E-commerce has been on the rise over the last decade with consumers now able to reach goods from across the world. The penetration of e-commerce across the globe has broadly affected the way supply chains work, and this seems to be the opportune time for logistic providers to take advantage. Lorraine Bangera writes.
With numerous international and national online retail outlets, the world is becoming smaller than ever before. E-commerce has added a new edge to every retail group, and almost every big brand has decided hop on the bandwagon, adding pressure and demand to global supply chains of disparate agility.
According to a report by Transport Intelligence, e-commerce is simply a commercial transaction conducted electronically on the Internet. It has not only changed the way consumers buy goods but has also affected how businesses interact with each other.
According to a Jones Lang LaSalle survey, online retail in Europe is expected to exceed 10% of total sales by 2016. While in India, Technopak Advisors reports that the sector is forecasted to grow to $76bn
by 2021.
To sustain this growth, there is an absolute vital need for supply chain reforms across continents. With the demand for online retail increasing, large logistics units are on the rise, especially in Scotland; which JLL finds to be the main home for large retail bases in Europe.
In the Middle East, the infiltration of e-commerce has differed nation to nation. In the UAE, according to local paper Gulf News, residents spent a total of AED2.4bn on online purchases in 2015. While according to MasterCards Online Shopping Behaviour study in 2015, 83% of UAE residents purchased goods online during the three months prior to the study being conducted and four out of five surveyed said they were satisfied with the process.
CEO of Cosmos Group Gaurav Aidasani told Gulf News, that even though e-commerce would not be able to replace offline retail (in the short term), big retailers must take note of its substantial growth, and the CEO stresses that this is a massive opportunity for service providers.
The move online
The UAE has undoubtedly been topping the charts when it comes to Internet use and online purchases in the Middle East. But is the country, or the region, ready for the massive uprising of online retail?
Consumers today have high expectations when it comes to delivery. Not only do they want goods dropped at their doorstep in top-notch quality but also demand the goods are inexpensive and delivered within a week or in some cases a day.
The attractive prices and the convenience of the whole process has enabled countless consumers to feed in their CVV codes and click Buy Now. But has there been similar progress in the back-end?
Cash on delivery options are favoured by the consumer, but last mile logistics have done little to mitigate the barrage of phone calls from drivers who often sound like theyre calling from the other side of the world, while stood outside in extreme weather conditions. And this experience remains in the mind of consumers just as much as the usability of websites and ease of payment, regardless of this final leg of the experience being provided by the retailer or a third party.
Is the GCCs logistics industry up for the challenge? To be honest, Im not sure the world is. Financial Times columnist Maija Palmer claims that even in the UK, where online shopping is more mature, the logistics of it is still somewhat of a mess. Online retail has emerged from a place you could find second-hand goods to where you can purchase regular groceries. With such a massive uprising, it is only a matter of time before the infrastructure of the back-end doesnt match up to the demand of a consumeristic society.
In her column, Palmer states that MetaPack found two-thirds of online shoppers choosing goods with better delivery options. Delivery, in my opinion, is often undermined by retailers. With a brutal focus on increasing sales, retailers often get blindsided by poor logistics, which in all fairness if managed well could substantially increase the effectiveness of the overall scheme.
In the Middle East, immature logistics and delivery networks have made online retail harder to trust. Alpen Capitals Retail Industry Report states that the online retail industry faces challenges with the delivery of products because of under-developed inventory nodes, warehouses and stocking points in the region.
Infrastructure and consumption need to go together to be sustainable. Any kind of unbalance can cause a tumble-down effect, with retailers and logistics solution providers on the losing end of the deal.
Its fair to say this unseen benefit of the Internet is not really a threat but an opportunity for logistics providers to extend their services and embrace the e-revolution.