The Global Logistical Challenges of Online Retail

It’s undeniable -- in the last couple of years e-commerce has gone worldwide. As depressed oil prices lowered retail sales across brick and mortar franchises in 2017, online retailers saw a 27% growth in revenues, making up almost $2 trillion in sales. With established markets like North America already part of this digital revolution, Asia-Pacific and in particular China also became major players in the e-commerce market more recently. As the middle class across these developing regions expands, and internet penetration grows, increasingly consumers and businesses are looking to global markets to source their need for electronics, fashions and communications.

However with increased interest comes greater expectations, and empowered customers demand quick delivery, accuracy, quality and easy returns from their retail experience. Fulfilling these requirements in the international market, places unique technical and logistical challenges on any online retailer. Here are some of the issues they face.

Flexibility

Product Ranges

Global e-commerce sites like Amazon and Alibaba are dealing in a diverse range of products, from knick knacks and electronics weighing a couple of to heavy packages weighing upwards of 50 kg. The logistical system or third party provider that these firms use must be able to handle this variety without consigning goods into the non-conveyable category. This is vital for driving efficiency and reducing costs.

Scalability

Online retailers face a constant ebb and flow in order volumes with a changing mix of products involved in each shipment. Online retailers must develop scalable logistics systems that are able to quickly adapt to different capacity requirements with, planned processes, system flows and staffing requirements for each. A system that can only run efficiently at full capacity will often prove ineffective when volumes are lower, so accounting for downtime and overcapacity must be built into these systems.

Developing Markets

Asia-Pacific and Africa, may be gaining increasing prominence in both the supply and retail of e-commerce operations, but sourcing from, and shipping to developing nations poses its own risks.

Payment Options

Payment options in these markets are often limited; instead of credit and debit cards customer will pay via cash-on-delivery or mobile money. Integrating multiple local payment options into existing services can be difficult. Payments that are made will be in local currency and systems must account for payment in multiple currencies.

Poor Infrastructure

Many of these countries have poor transport networks. Roads are often poorly constructed or maintained, and major routes are often subject to extreme traffic volumes creating costly bottlenecks and unavoidable delivery delays. Warehouses may also be inadequate for large shipments, with a lack of automated tracking, below standard storage facilities and inadequate monitoring and controls.

These issues will often result in inaccurate or botched deliveries, and in worst case scenarios cause deliveries to fail altogether. For example, if customers are not available to sign for packages or if they have provided incorrect addresses, in some cases retailers may ask customers to pick up packages from a central shipping hub to reduce these failures, however this does adversely affect the customer experience.

Comments are closed.