Trends & Expectations: E-commerce & Logistics
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1 Trends & Expectations: E-commerce & Logistics February 6 th, 2013 Radisson Blu Hotel Amsterdam Airport Logicon Supply Chain Management Conference for Retail & FMCG
2 Take aways.. Collaboration is the key for online success Define an optimal network per product/market combination Without a solid plan for logistics, Cross channel will not succeed Warehousing solutions do not have to be fancy, they have to work 2
3 45 years history 5 year e-commerce projects Logistics International logistics consultancy Supply Chain Management Construction Management & Engineering 3
4 Trends within E-commerce & Logistics SIGNIFICANT DIFFERENCE IN RETAIL SPLIT ONLINE/OFFLINE BETWEEN COUNTRIES Source: Centre of Retail Research 4
5 Share informed online (%) Trends within E-commerce & Logistics INTERNET USAGE DIFFERS BY PRODUCT GROUP Software Babycare Books Photo Sport & Leisure Furniture Telecom Computer Consumer Electronics Household 0 Fashion Gardening Welness & beauty Source: GFK, based on Germany Share bought online (%) 5
6 Customers want choice In product Returns handling Delivery speed Delivery location 6 Payment method
7 The future is in Europe Total EU > 500 million inhabitants Target EU: 20% purchases Cross Border 7
8 Current E-commerce network structures Short lead time perceived valuable Yes No Commodity sellers Nootbooksbilliger / Coolblue Zalando / Amazon / Pixmania Zara / H&M Branded sites 8
9 Some major changes are just starting up MID-TERM: STOCK CLOSER TO CUSTOMER & STOCK FURTHER UP IN SUPPLY CHAIN CURRENT DIRECTION NEXT YEARS EFFECT Commodity sellers Wider assortment Deeper assortment Demand for Value Added Services Cross border selling E-tailers search for partners Product storage & handling shifts partially to wholesaler, manufacturer & other E-tailers Branded sites Faster online delivery requested by customers Increase sales (Product offered via multiple E- tailers) Product is stored at other locations/ companies in the network closer to the customer 9
10 Supply Chain Demand Network END STATE: SUPPLY CHAIN DEMAND NETWORK CURRENT MID TERM SOLUTION END STATE Commodity sellers Branded sites 10
11 Supply Chain Demand Network END STATE: SUPPLY CHAIN DEMAND NETWORK Collaboration is king Network far more complex than current typical Supply Chain END STATE E-tailers increase assortment, both in depth and width E-tailers expand to other countries/ markets Inventory sharing, both horizontal and vertical Piece picking at all levels of the network (including producers!!) Optimal network per product/market combination, NOT by company 11
12 Cross channel is the future 12
13 Cross channel impact differs by company type PRODUCER Change in internal logistics Both B2B and B2C picking/shipping From pallet to piece pick From retailer address to customer address Different lead time requirements RETAILER Change in internal logistics Both B2B and B2C picking/shipping Logistics opportunities are typically to be found in Sharing inbound and bulk stock of items sold both online & offline Return flow Potentially in transport between warehouse and (pick up) store From a logistics point of view, everything else is challenging! 13
14 Orders for Business Orders for Consumers B2B B2C Lines per order Pcs per line Complexity Lower Higher Returned goods Very minor Up to 30% Consolidation Pallet Shipping box 14
15 Where are online orders handled? New developments facilitate integration B2B & B2C Sales online Online DC High mechanization Offline DC Offline DC Online DC Low mechanization Store Time 15
16 Where are online orders handled? New developments facilitate integration B2B & B2C New specific e-fulfillment solutions are being developed Sales online Online DC High Online mechanization DC High mechanization Online DC Low mechanization Offline DC Store Time 16
17 Summary Customers Choice, choice, choice Geography From domestic to Cross border Supply chain Collaboration is king Inventory sharing, both vertical and horizontal Piece picking at all levels of the supply chain Optimal network per product/market combination Fulfillment Traditional logistic solutions are mostly sufficient Specific solutions for E-fulfillment are being developed Think big, act scalable and GROW 17
18 Senior Consultant Supply Chain & E-fulfillment clarijsgroenewout.com
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