Features

e-Commerce Logistics Can Make or Break e-Commerce Opportunity

by Dr Sascha Hower, Group Chief Operating Officer & Chief Executive Officer, Quantium Solutions

Online retailers are seeing unprecedented sales. This has postal companies all over the world setting their sights on this amazing booming global opportunity. Yet, postal organisations need to do much more than just seize advantage of their extensive last mile delivery networks. They will need to transform their mindsets, reorganise their operations, integrate their networks and invest in disruptive technologies – if they are to turn the industry from sunset (where letter volumes are declining) to sunrise (where parcel volumes are increasing).

The e-commerce industry continues to grow exponentially with market research firm eMarketer projecting online purchases to exceed US$3.5tr by 2019, with the Asia Pacific market growing faster than any other region, at a rate of 35.2 per cent per year. This means continued increase in parcel volumes, which have been the main driver of postal growth.

The International Post Corporation (IPC) Global Postal Industry Report 2015 shows that for the first half of last year, average parcel revenues rose 10.5 per cent, double the growth in the same period in 2014. By contrast, mail revenue growth was stable at 0.2 per cent. Global parcel growth remains above GDP growth on average but lags behind online retail growth, which suggests ongoing growth potential for postal companies.

Convergence of e-commerce and logistics

It is crucial to recognise that e-commerce is not just about the front end: webstore operations, online marketing, order management system (OMS), customer care service. Thinking in terms of the entire supply chain ecosystem, especially last mile delivery serving consumers directly, is critical to securing success in e-commerce logistics. Postal companies that want to ride the e-commerce boom need to become multi-tier postal and logistics network operators with a comprehensive suite of end-to-end e-commerce logistics solutions.

e-Commerce and logistics are converging to create unique, end-to-end solutions that run the gamut from enhancing online shopping experiences for consumers to providing operational cost savings to online retailers.

For postal companies, integrating their existing postal and parcel operations into the new e-commerce logistics ecosystem is essential if they are to leapfrog the competition that is heating up by the day.

Postal companies that succeed will be those that offer the whole value chain of e-commerce logistics solutions, spanning web-store development and operations to global fulfilment, omni-channel order management, cross-border commerce, performance marketing, customer care services, warehouse management system, delivery selection and routing, and last mile delivery. The performance of the value chain is like a string of pearls: If one part of the string is weak and gives way, all the pearls will fall and scatter.

Transformed postal companies thus offer retailers and brands with an integrated, one-stop shop where they can find an end-to-end solution for their e-commerce business. They may also pick and choose modular services to suit their needs.

Customer centricity forms the DNA of e-commerce logistics

The online market place gives consumers far greater choice of retailers and makes it easier than ever for them to switch to a competing retailer if their needs are not met. Last mile delivery is often the deciding factor as more consumers expect same- or next-day delivery, as well as multiple and convenient pick-up and delivery options for their e-commerce parcels. e-Commerce success is dependent on a smooth supply chain and effective last mile delivery.

Customer experience is key in offering endto- end e-commerce logistics solutions. Delivering a stellar customer experience in the B2B4C environment needs to be embedded in the DNA of any e-commerce logistics company. Customer expectations from both the sender and especially the receipient are much higher in a competitive e-commerce environment. Recipients can now readily give feedback to both the delivery party as well as online seller. Excellent customer experience is a key differentiator in e-commerce logistics.

With their extensive network access and last mile delivery, postal companies are at a tremendous advantage: they are already reaching every household around the world every single day. They are in a good position to ride the e-commerce wave because one of the main challenges in e-commerce is ensuring reliable on time delivery for every customer. This is especially challenging in some countries with complex geography and unevenly distributed population.

Disruptive technologies are needed to transform

Beyond existing infrastructure, postal companies need to leverage technology to offer effective end-to-end e-commerce logistics solutions.

The Internet of Things (IoT) is one disruptive technology that postal and logistics players can deploy to increase efficiency as well as deliver consistent, stellar customer experiences. IoT makes the tracking of goods and people easier and more accurate, and can be deployed in smart parcel lockers as well as automated warehousing operations.

Smart parcel lockers help ease the last mile delivery challenge and cater to the busy lifestyle of today’s consumers. They allow consumers to collect and return e-commerce parcels at their convenience, even enabling them to make payment for their online purchases.

Smart parcel lockers also help de-congest roads, as couriers can drop off more parcels at one stop as compared to going to each customer’s house. This boosts work productivity and reduces our carbon footprint.

Automation is another disruptive technology used in e-commerce logistics. As parcel volumes grow exponentially with the boom in e-commerce, automated warehousing operations can greatly maximise productivity and efficiency. A fully automated parcel sorting facility – with sorting, picking, packing, all the way to shipping and returns management – integrated with automated warehousing equipment will enable faster order fulfilment. Leveraging on automatic data capture and processing, full track and trace, as well as automated weighing capabilities, multi-client e-commerce logistics warehouses will deliver greater customer satisfaction by providing them more accurate delivery timing and cost estimates.

On top of this, analytics across the whole value chain are important in helping e-commerce logistics postal companies ensure their services are customer centric.

e-Commerce success is dependent on seamless e-commerce logistics

These are exciting times. The booming e-commerce industry offers a wealth of opportunity for traditional postal businesses to forge a new trajectory of growth and innovation. Those that embrace the nexus of e-commerce and logistics, and transform themselves into multi-tier postal and logistics operators, will secure for themselves, not just relevance, but leadership in the digital age.

About the Author

Dr Hower is responsible for the operational transformation of SingPost. He leads the group’s operations in Singapore and the region, under Quantium Solutions, the international arm for SingPost’s e-commerce logistics business that has presence in more than 10 countries in the Asia Pacific. Dr Hower oversees the integration of logistics acquisitions across the region, including CouriersPlease in Australia. His focus is to create and further develop SingPost’s e-commerce logistics backbone.

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