructure being completely different to what it was in the past. E-fulfilment centres have been key in maintaining the e-commerce demand, with warehouses now equipped with the capability to stock merchandise and pick and pack products on an individual order level.
The number of parcel hubs and sorting centres has also increased with e-commerce popularity. Once pick and pack orders have been fulfilled, they are sent to specialised sorting centres that sort orders by country and zip code, and are then delivered to delivery centres. Last-mile distribution centres have also been vital to e-commerce growth as distribution hubs have been moving closer to delivery locations for high-speed operations and lover fuel costs. This has resulted in high demand for warehouse real estate in highly populated cities.

Future of e-commerce logistics

Technological advancements have also aided in the growth of e-commerce, with artificial intelligence and machine learning helping to streamline supply chain processes. Australia Posts E-commerce industry report shows that e-commerce represented over 16% of all retail sales in the past year, with Australians spending a value over $50.4 billion. With this continued growth, e-commerce logistics practices will continue to improve through several different ways:

• Blockchain technology is being used more frequently to remove human error from transactions. This allows for documents to be written through blockchains and execute contract terms in real time.
• Drones have been around for a few years now and are emerging in the supply chain for last-mile delivery and warehouse management. Companies are already using drones to manage inventory tracking and transport small items through the warehouse.
• Autonomous ships are being used more often in warehouses for automated product picking and inspections e.g., Amazon, Nike, IKEA. With such fast advancements in technology, it won’t be long till containers can board ships with minimal human staff.

Today, reputed global logistics companies can help and facilitate businesses with logistic solutions related to e-commerce trade at very competitive prices. Brick and mortar business should explore e-commerce business models to benefit from the fast industry growth and maintain a competitive edge.
With a disrupted freight industry and numerous delays encountered, businesses should consider low-cost finance offered by banks, which allows businesses to hold much larger buffer stocks at last mile delivery stations/ warehouses so they are able to meet customer demands in terms of delivery and profit better.
At 20Cube Logistics our professional business consultants have helped many of our customers with 3PL and 4PL logistics solutions for e-commerce businesses. Within the last couple of years these businesses have shown a growth between 40%- 60%.
Talk to us, our passion is to add value to your business.