How e-commerce revolutionised logistics
Updated: Sep 2, 2021
With an annual growth rate of over 20% and an equally promising sales expansion, we can say that e-commerce is the new black. However, if everyone is probably aware of its win-win-win paradigm (consumer-centred model, diminished business costs and even environmental relief), much less is known about its impact on the supply chain management. Indeed, the shift from brick-and-mortar to online stores revolutionised the logistic needs of businesses, inaugurating a time of massive renovation – and sometimes struggle – for all the firms that provide warehouse and transport services. With consumers who increasingly expect fast shipping and free returns, and retailers who try to “stand out from the crowd” by offering ever-more efficient delivery options, the logistic sector has soon been struck by the e-commerce tornado. And, just like in nature, it’s the swifter to adapt who survives.
Big challenges and smart solutions
The “e-commerce effect” introduced in the field multiple disruptions, which had to be embraced and managed with incredible agility. Among all firms, the small businesses were those more challenged by this fast evolution, as they had to act in much uncertainty and with little resources on three different novelties.
More complex operations: last-mile delivery and reverse logistics
Physical stores usually entail a linear logistic process, in which goods flow at regular pace from suppliers to distribution and are returned to one centralized location. Online businesses require a far more complex logistics: products sold must reach many changing (and often urban) locations and, if returned, items must be collected from equally disparate households. These two operations – more precisely called last mile delivery and reverse logistics - often result complicated and costly for the firm. Coping with these new operations has required logistic businesses to increase their specialisation level: one example was the readjustment of the fleet, investing in smaller – and, now often, electric - vehicles to better cover the short urban runs needed for last-mile delivery and returns.
Lower delivery fees and shorter shipping times
The e-commerce consumer is nowadays accustomed to a quick, on-demand, (almost) free delivery treatment: to satisfy these expectations while remaining profitable, firms had to rethink their logistic strategy, for example augmenting traditional long-haul delivery with just-in-time delivery or storing goods as near to the end consumer as possible. As a consequence, more and more firms are equipping themselves with a diffused network of warehouses, located near city centres.
A solution that may solve the time issue, but generates an equally urging problem: space.
Lack of warehouse space and increased competition
Counter-intuitively, e-commerce companies require a much wider warehouse compared to physical businesses. As seen above, online retailers must augment their inventory to deliver goods quickly; while other space is needed for picking, packing and shipping operations, as well as the management of returned items. As the number and scale of online retailers grow, the free land near city centres is lacking, and the competition for warehouse space is getting tighter.
In technology we trust
In today’s competitive markets, all these challenges must be managed within razor-thin margins of time, money and resources. In this tricky game, technology has proved to be the best ally to achieve high levels of efficiency. If internet and tracking systems surely enhance consumer experience, they also save time and resources for companies, minimising costs and avoiding errors. For example, information technologies such as Internet of Things (IoT) and Radio Frequency Identification (RFID) are labour-saving ways used by companies to track their inventory and monitor the unfoldment of any process.
At the same time, GPS, fleet management software solutions and real-time freight analytics – supported also by advanced AI algorithms – enable businesses to maximise their revenue: they increase utilization, minimise costs by optimising the routing and the order-to-truck allocation, they almost completely eliminate manual planning tasks. Sounds familiar? Yes, this is exactly what we do at Cargoful.
Looking at the future, a greater upgrade may be soon brought by autonomous trucks, which are almost ready to hit our roads and to make road transport faster and greener.