E-Commerce Logistics In Europe: Integrate Or Stagnate

Author Roland Slegers-Leijsten has just published a book which analyzes how the rise of e-commerce is likely to lead to a change in the logistics landscape in the coming years. The book, E-Commerce Logistics in Europe: Integrate or Stagnate, costs € 45 (hardcover) or € 15 (e-pub) and is available through Bol.com and via verloopuitgeverij.nl. With thanks to Dr. Slegers-Leijsten, ESM presents one of the chapters of the book below.

The e-commerce market in all European countries is growing rapidly. In my previous research, a necessary shift from a “push” to a “pull” market has already been recognized. In addition, more and more combinations of Business2Business (B2B) and Business2Consumer (B2C) sales need to be integrated into supply chains.

In 2019, the three largest e-commerce markets in Europe were the UK (€ 168 billion), Germany (€ 111 billion) and France (€ 103 billion). The Netherlands was roughly the 5th largest e-commerce market with a turnover of 29 billion euros. In addition, at the onset of the COVID-19 pandemic, growth became increasingly rapid.

Operations will always be sales oriented. This implies that logistics concepts and operations must always follow and relate to sales concepts. From my perspective, the following sales trends impact logistics concepts and operations, as more and more businesses:

  • Combine B2C and B2B sales.
  • Combine online and offline retail. It started with companies that were originally offline retailers and added online retailers over time. Some have succeeded, many have not. In recent years, the original online retailers have also added offline sales channels. In general, this is a very capital intensive strategy, and this trend is currently only in an early stage.
  • Use D2C and D2B. They let their suppliers ship the (partial) purchase directly to their customers.
  • Sell ​​across borders, in Europe or around the world.
  • Sell ​​outside of their own sales channels, through wholesale platforms like Amazon, Ebay, Zalando, Britdeals, Chinabrands, OTTO, Etsy, CDiscount, Darty, Bol.com and Wehkamp.
  • Sell ​​directly to consumers (manufacturers).
  • Have a wide range of products and a big “long tail”.
  • Sell ​​products with a wide range of physical characteristics (weight, dimensions, breakables, dangerous goods, fresh produce, etc. etc.).

While in B2B business companies often work with Service Level Agreements (SLAs) and the demanded performance of logistics operations is (more or less) known in advance and therefore (more or less) predictable, the online consumer (B2C) expects his / her own specific temporary “SLA” for each purchase they make online. Thus, the concepts of multichannel and omnichannel sales are more and more common.

As a result, the following challenges arise from a logistics and supply chain perspective:

  • Stock should be available for multiple sales channels and / or companies in different countries. This implies that the stock is in different warehouses, possibly in different companies and in different countries. Real-time and reliably extracting inventory availability, shipping capacities / options, pick-up capacities / options and delivery capacities / options from different warehouses and carriers at the time of transaction is a must, but very complex. This requires real-time integrated OMS and TMS functionality with the online store front-end (s), WMS and ERP systems and chain support systems.
  • There is often a wide range of physical characteristics of products (weight, dimension, fragility, danger, etc.) sold online. This implies that multiple carriers with a variety of services are required to be able to deliver orders to customers.
  • Many companies are wondering how to integrate offline and online distribution into transportation.
  • B2C and B2B sales must be served by logistics solutions, many companies are wondering how to integrate B2C and B2B distribution in warehouses.
  • Selling cross-border poses challenges regarding the location of inventory, with customs requirements, multiple carriers required, and transportation costs that can vary widely per order.

When companies start to combine their sales offline, online, B2C, B2B, through wholesale and cross-border platforms, all of the previously mentioned logistics challenges become an instant reality.

When using D2C and / or D2B drop shipping solutions to ship a (partial) purchase directly from the supplier to the customer, even more systems in the chain need to be connected and inventory availability and logistics capacity data of their warehouse (s) and carrier (s) must be available in real time during the purchasing process for:

  • Being able to offer reliable shipping options and costs.
  • To be able to optimize the chain.

In addition to this, the demands on the level of excellence of the logistics service are increasing, so that the failure and the limited service have a direct negative impact on the revenues, due to the decrease in conversion and retention.

These trends and the logistical challenges that accompany them underscore the need for a continuous flow of products and information in real time, from ‘checkout to doorbell’, because ‘the last mile starts with the first click’. Throughout the supply chain, retailers, manufacturers, warehouses and carriers must be tightly linked / integrated in real time to ensure reliable shipping and delivery the first time around, also giving the customer options regarding logistics services. .

At the same time, reducing CO2 emissions is becoming more and more important, but the good news is that doing things ‘right first’ and providing consumers with reliable shipping and delivery options will not only help to save money. increase sales and reduce costs, but will also help reduce CO2 emissions. Multi-store, multi-warehouse and multi-carrier solutions must be implemented for this. Let your supply chains work for you as a “sales engine” and “cost / CO2 saver”.

Here is a brief example from my own experience as an online consumer:

Somewhere in early 2021 I needed to purchase two totally different products, filing folders and a leaf rake. Due to COVID-19, offline stores were closed, so I decided to buy them through a wholesale platform. After filling my basket, I was pleasantly surprised to be able to choose a specific date for the delivery of the two products. So I chose my option, four days after the day of purchase, and finalized the purchase at the checkout.

Of course, I knew that the two different products would be shipped by two different resellers from two different warehouses. In order not to set the bar too high, I expected that the two different products would be delivered on the chosen day by two different carriers.

The next day I already received an email from one of the two drop-shippers that they couldn’t deliver on the chosen day, but that it would be later. Reading this email, the first question I asked myself was if the product was not available for shipping and / or if there was no corresponding warehouse production capacity for ship the product at the right time? Unfortunately, I will never know for sure.

Then there was an email communication overload on the delivery status of the two products. Both the wholesale platform and drop shippers and carrier kept me busy reading status details emails which was too much! On top of that, they were communicating information that was not aligned.

In the end, the first product was delivered on the day chosen by a carrier. I was at home, but the driver didn’t bother to ring the bell, so I found the package wet (it was raining) outside my door at the end of the day. It was very disappointing.

Two days later the second product was delivered and I again found it outside my door. After this second drop, I discovered that both drops were performed by one and the same carrier, so I was wondering why they weren’t able to deliver both products in one drop?

This example shows some topics that are not yet in place. In the front-end of the online store, they are perfectly capable of selling products from multiple vendors. However, the logistics concept seems to be far behind and unable to support this sales concept:

  • Maybe there is not a sufficient link on the stock information between the wholesale platform and the supplier at the time of purchase?
  • Perhaps there is not a sufficient link on the warehouse production capacity between the wholesale platform and the supplier at the time of purchase?
  • Is there no control at the time of purchase on which carrier can deliver the two products (coming for two suppliers), when this carrier can do the two collections, when both suppliers must be able to ship and when can this transporter deliver both products in one drop?
  • The quality of the transporter delivering the products is questionable, as they just drop the products off at my doorstep without using the doorbell, even when I am at home.

The fact that the logistics concept is not at the right level to be able to support this sales concept causes a dissatisfied customer, excessive communication, increased transport costs (two drops instead of one) and more CO2 emissions than necessary.

My conclusion, not only based on this example, is that there is work to be done on logistics concepts and operations. The chain’s sales, logistics and finance systems must and can be enabled to connect with each other to obtain real-time data and perform a higher level of chain control.

To purchase a copy of E-Commerce Logistics in Europe: Integrate or Stagnate, visit Bol.com and via verloopuitgeverij.nl.

© 2022 European supermarket magazine. Article by Roland Slegers-Leijsten. For more information on the supply chain, click here. Click on subscribe register for ESM: European Magazine of Supermarkets.

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