E-commerce growth presents logistics challenges that are highly profitable
E-COMMERCE is known as one of the greatest modern-age disruptors. It has continued to promote steady growth across the globe over the last several years.
In fact, several Southeast Asian countries like Malaysia, Indonesia, and the Phillippines have promoted impressive double-digit market growth proving that the region is a goldmine for international retailers.
The driving forces of this immense growth are the ever-increasing consumer demands and evolving innovative digital solutions.
As technological advances enable more web-based retail platforms to be established and bring more shoppers online, the pressure to deliver purchases effortlessly now falls onto logistics companies.
According to a recent study by DHL, logistics companies now face greater challenges driven by the high growth of e-commerce.
However, these challenges also bring profit opportunities that can ultimately tip off the economic output of the logistics industry.
To begin with, customers have high expectations when it comes to online shopping. It’s not a stretch to say that they want the “perfect shopping experience”.
The ease of purchasing, the affordability and availability of products, the flexibility of return policies, the variety of shipping options, the capabilities for real-time tracking, and low-cost (or free) deliveries are instrumental factors affecting the average customer’s shopping experience.
Knowing that a wide array of technological advances are available in the market that could make fast deliveries and quick response time possible, expectations have significantly increased.
Thus, logistics companies must deliver on these expectations by expanding their capabilities or prepare to lose business opportunities.
Next, there is a booming demand for delivery in urban areas. The cities are normally where population growth and e-commerce impacts are most prominent due to the fast-pace, on-the-go lifestyle.
The study notes the fact that urban e-commerce trends are of high velocity and high frequency but of small quantities which can be cost-consuming for logistics companies if they intend to maintain the same performance standards for large-quantity deliveries.
Fulfilling the demand for quick shipping in urban areas can be overwhelming for logistics companies, but with emerging technologies like drones, the outcome can be changed.
E-commerce growth is, therefore, clearly forcing logistics companies to expand operations; but such growth is not always possible.
As a result, labor shortages and rising costs are becoming a common issue in the industry. The report noted: “Logistics operations are being challenged to ensure they have sufficient ‘hands on deck’ to meet stringent service commitments, especially during seasonal peak periods.”
However, if logistics companies strive to automate certain processes, the initial manual labor can be reskilled and focused on areas that are shorthanded.
The report highlights the necessity for logistics companies to strategically innovate in order to stay on top of these growing and changing demands as well as counter the shortcomings of the industry.
Innovative efforts must be pursued at full-scale to satisfy this exploding market and that means adopting innovative-first thinking, investing in long-term solutions, and automating processes to increase efficiencies.
With the right strategies and gameplan, the dynamics of logistics operations can be drastically changed and supply chain processes can be transformed.