Traditional Logistics – a sunset?

It’s impact on Ecommerce and Online shopping

Ecommerce and online shopping have changed the way you shop. Online retailers strive to amaze customers with cost effective same day  and superfast one hour deliveries.

Ecommerce market is expected to reach USD88 b by the year 2025 in South East  Asia (SEA). It is a Gold rush!

Who is driving this growth – young population (<40) is the key driver. So is the rapidly growing middle class.

SEA retail stores per capita is only 1/3rd of US market (big scope for growth). Moreover, high density urban population and affordable & faster internet connection also contributing to this boom.

Payment and Logistics are considered as supporting pillars. For example, Taobao (China) is supported by Cainiao and Alipay (Alibaba corporate family members). Taobao is able to ensure a sustainable customer experience for all their shoppers by providing end-to-end service for online shoppers.

So then where do traditional Logistics stand today? It is defined as movement of goods from retailers’tranportation hub to the final destination, costing around 75% of total distribution costs. Most delivery companies have operated much the same way as for last 30  years. Industry is calling for a major disruption.

Hub and Spoke concept

This is great for airfreights, otherwise it is time consuming and inefficient.

Look at how it operates – a Call centre will assign a delivery person to pick up an item from the customer. The person usually collects all the items assigned area, and bring it to the warehouse and sorting centre (called Hub).

These items then are included in the inventory, and sorted out in districts and areas. These packages are then assigned on different routes, to be piced up by delivery people for delivery. This is inefficient, time consuming, and costly process. Also, chances of errors (wrong deliveries) – 3 to 5% is industry norm.

What’s happening now there!

An urban logistics platform, providing fast, accurate, and reliable delivery services. They infact, broke down traditional delivery process workflows, and analyzed them, for more efficient workflow chain.

More than 2000 courier partners are joining together. This was possible due to adopting sharing economy and crowdsourcing. It eliminates fixed assets and investments. Uber perhaps the most suitable example – utilising idle resources and monetizing for the assset owners – doing business without tangible assets.

Assign the nearest courier to pick up the item from customer in a hurry. Fast deliveries are critical for success of Ecommerce. Key to fast delivery is assigning right courier at the right time in right location.

We are living in fast, dynamic world where 3 days delivery is not acceptable. It is a great opportunity for those providing superior customer experience to the shoppers. ‘’Zap Delivery’’ is well positioned to help online retailers amaze their customers with cost effective same day deliveries and superfast one hour deliveries.

Suresh Shah, Pathfinders Enterprise

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