Strategy

Winning the e-Commerce Battle

by Wolfgang Hall, Global Industry Manager, Esri

Changing consumer habits and preferences, together with the rapid pace of technological innovation, have changed the face of retail. Traditional brick-and-mortar shops are under siege from a growing army of e-commerce companies – the retail paradigm has shifted. Today, the convenience of having thousands of brands and products available, has created new customer expectations regarding fast delivery and a customer-centric buying experience.

With online merchants offering myriad shopping options, it is easier than ever for consumers to switch brands when their expectations are not met.

Data-driven last mile delivery

The e-commerce battle is not just about creating a great virtual shopfront – it now boils down to last mile delivery. e-Commerce players who can deliver packages in the fastest, most cost-effective, and efficient way possible are ahead in the race. A successful last mile delivery starts with taking advantage of data – 80 per cent of which is location related.

Whether it is real-time data or information on customer demographics, delivery routes, delivery capacity or resources, location defines the business of supply chain management and logistics.

Leveraging this data can have a significant impact on how retailers and logistics providers run their operations and the results they achieve. With such huge potential, it is no wonder that an increasing number of retailers, shipping and courier delivery organisations, are turning to location-based analytics to streamline last mile delivery processes. Location-based analytics – also known as Geographic Information System (GIS) technology – integrates and analyses a complex range of data from multiple business systems and visualises it on a dynamic mapping platform. This technology was originally developed to assist with urban planning. However, today GIS influences strategic decisionmaking in governments and corporations around the world. Retail and logistics operators realised they could better optimise routes and parcel delivery, while also meeting the challenges faced by other parts of their businesses.

Logistics companies, like FedEx, UPS, and the United States Postal Service, use GIS technology to create a real-time synchronised view of their businesses, and understand how to optimise human resources, physical assets and delivery fleets. Optimised routing is more than just driving from point A to point B. Dispatchers need to consider every element that affects their daily operations. Location-based analytics helps logistics providers maximise the use of assets to create optimum routes based on specific variables, including vehicle capabilities, driver specialties, street network restrictions, and customer time windows. GIS technology also allows logistics providers to more effectively plan and manage their fleet by increasing the number of deliveries per route while decreasing excess capacity.

This capability means companies can reduce operational expenses, fuel consumption, labour hours, and idle time. It also cuts time spent by delivery drivers searching for parcels and packages on arrival at the delivery address. With location-based analytics, parcels can be sorted and loaded on delivery vehicles according to a specific sequence, thereby removing unproductive time and improving number of deliveries per vehicle.

Delivering on time, as promised

The e-commerce boom in Asia Pacific is showing no signs of slowing down. This is evident by the strain on both retailers and logistics providers to get deliveries to their intended destination, on time, as promised.

To address this, some players in the field are getting ahead of the competition by creating their own supply and logistics chain, which includes procuring their own fleet of delivery vans or partnering with traditional brick-and-mortar firms, such as post offices. While companies, like Uber, have struggled in Asia with personal transportation, start-ups, such as Lalamove, are pushing aggressively into a new market. They provide logistics deliver models that allow e-commerce companies to instantly leverage a fleet of hundreds of thousands of drivers.

Meanwhile, AliExpress – the retail marketplace owned by Alibaba – forged a partnership with Singapore Post and Pos Indonesia to enable faster delivery times from China to Jakarta. As a result, Indonesian buyers can now expect their packages to arrive within two weeks, much faster than the previous delivery window of more than 35 days. While the results of these partnerships and innovations have been transformational, at the end of the day, a powerful decision-making tool needs to be at the heart of the supply chain life cycle.

Beyond the ability of visualising data on a dynamic map, the most important feature of location-based analytics is its capability to provide decision-makers with greater situational awareness, showing data in an entirely new perspective, giving a richer context than static reports and spreadsheets. This includes incorporation of unpredictable events, such as storms, flooding, traffic, or other disruptions into route planning and dispatching. When managers make decisions based on this type of analysis and real-time data, they can be confident the needs of their customers are met and that they are leading the surge into this new market.

Preparing for the future

As companies compete on the e-commerce battleground, those with a commitment to technology and customer service are currently in the lead. But the biggest fight is still ahead: Leaders of tomorrow will combine the substantial improvements in productivity, operations and cost with the emerging delivery automation. Self-driving vehicles, drone deliveries, and other smart technologies are coming with force and will replace many of today’s fleets within the next 10 years.

Vehicles automation is impossible without implementing GIS – every drone or self-driving truck needs to be aware of where they are, where they are going, and what to avoid. The future winners will be companies that embrace automation and combine it with location analytics to react to their everchanging customers’ needs with agility, speed, reliability and efficiency.

About the Author

Wolfgang Hall joined Esri in 1998 as a consultant and project manager. Since then, he has held a variety of progressively responsible positions, including manager of the transportation and logistics services sector, principal consultant for logistics, and business development manager for solution products. Wolfgang has managed many large enterprise fleet services implementations for AAA, FedEx, Schindler Group, Sears, Sempra Energy, Siemens and OnStar. In June 2012, he was appointed Esri’s global industry manager for logistics and supply chain management

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