How e-commerce is shaping the logistics industry

Jim Berge

By Jim Berge Business Development at King Solutions

ecommerceSince the early 2000s, e-commerce has grown to encompass a large portion of worldwide retail sales.

In 2014 alone, 196 million digital shoppers from all over the world spent almost 1.5 trillion dollars on goods purchased online. This number is expected to grow to over 200 million digital shoppers in 2015, increasing the amount spent on e-commerce to over 1.7 trillion.

These effects are felt not only by retail chains and suppliers but also by logistics and shipping companies, as well.

As the internet continues to insert virtual shopping malls into the homes of consumers the world over, the need for traditional brick-and-mortar stores has diminished, but not disappeared altogether. This has changed the paradigm of logistics by transforming the role of logistics companies and warehouses, a ripple that has sent a wave across the entire industry.

The Evolution of Logistics

In the pre-e-commerce world, retailers received their supply of goods from centralized distribution centers located in their particular region. These distribution centers continually supplied fresh stock to retail stores as needed. Because these items were readily available for consumer to purchase and take home, the consumer was technically a part of the logistics equation. By taking the item home themselves, they represented the last leg of the shipping process.

As e-commerce diminishes the need for walk-in retail stores, customers are no longer needed to be a part of the shipping process because items are shipped directly to them via the warehouses that supply them to retail chains.

A New Role for Logistics Companies

Logistics service providers are now seeing a significant increase in small shipments that need to be transported directly to customers all over the region, rather than the usual large and consolidated shipments that were traditionally sent out to retail stores.

This has increased the need for shipping and logistics companies as they continue to take more of the weight off of retail stores who do not need to keep as much stock in their stores. Instead, retailers both large and small are relying upon the shipping and warehousing companies to maintain a level of stock and coordinate and send micro-shipments to purchasing consumers.

Some smaller retailers are eliminating their stores altogether and switching to a strictly e-commerce method of conducting business.

How Logistics Companies Need to Adapt

Logistics service providers are facing the reality of transforming themselves into fulfillment centers. Parcel shipments to customers are becoming increasingly common, and properly coordinating these shipments is necessary to reduce costs.

In order for logistics service providers to adapt to the changes brought by increases in e-commerce, they must:

  • Maintain a system where online orders can be processed and statuses updated.
  • Track and organize shipments with efficiency in order to avoid and reduce claims.
  • Consolidate as many shipments as possible to reduce shipping costs (bulk shipments to parcel hubs that sort by postal code and ship individually).
  • Improve communication methods between retailers/customers to maintain transparency and efficiency in the supply chain.

Whether you are a large retailer with branches across the country or a small, strictly e-commerce business, King Solutions can help you adapt to the ever-changing landscape of the logistics industry.

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