How to organize the logistics for an e- commerce? What new topics will appear in Logistics? Examples and success cases!
E-commerce is the latest biggest driver of change in logistics and physical distribution networks.
How has logistics evolved?
- ‘70s: most retail stores were replenished by direct deliveries from suppliers of wholesalers.
- ‘80s: retailers started to centralise their store deliveries through new distribution centres which they controlled.
- ‘90’s: global sourcing took off with many retailers developing import centres to receive and process mostly containerised imports
- 2000s: e-commerce took off. This expanded with internet only retailers leading the way in establishing e-fulfilment distribution networks.
There are different demands in different economies, for example developed economies have seen a strong growth in sectors like fashion, electrical and ICT goods but no food. Due to the growth of e-commerce logistics models, there is a new demand in four types of logistics functions
- Mega e-fulfilment centres that operate 24/7 with merchandise stocked and picked at item level.
- Sortation centres which sort orders by zip or post code so they can be delivered to the relevant parcel delivery centres for final delivery to the customer’s home.
- Parcel delivery centres which organise the ‘last mile” which refers to the delivery to the customers.
- Seamlessly integrated technology where shopping carts connect via API, web xml or some other connection to a transportation management system which gives customers the exact price of their shopping and shipping. This for example includes, tracking shipping, order status, online invoices and bills, auto reminders of payments, and alerts via text message.
This fits with the discussions we had regarding the importance of customer service. E-commerce provides the consumer with
- Improved communication
- Transparency into the supply chain
- Improved customer satisfaction
- Cost reduction
- Improvement in efficiency
- On time delivery
Example: Tesco’s expansion to South Korea
Tesco introduced virtual stores to South Korea in 2012 which are essentially a display of products on walls of metro stations and bus stops. Commuters, especially the tech savvy and ultra busy scan the QR codes of the products on display with their phones, placing their orders as they wait for buses or trains. These virtual stores are set up in public spaces, often places with high foot traffic like subways and bus stops. Interested customers download an app (homeplus app), and then use the smartphones to scan the QR codes of the products they want to purchase. They have designed the posters in the virtual stores to resemble the aisles of a regular Tesco store. The products they have scanned go into the customer's shopping “basket.” The customer then schedules the time from home delivery. It is the norm to have same-day delivery so that customers can have their products by the time they get home from work. Today there are 22 homeplus virtual stores in south korea and the brand is the country’s number one online retailer.
Supporting a virtual store requires a home delivery supply chain and frequent investment into technology, to support the demands of the consumers and the frequency and efficiency in which consumers expect goods. Moreover, in order for fast deliveries there needs to be sufficient infrastructure such as the pickers, the trucks, and the drivers. It would require GPS tracking, and mobile devices to collect payments and signatures as well.
Sources:
https://logisticsviewpoints.com/2012/01/23/a-brilliant-new-retail-format-supported-by-last-mile-logistics/
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