E-Commerce Logistics Drivers John Callan UrsaMajor Associates Shea Felix - Endicia Cooper Smith Business Insider

Transcription

1 E-Commerce Logistics Drivers John Callan UrsaMajor Associates Shea Felix - Endicia Cooper Smith Business Insider The Future of Delivery Matt Swain InfoTrends Gary Reblin - USPS

2 E-Commerce Logistics Drivers / The Future of Delivery Cooper Smith Business Insider Brody Buhler - Accentúre Matt Swain - InfoTrends Gary Reblin - USPS Amine Khechfé - Endicia PostalVision2020 March 2015

3 ecommerce is Growing Fast Online Retailers Fuel the Search for Options Growth in e-commerce establishments is expected to continue, driving increased need for affordable and accessible shipping solutions Consumer expectations of free shipping and free returns are forcing sellers to optimize their shipping strategies across shipping carriers and technology providers U.S. E-Commerce Establishments Over Time (Establishments in thousands) Sources: Forrester Research; 3

4 Buyers Buyers Buyers Buyers Buyers Buyers Online Retailers Marketplaces Warehouse Shippers Shipping / Delivery Technology Brick & Mortar Retailers Desktop Cloud Mobile APIs 3PLs External Systems 3 rd party (ebay, shopping cart, etc.) Login / Authentication / Sign-up Security & Profiles Preferences & Configuration Customer Rules Engine Printing Engine Label Customization Compliance (Rating, Rules) Reporting, Analytics, Audit Database / OMS / XML Account & User Management Application Security Billing & Payments Batch Management s, Notifications Integration Address Book Value Added Services Business Rules Engine Hardware POSTAL OPERATORS & CONSOLIDATORS Others

5 thanks!

6 E-Commerce Logistics Drivers A Research Service By Business Insider

7 How important a factor is delivery to online shoppers?

8 Shipping-related factors are the number one reason online shoppers abandon a shopping cart Top Reasons For Abandoning Shopping Cart % Among US Online Shoppers (June 2014) Shipping costs made the total purchase more than expected 58% I was not ready to purchase but wanted to get an idea of the total cost wth shipping for comparison against other sites 57% I was not ready to purchase, wanted to save the cart for later 55% My order value wasn't large enough to qualify for free shipping 50% Shipping and handling costs were listed too late during the checkout process 37% The estimated shipping time was too long for the amount I wanted to pay 28% I didn't want to register/create account just to make a purchase 28% My preferred payment options (i.e. back transfer, debit card, PayPal, Google Checkout) was not offered 25% Source: UPS/comScore

9 Consumers also say they would shop more online if given more shipping flexibility Percent Of US Consumers Who Say The Following Factors Would Motivate Them To Shop More Free delivery 74% Lower prices 50% Free returns 35% More-secure websites Better virtual view of products 25% 25% Insurance against credit card fraud Compare different products Can chat with salesperson Faster delivery options 19% 18% 15% 15% Guarenteed delivery timing Same-day delivery Flexibility of delivery time and place 7% 9% 9% Source: Boston Consulting Group, 2012

10 But online retailers aren t giving consumers the shipping flexibility they want Number Of Shipping And Payment Options When Buying Online 5 Shipping Payment Source: BI Intelligence, November 2014

11 Shipping doesn t need to be a major cost center for retailers Billions Amazon Shipping Costs And Revenue Global $10 $9 $8 $7 Shipping Costs $6 $5 $4 $3 Shipping Revenue $2 $ $0 Source: Amazon

12 One of the fastest growing delivery options is in-store pickup Preferred Shipping Option Depending On Purchase Location North America, 2013 Buy online, ship to home 66.5% Buy in store, take home 64.3% Buy online, pick up in store 28.6% Buy in store, ship from store to home 12.5% Buy on mobile, ship to home 12.3% Buy on mobile, pick up in store 7.9% Source: Motorola

13 Same-day delivery is one way that online retailers can provide a sense of instant gratification Billions US Same-Day Delivery Market Forecast *Annual Estimates In $ Billions, Delivery By Human Couriers Only $5 $4.03 $4 Five-Year CAGR 111% $3.35 Value Of Merchandise Ordered Annually Via Same-Day Delivery $3 $1.97 $2 Shipping Fees Generated Annually By Same-Day Delivery Services $1.01 $0.62 $0.84 $0.49 $0.16 E2014 E2015 E2016 E2017 E2018 $1 $0 Source: BI Intelligence Estimates

14 Urban-dwelling millennials are the top customers of same-day delivery US Consumers Who Say They Would Pay A Premium For Same-Day Delivery 25% 20% 17% 13% 13% 11% 11% 9% 1% Millennials (18-36) Gen X (37-48) Baby Boomers (49-67) Matures (68+) Male Female Urban Suburban Rural Source: Harris Interactive, June 2014

15 Particularly, affluent millennials Percent Of US Consumers Who Say They Are Likely To Use Same-Day Delivery Services 28% 18% Average U.S. consumer Affluent Millennials Source: Boston Consulting Group

16 When drones do arrive, they will most likely be used to deliver inexpensive items US Consumers Who Say They Would Trust Drones To Deliver Their Order, By Product Type 73% 74% 54% 44% 44% 45% 32% 15% Luxury goods Consumer electronics Household goods Sporting goods Tools Pet items Clotihing and apparel Books Source: Walker Sands, 2015

17 BI Intelligence Cooper Smith Senior Research Analyst John Heggestuen Research Analyst John Greenough Research Analyst Henry Blodget CEO & Editor-in-Chief Mark Hoelzel Research Analyst Evan Bakker Research Associate Marcelo Ballvé Editorial Director Emily Adler Senior Research Editor Jessica Smith Research Associate Tony Danova Senior Research Analyst Cale Weissman Reporter intelligence.businessinsider.com

18 PostalVision 2020 New Delivery Models March 2015

19 Big Bang Disruption Trial Users Everybody Else BIG-BANG MARKET SEGMENTS Innovators (2.5%) Early Adopters (13.5%) Early Majority (34%) Late Majority (34%) Laggards (16%) Copyright 2015 Accenture All rights reserved. 19

22 Estimated users (millions) Google Navigation Example Google Maps mobile installs TomTom cumulative unit sales* Garmin cumulative unit sales Years since debut of first auto-gps offering NB: Garmin and TomTom data from available 10k filings and annual reports. Garmin s year 0 = 1998 (StreetPilot debut); TomTom s year 0 = 2002 (Navigator debut). Both Garmin and TomTom unit sales are inclusive of all GPS products. Google data from publicly available news sources; year 0 = 2007 (debut of Maps for Mobile 2.0) * TomTom stops reporting unit sales per year after 2009 Copyright 2014 Accenture All rights reserved. 22

23 Market Penetration Driven By Moore s Law Unconstrained Growth BIG BANG DISRUPTION Undisciplined Strategy Unencumbered Development TRADITION AL TECHNOLO GY ADOPTION CURVE Time Copyright 2014 Accenture All rights reserved. 23

26 Unencumbered Development YOU CAN T SEE IT Cductive Internet Underground Music Archive Ritmoteca.com, emusic Napster itunes Music Store Expanded books Rocket ebook, SoftBook Librié iliad, Reader Kindle Copyright 2014 Accenture All rights reserved. 26

27 Moore s Law Applied Three technologies have come together to forever radically change the consumer landscape. Smartphone + Network + Cloud Infinite Processing Capacity Copyright 2015 Accenture All rights reserved. 27

28 We ve Already Seen It Global volume (trillions) Pieces of transaction mail (billions) Source: Global approximation based on data from USPS, Volume Estimates from 1978 to 2011, International Center for Integrative Systems Copyright 2014 Accenture All rights reserved. 28

36 New Models Now Possible New entrants have an entirely different cost structure. Sourcing Spare Capacity Rapid Scale (Up and Down) Technology Enabled Focused On Last Mile (For Now) Copyright 2015 Accenture All rights reserved. 36

37 Significant Last Mile Investment Total Funding in Sharing Economy Start-ups by Year ($M) Total Sector Funding ($M) Top Funded Companies Top Investors Stay 800 Airbnb ($776.4M), Wimdu($90.0M) Sequoia, TPG Growth Transport Personal Goods Lyft ($333M), RelayRides($53.2M), Boatbound($5.3M) Chegg ($252M; IPO at $1.1B). Bag Borrow or Steal($20.0M) Trinity Ventures, Shasta Ventures, Google Ventures, August Capital N/A Private Spaces 51 LiquidSpace($26.2M), PivotDesk ($6.7M), Storefront($8.9M) Shasta Ventures, Roth Capital Partners, Lucas venture Group, Spark Capital Business Equipment 16 Getable($3.2M), Yard Club($1.6M) N/A Food 11 EatWith ($9.2M), Suppershare GreyLock Logistics 4 Friendshippr($1.2M), WeDeliver($0.8M) N/A Storage 0 Roost($160k), StowThat($50k) N/A Source : Sharing Economy Landscape, 2015, Tracxn, Accenture Analysis Copyright 2015 Accenture All rights reserved. 37

39 Variable Cost Networks Change The Game Variable Cost Levels Margin Impact Operating Margin Loss Sensitivity Revenue Loss 1% 3% 5% 7% 10% 10% 9% 27% 45% 63% 90% 20% 8% 24% 40% 56% 80% 30% 7% 21% 35% 49% 70% Variable Cost Ratio 40% 6% 18% 30% 42% 60% 50% 5% 15% 25% 35% 50% 60% 4% 12% 20% 28% 40% 70% 3% 9% 15% 21% 30% 80% 2% 6% 10% 14% 20% 90% 1% 3% 5% 7% 10% Variablizing costs or being more captive in sustainable revenue streams would be important Notes: Illustrative of a firm with a 10% operating margin in the original scenario Source: Accenture Analysis. Copyright 2015 Accenture All rights reserved. 39

44 What Is Next? Trial Users Everybody Else BIG-BANG MARKET SEGMENTS Innovators (2.5%) Early Adopters (13.5%) Early Majority (34%) Late Majority (34%) Laggards (16%) Copyright 2015 Accenture All rights reserved. 44

45 The Future of Delivery Prepared for PostalVision 2020/5.0 Matt Swain Director March 10, InfoTrends 45

46 2015 InfoTrends 46

47 Focus Group Locations 2015 InfoTrends 47

48 Focus Group Participants (A Sample) 2015 InfoTrends 48

49 Seven Key Research Highlights The majority of participants did not realize that the Postal Service is self-funded. Most participants valued the Postal Service as a community asset. Reducing hours of operations should not be a primary focus for cost saving efforts. Residential delivery location and the number of delivery days represented the most likely areas for compromise. Some participants saw value in the Postal Service introducing new products or services at post offices. Most participants were hesitant about the Postal Service providing digital services. Nearly every participants cited that they would be negatively affected if the Postal Service ceased to exist, but had trouble articulating how they would be affected InfoTrends 49

50 Residential delivery location and the number of delivery days represented the most likely areas for compromise InfoTrends 50

51 General Acceptance of a Move to Cluster Boxes Source: InfoTrends 51

52 Mail Security as an Argument for Both Sides on Cluster Boxes There [are] people in our neighborhood who watch you come and go, and we ve had a problem with people using your mail, stealing your mail. Sharon Camilla, GA Edward Spokane, WA I feel comfortable knowing that I can see my mail. I can see who goes around it. I can see who puts stuff in there InfoTrends 52

53 New Consumer Research, Including Insight on Cluster box InfoTrends conducted research on behalf of the USPS OIG Research timeline was August 2014 September ,000 respondents in the United States Aligned age, gender, and geography by U.S. Census data 4,500 from web surveys, 500 from phone surveys 88% had Internet access at home This is a preview of a subset of the data, which will publish in a USPS OIG report later this year 2015 InfoTrends 53

54 Mail Retrieval Location Where do you normally receive your mail? Central outdoor mailbox cluster 12% PO Box 4% Central indoor mailbox cluster 16% Door slot, porch, or near front door 37% Curbside single 31% N = 5,000 Consumers in the U.S. Source: Modes of Delivery & Mail Recipients, USPS OIG, Unpublished 2015 InfoTrends 54

55 Package Retrieval Location Where do you normally receive your packages? Parcel locker at outside cluster box (6%) Neighbor or building manager accepts it (4%) At shipper s office (2%) In my lobby unsecured (2%) Other (2%) N = 5,000 Consumers in the U.S. Source: Modes of Delivery & Mail Recipients, USPS OIG, Unpublished 2015 InfoTrends 55

56 Security of Parcel/Package Retrieval Location Do you consider your packages/parcels to be safe in the location where they are delivered? Most yes responses: P.O. Box (94%) Most no responses: Indoor cluster box (15%) 94% of respondents viewed letter mail delivery locations as safe. N = 5,000 Consumers in the U.S. Source: Modes of Delivery & Mail Recipients, USPS OIG, Unpublished 2015 InfoTrends 56

57 Postal Service Rating for Level of Service How would you rate the level of service that you currently receive from the Postal Service? Among respondents who viewed the delivery location of their packages as unsafe, only 59% were satisfied. N = 5,000 Consumers in the U.S. Source: Modes of Delivery & Mail Recipients, USPS OIG, Unpublished 2015 InfoTrends 57

58 Attitude Toward a Transition to a Locked Cluster Box If your mail delivery was moved to a locked cluster box, how would you react? Highest Pleased feedback from respondents with: A door slot (37%) No Internet at home (29%) PO Box (28%) N = 5,000 Consumers in the U.S. Source: Modes of Delivery & Mail Recipients, USPS OIG, Unpublished 2015 InfoTrends 58

59 Sample of Attending Organizations Association of Magazine Media Canada Post Greeting Card Association National Association of Letter Carriers National Association of Presort Mailers National Postal Policy Council Parcel Shippers Association U.S. Postal Service Valassis American Catalog Mailers Association Publishers Clearing House Posti WIK 2015 InfoTrends 59

60 Key Themes from the Round Table Discussion We can learn from international implementations for cluster box delivery (e.g., what worked and where messaging/approach needed to be adjusted) Some people raised concerns about reducing Postal employee interaction with consumers and thus reducing the USPS competitive advantage Community cluster boxes will need to be designed to accommodate for the age of ecommerce, with an expectation for more (larger) parcels being delivered 2015 InfoTrends 60

61 SwainfoTrends 2015 InfoTrends 61

62 United States Postal Service Evolving now to meet tomorrow s needs Gary Reblin VP, New Products & Innovation Unite States Postal Service

63 What will e-commerce be like in the year 2020? Ecommerce Forecast to Keep Growing - $200 billion market today - Growing at five times the rate of traditional retailing - Projected to be 15% of total retail sales 1 (Today 8%) More nimble warehousing - Smaller warehouses - Ship from store - Distribution capable Same-Day Delivery will be more common New entrants in market place affect consumer expectations - Leisure and Regional Shippers Source: Quora.com

64 What will shopping be like in the year 2020? Shopping evolves to offer more stores that take advantage show rooming trend - Blend of Brick and Mortar and e-commerce

65 Hardcopy to digital seamless transition making mail a great ecommerce marketing tool Catalogs already trending as a new old marketing tool Source: 1 WSJ Now, retailers are rediscovering the books as a branding tool that can drive sales. According to Kurt Salmon, 31% of shoppers have a catalog with them when they make an online purchase 1

66 Changing Shipping Environment Consumers busy lifestyles demand more delivery convenience These changes set new consumer expectations Existing players improve their offerings to meet demand Growing Consumer Expectations New businesses take notice of these demands and offer more expedient deliveries

67 Consumer Exerts pressure to control deliver USPS Providing tools for the consumer to control deliveries My USPS. Com is platform USPS will use to give the consumer more control over package Site already allows consumer to give delivery instructions: list what can do - Redirect and delivery windows will make it easier to plan

68 Customers expectation continue to evolve: faster shipping and simple returns

69 Meeting Changing Consumer Expectations 1. Google consumer survey Study: Why 92% of Retail Purchases Still Happen Offline - 6.5% of consumers prefer offline due to easier/cheaper returns 1 USPS is making it easier to return - Available now - Pay on scan by sorters - New tools: Merchant Returns Cloud Tool (API for USPS returns labels) - Coming Soon o Round trip labels o Weigh on fly

70 Meeting need for Speed 7-Day Delivery (Sunday Included) Holiday Sunday Delivery (16 millions pieces) Same-Day - Currently piloting - Expanded to NYC and Phoenix - 37,000 deliveries %

71 What s on the horizon for Delivery Opening New Markets - Expanding delivery around our core o Pre-dawn grocery delivery o Pilot Location: - San Francisco - San Diego (March 4) - Los Angeles (March 9) o Dynamic routing - Scan and sort totes to route/sequence order

72 Q & A