Despite all the empty store space in towns around the UK following the ‘death of high street’ exponential growth is reported for the countries e-commerce industry which is to provide supply chain operators and logistics services providers a boost in the years to come according to the Loadstar.
An Ecommerce Boom
Ecommerce in the UK is experience a major boom in recent years as the way consumers purchase their goods has geared towards online activity. The most recent major retail periods such as Valentine’s Day and Christmas has seen record volumes of online purchases. This surge in demand has had a direct effect on the Logistics industry which will benefit in the long term.
The chief executive of the Chartered Institute of Logistics and Transport Steve Agg spoke at the Multimodal show in Birmingham this week stating that "research indicates that there will be 30% fewer chain stores on the UK high street by 2020 compared to today – but the effect on supply chain volumes will be mitigated by the switch to e-tailing.”
“The UK is the largest per capita e-commerce market in the world. If it was a sector in itself it would be the fifth largest in the UK economy. While some 68% of retail volumes are done in-store at the moment, by 2020 that will have dropped to just 43%,” he said.
Agg added that the success of the ecommerce boils to the importance of the supply chain and calls for Logistical processes to be as efficient, transparent and as optimised as possible. The expectations of consumers are growing and show no sign of slowing down. Logistical operations have a direct effect on speed of delivery which is a major contributor to customer satisfaction. “This raises the profile and shows the value of the supply chain to society.”
New Business Opportunities
This surge in ecommerce has seen the arrival of mail order businesses, specifically designed to cater for ‘home shopping,’ offering online mail order fulfilment for those who sell their products online and have a need for warehousing space and distribution services. Retailers are adapting to this shift in consumer behaviour by developing a multi-channel approach to the way they sell and marketing their projects.
There are subtle differences in logistical operations which firms must adapt to. Firstly, whilst rational store distribution involved bulk orders, pallets and rigid delivery dates. E-fulfilment is mostly about single items meaning a larger requirement for pick and pack operations. This results in higher labour requirements and costs, however the reduced need for bricks and mortar premises can generally offsets this rise costs.
Will this continue?
The trend of increasing ecommerce activity shows no signs of stopping according to yearly projections. Although ecommerce is gaining in popularity, a standard model of e-tailing is yet to be developed as firms have been developing their own systems using distribution centres. Strategists are now setting thresholds or tipping points for retailers to turn multi-channel (which appears to be when e-commerce sales reach 20% of overall business volumes).
Although it is too early to say whether this boom will continue or even too early to say whether this will increase revenue for freight providers mail order fulfilment providers and logistics consultants, this has definitely highlighted that a shift in consumer buying behaviour affects all aspects of business, from marketing to logistics and distribution.