Changing consumer behaviour and the impact on logistics

on August 21, 2018

Since the rise and wide adoption of multi-channel sale approaches e-commerce has boomed in the UK and across the globe. Online sales now account for 11.9% of global sales and are expected to reach 17.5% of total sales by 2021. Figures also vary depending on the country as in China 19% of all retail sales occurred via e-commerce since 2016.

The shift from retail stores to e-commerce has increased the levels of complexity for those in logistics. Many retailers are outsourcing their logistics operations to external service providers such as Third-Party Logistics companies who take charge of all aspects of the supply chain from fulfilment to delivery. While outsourcing logistics operations has proved to drive lower costs than in house logistics, putting a third-party in charge of one of the main business functions has a large impact on customer satisfaction. With competition rife this is something more important than ever; customers expect their shipments to arrive with unprecedented speed and to include free or low-cost shipping. This is creating challenges for those 63% of 3PL companies for whom the main concern is cutting transportation costs.

Due to fierce competition from major players such as Amazon retailers need to adapt and make every aspect of the supply chain leaner in order to provide free next, or even same day delivery. In 2015 60% of all online transactions included free shipping which is only increasing transportation costs especially in the critical ‘last mile’.  This rising pinch on margins has meant that implementing profitable and efficient routing plans has gained significant importance, with missed deliveries often negating the cost of an entire transaction. 15% of consumers expect providers to re-schedule deliveries in the event they were not home and 29% expect items to be delivered wherever they are. It is estimated that every time a courier fails to deliver at first attempt, it costs the company £11.

In traditional retail-store channels the supply chain costs accounted for 4 to 9% of sales while in e-commerce that figure moves to 15 to 18%. The importance of free and quick delivery options cannot be ignored however as 50% of shoppers surveyed in study admitted to have abandoned their shopping carts because the delivery options did not meet their needs.

Real time data has become invaluable to global supply chains

Implementing IoT, big data, and fully integrated supply chain systems has the potential to combat increased customer expectations. The use of data-collecting tools can greatly improve the tracking of delivery progress  and create route planning by identifying patterns in delivery times, traffic and weather patterns. With real time data on a specific shipment, rather than truck level, consumers can now be alerted when their shipment is, for example, an hour away leading to fewer missed deliveries. IoT can also solve issues such as lost shipments, lack of tracking ability or unpredictable delivery times which make delivery a challenge.

Internet of Things solutions such as ParceLive enable a new wave of network level visibility and decision making in a world of increased outsourcing and third-parties. The complexity of many systems, languages and carriers trying to share information often leads to supply chain failures- while ParceLive enables a globally uniformed and reliable data set on which to create workflows. With a growing perfect storm, of rising consumer expectations and shrinking supply chain margins the focus is now more than ever on creating a seamless delivery experience. But how to increase efficiency when the cause of inefficiency is unknown? With missed delivery costs being so high how can we go about tackling them if we don’t know the cause? ParceLive enables users to build up a complex and wide data set that provides invaluable supply chain information to users such as traffic patterns and hot spots for shipment breakages. In addition to wider network visibility each shipment now has the ability to become a customer service agent, responding to the consumer in real time on its location and state.

To receive more information on the benefits that ParceLive could bring to your supply chain click the link below:

Article by Ana Bila

Stephen hartnettChanging consumer behaviour and the impact on logistics

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