Supply chain logistics continues to be dominated by business to business (B2B) needs. A huge volume of products get moved from factories to distribution centers or warehouses to retail shops. Traditionally, the supply chain ends at the retail shops. Consumers have to go to a shop, purchase the product and bring it home.
But with eCommerce , the supply chain just got extended. Retailers now have the responsibility to deliver the parcels to the customer, a situation that retailers did not face in the past and is becoming a challenge.
Growth in online sales
According to Deloitte’s logistics study, online sales have been growing faster than retail sales overall. Proliferation of online shopping has driven demand for faster parcel deliveries, which is presenting complex capability for retailers and their logistics partners.
Business to Consumers (B2C) logistics is experiencing huge growth as a result of online shopping. The predominant use case of B2C is mail delivery. However, that is still not similar to the needs of eCommerce logistics delivery, which require parcel handling. When sending a letter, the sender needs to drop them at the post boxes (increasing disappearing), the postman collects them and sends the mail to the sorting center. The letters are redistributed out to the receivers.
What are the options for a retailer to reach the promise land of eCommerce?
Managing your own fleet
Retailers have to buy their vehicles and hire delivery people to make the deliveries. Vehicle leasing is one option to consider but it is generally the most costly and capital-intensive move. Unless you have special requirements such as cold chain or large volumes, setting up in-house delivery is not advisable.
Selling through 3rd Party eCommerce platforms
Many online retailers, especially the new ones, are ditching the physical stores and their own online sites all together. They start by using established marketplaces to sell their products. From Amazon in United States to TaoBao in China, retailers can immediately tap on the vast reach of marketplace websites and also their logistics prowess. Amazon offers “fulfilment by Amazon”. You sell it, Amazon ships it. After 10 years and millions of orders and customers, Amazon has created one of the most advanced fulfilment networks in the world and your business can now benefit from Amazon’s expertise. When a customer places an order they pick, pack, and ship the parcel. There is no handling of the products. The challenge is that you will be totally reliant on the 3rd party for fulfilment and can sell only through one channel. Many marketplaces impose penalties for out of stock situations. Therefore, it is difficult to manage inventory across multiple online platforms.
Using 3rd party fulfilment
Online retailers may want to build up their own brand and not entirely comfortable with leaving everything to online marketplaces. eCommerce marketplaces charge fees for listing your products, commission for every sale and impose many other conditions for listing on their platforms. Hence, in the longer run it might be better to manage your own online site. There are many providers who offer fulfilment delivery for the parcels but not the product sale. They will help you store, and deliver the parcels but you will manage the sales and marketing. But they do charge storage and fees for every product sold.