Logistics providers: Take a leaf out of the ecommerce giants book before it’s too late
Author: Gary Byrne
Do you know what the biggest shopping day of the year is? If you’re anything like me you’re probably thinking Black Friday or Cyber Monday.
But, according to the Financial Times, it’s actually Singles Day in China. This year saw $25.4bn spent on Alibaba, with 777m parcels shipped on what has become the biggest day of spend in the retail calendar.
With consumer spending rising to dizzying new heights, there is a greater demand on deliveries than ever before. As e-commerce continues to grow, the logistics sector should be evolving alongside it. But what happens when one industry races ahead of the other? E-commerce giants like Amazon and Alibaba are the technology titans who are storming the world of retail, and shaking up the traditional supply chain along the way. As household brands, with deep pockets and vast resources, they are well positioned to challenge the ecosystem from click to door.
In September, Alibaba Group announced that it has taken majority control of logistics unit, Cainiao Smart Logistics Network. The company is looking to “build the most-efficient logistics network in China and around the world”, investing $15 billion over five years to achieve this. By effectively taking charge of its own logistics and supply chain, Alibaba is challenging delivery firms by applying its own technology and infrastructure to reach a wide network of consumers.
Of course, not every company is Alibaba, but for the logistics sector to remain relevant it needs to adapt. Most logistics companies ultimately serve consumers’ growing expectations, and given how quickly its audience has embraced digital, logistics must innovate to go toe to toe. The winners in the industry will be those who understand how to maximise new technology, and apply it back to the business.
Long-term technology investments are difficult to swallow in such a fast-paced industry. Therefore, many logistics companies operating on manual systems are looking to cloud based systems and platforms that offer them both flexibility and scalability. Other solutions which can help digitise the day-to-day functions and improve business management include: intelligent warehouse and security tracking, energy storage and video analytics. Given the pace of change and how competitive the industry is, these pay-to-play, scalable technology solutions could really help those, such as smaller logistics firms, who don’t want a large upfront cost when it comes to IT investment.
Once a more flexible and cost-effective technology infrastructure is in place, having the IT know-how within the business is essential. According to recent research from PwC, 90% of industry experts cited that data and analytics will be more crucial to logistics and transport than any other sector – the question is, does it have the skills to apply and use it effectively? This seems to be the root challenge, with the same report stating that just 28% of logistics companies rated themselves as “advanced” in digital. Furthermore, 50% of respondents said their biggest challenge was the lack of digital culture and training.
Given how fierce competition is in the sector, the logistics industry really needs to commit to a strategy that ensures they are part of the future. Without this, they will alienate themselves from customers looking for a tech-savvy service, and in turn encourage the rise of the e-commerce giants - meaning less choice across the market.
When it comes to change, there always needs to be a leap of faith. That initial trust and willingness to make an investment can be difficult, given that most companies only forecast 12 months ahead. However, by making that decision and taking your business digital, it could ultimately improve the shot-term view and ensure the business’ longevity.
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