E-Commerce and Logistics Set for Global Growth

Over the next ten years, online retail will gain even more importance than expected so far - not just in developed countries, but also in emerging markets.

Logistics will play a key role: it provides companies important competitive advantages, such as deliveries within a few hours on the day of ordering, flexible receiving and return times as well as resilient logistics and value-added concepts in emerging countries.

This is one of the key findings of the “Global E-Tailing 2025” study, initiated by Deutsche Post DHL with participation of the trend research institutions Z_punkt as well as numerous international experts from retail, logistics and academia.

It is the first global scenario study on cross-border online commerce and its implications for the logistics industry.

In four scenarios the study shows what the electronic world of shopping around the globe could look like for consumers and businesses in the near future.

The different future projections are based on a detailed analysis of the most influential factors - from energy and raw material prices to technological, political and social factors to retail and consumption patterns.

The scenarios also outline possible effects of changes to society’s value system by 2025.

The research examined selected developed and emerging markets around the world. Trend scouts also studied purchasing and logistics trends in 12 international metropolises - among them New York, Moscow, Bangalore, Jakarta and Lagos.

The Dynamics of an Internet Nation

The forecast for what is still the world’s largest economy is a clear indication that even the global leader can provide powerful impetus for growth. GDP is set to grow by 43 percent and Americans can look forward to a one-third rise in disposable household income. Although the USA is a mature industrialized nation, a relatively significant increase in population is predicted for 2025, namely 13 percent, i.e. three times higher than in western Europe. Without doubt, this will give strength to the dynamic economic growth which is anticipated. As the cradle of the digital era, the country has had a very high level of Internet usage from the outset – and it still has: more than three-quarters of the population have access, 27 percent via broadband. The proportion of Americans with mobile Internet access is close to 50 percent. This is reflected in the very large volume of online retailing, which exceeded $300bn in 2011.

These consumer insights anchor the scenarios in today’s world and increase their plausibility.

The Four Scenarios
The scenario method is an ideal means of developing alternative visions of the future. The objective is to spur people’s imagination and give them new perspectives.

Accordingly, the scenarios do not simply carry the current situation forward into the future: they consciously reckon with upheavals and discontinuities. With this description of very diverse development paths, the future scenarios generate an awareness of possible changes in the business environment.

They invite the reader to consider the risks and opportunities involved, as well as the strategies and possible courses of action. The result is a valuable mental exercise and a thought-provoking assessment of possible future developments.

From a highly developed digital culture to Do-It-Yourself
today’s emerging markets will be the engine of growth 11 years from now. A strong global economy and a stable middle class will have established a true “Everywhere Commerce”. Consumers will receive their purchases much faster than today, with Express shipments being delivered in less than 24 hours and measured in minutes. In a different scenario a highly developed digital culture has evolved, in which almost all products will be sold online and consumers will receive support by avatars. To protect manufacturers from counterfeit, logistics companies will offer protected supply chains.

However, the study not just portrays positive future projections of worldwide e-tailing, but also possible crisis scenarios. Scenario four outlines how the worldwide consumption patterns develop after the global economy will have suffered another financial crisis and energy and raw material prices have risen considerably. Under these circumstances, people could adopt a Do-It-Yourself mentality instead and sharing models instead of the “all new” approach.

Changed consumer behavior influences retail sector
The scenario analysis is supplemented by multiple essays from renowned logistics experts: Prof. Dr. Dirk Moschett of Fribourg University in Switzerland underpins the necessity for all of society to bundle supply flows more efficiently. Professor Geritt Heinemann, of the University of the Lower Rhine elaborates in his “E-Pace” contribution on the importance of timing for the success of online retail. Professor Shashi Matta of Ohio State University analyses how changes in consumer behavior, e.g. trends such as sustainability or crowd-shaping, affect online retail. Best practice solutions, which Deutsche Post DHL already implemented for electronic retail, showcase the range of solutions and service in logistics.

All scenarios and contributions have in common that the competition in electronic retail, whether on global, national or regional level, will become more intense. Jürgen Gerdes: “We don’t know for certain what the world will look like in 2025, but the study’s various scenarios show how rapid the global retail sector - online and offline - is changing and that logistics will be a focal point of these change processes.”