The growth of e-commerce has been remarkable during the last 5 years. The impact has been wide spread in many areas. Consumer access to technology and the expectations of the shopping experience has dramatically changed. We must consider that this has happened purely because of the Internet and our ability to have access it. Without the ability to share information e-commerce would not exist. Critical to any ecommerce operation is the integration of data in a clean timely manner from the shopping experience to the order fulfillment and last mile delivery. Logistics, courier express and postal industry need to change with the times.
Particularly, three groups have been affected by the rapid e-commerce growth.
As consumers, we have many criteria in terms of where we shop, when we shop, what we buy and how we want to receive our goods. We are looking for personalized and memorable shopping experiences. Just think of companies like Blue Apron and Stitch Fix. Both offers fully personalized services to meet our needs. This is what e-commerce is all about: ‘Love the customer’ and they will shop more from you. The impact these companies are making in the market is substantial.
For example, Blue Apron will provide 3 meals for free on the first order. Stitchfix offers a personal stylist who will help to select 5 pieces of clothing that will be delivered to the customer's door free of charge. These companies are great examples of how one can provide a superior experience to the customers.
Now, when we are in a store, we can compare prices on our smartphones, look for bargains and search for vouchers prior to finalizing an in-store purchase. Furthermore, retailers can push offers to our phones, such as loyalty programs and redeemable vouchers right when we walk in. Providing an offer at the right time can make a difference in the retail space.
Let's consider China for a moment. In China, there are more than 500 million mobile users. According to Alibaba, they saw a 213% increase in mobile GMV (Gross Merchandise Volume) in the last quarter of 2016 over the same quarter from the previous year. Mobile users in China represents 42% of total GMV. In comparison, Amazon has about 69 million monthly active mobile users according to comScore.
Using our phones has become part of the overall shopping experience and this is a huge opportunity for retailers to offer personalized services, send us loyalty notifications, help us with comparison shopping, or provide flexible shipping and payment options. Now more than ever we are fully aware of what's happening with our purchases.
We have seen Amazon evolve from an online bookstore founded in 1995, four years after the internet became reality, to a behemoth with a market capital of $450 Billion. Along the way, it has gobbled up companies and transformed the way we buy and receive goods. Amazon is established in many countries around the world and it has been successfully running its own extensive logistics operations.
You may ask how quick can Walmart catch up. At a market capital of close to half of Amazon's and the recent $3 Billion acquisition of Jet, Walmart is turning a corner.
Click and collect can be a differentiator for Walmart. The popularity of click and collect in North America is going to increase rapidly, just as it did in Europe in the last 2 years. Adopting to click and collect can put Walmart in a strong position with more than 5000 stores in the United States alone.
At the same time, major retailers are now heavily investing in e-commerce while store sales are dropping, store sizes are being reduced or stores are being shut down altogether. One of the biggest brands over the last few decades, Sears & K-Mart, is closing 150 locations and counting. Macy’s, PC Penny, Abercrombie & Fitch are all considering the same. Even Walmart closed 269 stores in 2016. Then there are those that just missed e-commerce all together and are gone; Sports Authority, Circuit City, Blockbuster, Borders, A&P just to name a few.
When we think about retailing now in the e-commerce world, competition is considerable. With the demise of Sports Authority, Target and Kohl’s have entered the active/athletic wear space. Manufacturers like Nike and Under Armour are now also selling directly on their own e-commerce platforms and channels. The key for retailers is to optimize their supply chain and inventory so that their bricks and mortar operation and e-commerce operation are fully integrated. You need to effectively manage your distribution and fulfillment operation to meet the needs of your customers. The challenge is greater in the fashion sector due to the higher rate of returns.
Thousands of years ago, every civilization in the world pioneered a postal system. But it wasn’t until the 17th century that mail, as we know it now, came into existence together with with the invention of the pen and paper. In the modern world, traditional mail has almost entirely disappeared from our everyday. The postal operators of yesterday are trying to determine how could they re-invent their businesses for e-commerce and parcel.
Courier express and last-mile providers need several specific solutions from fleet management to shipping/delivery/route management, warehousing/fulfillment, inventory, planning/scheduling and much more. These solutions and systems need to be quickly deployed and integrated with customer systems. Data needs to be shared in real-time across all platforms and all stakeholders. Speed is the key. I continually talk with 3PL fulfillment providers and according to them onboarding new B2B partners takes anywhere from weeks to months. With an integration platform as a service (iPaaS) designed for B2C and B2B, the onboarding of new customers and partners can happen within a few hours.
There are many innovations happening now to improve order fulfillment. Augmented Reality is changing the way we pick and pack, put away, store or load. Robots and augmented reality could generate a huge impact on the industry. Driverless trucks will also make a significant impact in how goods are moved from manufacturers to retailers or across DC’s. UberRUSH and similar services will perhaps change the way last mile deliveries are performed. Perhaps 3D printing will change the way some products are delivered or purchased. The cost of 3D printing will rapidly decrease over time and it will expand the same way as mobile phone technology has changed over the last 20 years.
When we think about e-commerce there are many key attributes in all aspects of the shopping experience, the fulfillment cycle, payment and final mile that we must measure, monitor and improve. As consumers, we demand excellence in service. We demand free shipping, low prices, simplified returns and a service that is nothing short of outstanding. We want to be loved, we want to feel handheld.
Retailer and 3PLs must exceed the customers' expectations. They need meet their every desire. To do so, they need to evolve quickly, they need to think outside the box, put your start-up hat on. If they don’t, they may not be here tomorrow.