What Does Amazon’s E-Commerce Domination Mean for Logistics Service Providers?
Logistics Service Providers have profited from aligning themselves with the e-commerce giant’s rapid growth, however, as Amazon evolves, many LSPs risk being left with their head in the sand.
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From its inception as an online book retailer, to being the world’s biggest e-commerce company, Amazon’s influence and control over the sector has been almost absolute.
Logistics Service Providers (LSPs) have profited from aligning themselves with the e-commerce giant’s rapid growth.
However, as both Amazon and customers evolve, LSPs risk being left on the shelf.
One of the key findings of Ti’s (Transport Intelligence) newly-released report, Global e-commerce Logistics 2016, is that as consumers continue to place their items in Amazon’s basket in ever-increasing numbers, LSPs cannot afford to cut ties with the e-commerce giant without losing significant volumes.
The report presents an in-depth analysis of the intricate and dynamic e-commerce sector, on a global scale.
It also provides overviews and analysis of some of the key factors shaping the market, including consumer preferences and expectations, as well as new technologies and how they are being received.
Ti’s Global e-commerce Logistics 2016 Annual Analysis & Market Overview
The report contains Ti’s bespoke market size and forecasting data, as well as overviews of some of the world’s leading e-commerce businesses, such as Alibaba and Amazon.
In addition, the report includes company profiles of both post offices, LSPs and dedicated e-commerce solution providers to showcase the different strategies shaping the market we know today.
- Amazon will continue to dominate the e-commerce market because customers choose its cheap and convenient delivery over other retailers’ offerings
- Online marketplaces and the adoption of omni channel strategies mean the distinction between B2C and B2B markets has become blurred
- The replication of B2B by B2C could guarantee higher levels of delivery success, but this is only part of the solution
- Changes in consumer demand have prompted retailers to invest in IT and fulfilment centre networks to link bricks & mortar to online, mobile and social media offerings, as well as embracing showrooming and concept stores
- Traditional seasonality has changed markedly, with savings days such as Singles Day (which now dwarfs Black Friday and Cyber Monday) meaning it is not just the Christmas volumes urge that retailers and logistics companies need to handle
- Alternative payments overtook card payments for the first time in 2014. This shift is expected to continue, driven by North America
- Technology failure and cyber-attacks are a bigger threat than adverse weather, fire and social unrest. Intellectual data is a critical supply chain asset and, within B2B, is among the primary targets for such security breaches
- Logistics and supply chains need to respond to the challenges created by the evolution of the sharing economy business model
- Technology means that consumers now have exposure to better prices, product availability and choice from outside of their country of residence
- E-commerce growth is rocketing in emerging markets and even developed markets are displaying double digit growth. However, there are various challenges that logistics providers need to surmount before they can take full advantage of this trend.
Ti analysts have reviewed not only the market as a whole, but also the individual supply chain models of both global and regional e-tailers. Companies profiled include those operating purely online, as well as those with multi- and omni-channel business models.
They include Alibaba, Amazon, CNOVA, eBay, JD.com, John Lewis, Tesco and Walmart. In addition, the report includes an overview of the activities and strategies of logistics providers within the e-commerce market, including Clipper Logistics, DPDHL, Japan Post, SEKO and XPO Logistics.
In order to find an edge in an increasingly crowded market place, the role of technology will continue to hold significant sway.
New ways for consumers to track and interact with deliveries, an increase in omni-channel adoption amongst retailers, the growth of wearable warehouse technology and growing fears about cyber-attacks are just a few of the ways in which technology will change the landscape of the sector dramatically in the next few years.
Those LSPs who are able to work with retailers to create the most efficient and cost effective services will be the ones who prosper. Others will find themselves shelved.
Amazon continues to make headlines over its moves to own and control more of its supply chain and global logistics operations.
For logistics providers, highlighting their involvement in the existing process is vital to ensuring their survival independent of Amazon.
As retailers continue to look for competitive advantages across the whole of the supply chain, those LSPs who can trade on their success as part of the Amazon delivery machine will be best placed to survive a fierce market which continues to grow in intensity.
According to Ti Economist Global: “Any provider that establishes a strong reputation in e-commerce logistics and finds a formula which yields a consistently decent margin is set for years of success.”
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Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [email protected]