As online purchases reach new heights, an ecommerce boom is well and truly underway. The U.S. Department of Commerce reports that online sales rose by an estimated 15.1 percent year-on-year between Q1 2015 and Q1 2016. Online sales totaled $86.3 billion, making up 11.1 percent of overall retail sales, which is a record-breaking ecommerce penetration level.
Next-day delivery and even same-day delivery are becoming the norm, and the increased demand is posing some big challenges to retailers and transportation providers. Delivery capacity and infrastructure are both under pressure. How is the industry managing to keep up?
Positioning Fulfillment Centers Close To City Centers
One thing that Amazon has been doing is fronting the costs for real estate to place fulfillment centers close to big cities so that shorter delivery windows can be achieved. Some of the money they spent in this endeavor was recouped in Amazon Prime subscription fees, but some of it had to be passed on to its third-party sellers. This has served to illustrate to smaller firms that entering ecommerce can have a tremendous cost.
Logistics providers and retailers that want to stay competitive should focus on prime real estate nonetheless. Walmart has recently been focusing on building fulfillment centers closer to customers in much the same way that Amazon has.
Agile and transparent fleet operations also need to be ensured. That’s because the entire process takes place so quickly that everything needs to be monitored as closely as possible. Vehicle technology and business intelligence are proving to be worthy investments as they can help optimize routing, transport networks, and fuel consumption, keeping ecommerce delivery costs under control.
Form Strategic Partnerships
Strategic partnerships between retailers and preferred logistics providers can also help keep costs manageable. This can enable retailers to find preferred providers who understand their delivery protocols well enough to keep the risk of loads getting tuned away to a minimum.
As the ecommerce boom shows no signs of letting up, business have to be prepared to make some big investments to stay in the game.
This blog post was based off an article from Global Trade Magazine. View the original here.