Many industries have had to adapt and change in response to the robust growth of eCommerce. From air freight to road transport to online marketing, eCommerce has been a catalyst for positive transformations – and logistics especially has been center stage for its role in bringing goods from distribution centers to customer doorsteps.
The retail migration from brick-and-mortar to multi-channel and the subsequent Omni channel eCommerce have added more ingredients to the logistics space that were non-existent five years ago – including last mile delivery and drone deliveries which are the most popular trends right now.
The early days of logistics were marked by direct replenishment of stocks by wholesalers at the retail shops. Those were the days when the supermarkets and shopping malls were slowly evolving as futuristic shopping destinations. Like today, holiday seasons and Christmas marked the peak sales period during which logistics operations would ramp up capacity.
In the 1980s, innovation started taking place to streamline the supply chain distribution, cut down truck carrier costs and also to ensure smooth last mile delivery. Retail distribution centers equipped with high ceilings and storage racks were strategically positioned in between suppliers and shops. The same scene continued to play until globalization took the world by storm and disrupted all industries, especially retail and FMCG.
With globalization adding to the complexities of distribution, yet another component became part of the supply chain machinery to handle both overseas and domestic operations with ease – the retail import centers or the import/export centers. These were basically warehouses with earmarked stocks that were meant for foreign trade, so no logistic operations needed to be planned comprehensively to include one more pickup or drop location to supply goods to the customers.
Although eCommerce operations have been around since 1991, it took another ten years for the first forms of modern-day order fulfillment to come into practice. The e-fulfillment framework turned logistics into a function capable of catering to many eCommerce operations concurrently.
For instance, at any given point in time, goods are being sent to the parcel center, sortation center, regional parcel distribution center and ultimately to the customer doorstep while returned goods are being carried back to the corresponding delivery center.
Logistics has become a piece in the overall big picture of eCommerce. In fact, it is the one thing that helps an eCommerce business differentiate itself from its competitors. Amazon is able to sustain its dominant stance in the B2C segment due to its highly flexible delivery system that has everything ranging from self-driven trucks to bike-borne last mile deliveries to futuristic drone deliveries.
It is surprising and even mind-boggling to see how the face of logistics has changed with the explosive growth of eCommerce. The days when trucks carried a single consignment from a manufacturer to a wholesaler and subsequently to a retailer are now extinct.
eCommerce introduced new links to the supply chain system, integrating state-of-the-art technological advancements to accelerate the pace at which transport and deliveries happen. Where it once took a week to receive a dispatch, today it possible to complete order fulfillment in a fraction of a timeframe.
Here are some ways how eCommerce has made that possible.
Drop shipping enables online retailers to sell goods to customers without ever having to physically stock the goods. The goods are shipped directly from manufacturer warehouses to customer locations. This distribution method has enabled countless number of self-employed people to launch their own small-scale or home-based eCommerce businesses and, of course, it has also fine-tuned the efficacy with which long distance logistics works.
In the past, distribution centers operated out of suburbs or far flung warehouses from which the store could pick up goods on an as-and-when-needed basis. Sometimes this led to overstocking or understocking of goods.
Strategically located distribution centers that take into account the proximity of the customer location have reduced the burden on logistic players. eCommerce businesses armed with analytics are able to drill down to details like hot zones from where maximum orders arise, average size of orders and even the busiest traffic hours.
The term last mile delivery was originally associated with telecommunications, cable and Internet industries. With the growth of eCommerce, the term got adopted to describe the last leg of delivery, that is from the sortation/dispatch center until the customer delivery. In fact, this last mile proved to be the biggest challenge for online retailers since it consumed as much as 28% of the total cost to move goods.
Thanks to eCommerce and the on-demand frenzy that it has kicked off, innovative last mile delivery systems that used mini trucks, two-wheelers and even bikes have come into vogue.
The latest craze of the tech titans and automobile manufacturers - self-driven automobiles - have crept into the supply chain system of eCommerce as well. Online retail brands have already started running pilot programs to see the real-world feasibility of unmanned aerial vehicles (drones) and self-driven trucks over long distances. Once their feasibility is proven, the on-demand order fulfillment space will widen exponentially.
To say that eCommerce has catalyzed the growth of logistics would be an understatement. eCommerce has in fact transformed the entire landscape of logistics, paving new paths for the logistics industry to charge ahead.
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