DHL: four key trends shaping the future of e-commerce
E-commerce was form...
E-commerce was formerly unique to the retail sector and B2C market, however, it has since become an important component in B2B transactions. Now used across all sectors, it is thought that business e-commerce in the US could reach $1.2trn by 2021, according to research firm Forrester.
1. The rise of ‘social commerce’ and virtual marketplaces
It has been discovered that consumers are transitioning away from purchasing online from corporate websites. Forrester’s research found that 67% of B2C online sales will take place on virtual marketplaces by 2022. “Until recently, it was mostly brands, distributors and retailers who would sell us the things that we consume online,” commented Nabil Malouli, VP, Global E-Commerce at DHL. “Now, however, it’s not just well-known marketplaces such as Amazon, Alibaba, eBay and Etsy who are extremely powerful, it’s also some of the new players enabling social commerce - the Instagrams and Pinterests of this world - to allow smaller businesses to sell to the world.”
2. Innovative approaches will be key to tackling labor shortages
With the significant increase in e-commerce contributing to a shortage of labour in the logistics space, peak days consist of around 30% of the year’s volume for some retailers, it’s important that orders are fulfilled efficiently otherwise valuable customer sentiment and returning customers could be lost. “DHL uses automation in many instances because it’s the only way of meeting the required service level,” added Malouli. “Large retailers can process up to 500,000 orders in a single day during peak time. Such volumes can’t be handled manually.”
3. Growth in e-commerce means growth in returns
With a rise in e-commerce, it also means an increase in returned goods by nature. The need for reverse logistics is a major factor in warehouse space being leased and is having a significant effect on warehousing in the US. It is thought that the need to handle returned good consists of around 700mn sq. ft of warehouse space in the US alone. “When consumers buy an item in a store, the average return rate of store item purchases is less than 10%,” said Spencer Levy, Americas Head of Research and Senior Economic Advisor for CBRE. “With internet purchases, the return rate can be more than 30%, so there’s an enormous difference.”
4. The convergence of online and offline
There has already been the beginning of convergence of online and offline with transactions such as Amazon’s $14bn acquisition of physical grocery chain Whole Foods. China’s Alibaba has also announced its new retail strategy which has seen it open bricks and mortar grocery stores and pop up shops, in addition to partnering with 600,000 smaller stores. “Some companies are doing it very well,” said Malouli. “Fast fashion retailer Zara, for example, has created an omnichannel experience at its new London concept store. But other companies which started out as mainly distributors of brands and that have managed online and offline as different businesses, with different technology backbones, have a hard time managing the experience. It’s convergence that is key.”
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Pandora and IBM digitise jewellery supply chain
Pandora has overhauled its global supply chain in partnership with IBM amid an ecommerce sales boom for its hand-finished jewellery.
The company found international success offering customisable charm bracelets and other personalised jewellery though its chain of bricks and mortar retail destinations. But in 2020, as the COVID-19 outbreak forced physical stores to close, Pandora strengthened its omnichannel operations and doubled online sales.
A focus on customer experience included deploying IBM’s Sterling Order Management, increasing supply chain resiliency and safeguarding against disruption across the global value chain.
Pandora leverages IBM Sterling Order Management as the backbone it its omnichannel fulfilment, with Salesforce Commerce Cloud powering its ecommerce. Greater automation across its channels has boosted the jeweller’s sustainability credentials, IBM said, streamlining processes for more efficient delivery. It has also given in-store staff and virtual customer service representatives superior end-to-end visibility to better meet consumer needs.
Jim Cruickshank, VP of Digital Development & Retail Technology, Pandora, said the digital transformation journey has brought “digital and store technology closer together and closer to the customer”, highlighting how important the customer journey remains, even during unprecedented disruption.
"Our mission is about creating a personal experience and we've instituted massive platform changes with IBM Sterling and Salesforce to enable new digital-first capabilities that are much more individualised, localised and connected across channels and markets,” he added.
Pandora’s pivot to digital
The pandemic forced the doors closed at most of Pandora’s 2,700 retail locations. To remain competitive, it pivoted to online retail. Virtual queuing for stores and virtual product trials via augmented reality (AR) technology went someway to emulating the in-store experience and retail theatre that is the brand’s hallmark. Meanwhile digital investments in supply chain efficiency was central to delivering on consumer demand.
“Consumer behaviour has significantly shifted and will continue to evolve with businesses needing to quickly adapt to new preferences and needs,” said Kareem Yusuf, General Manager, AI Applications and Blockchain, IBM. “To address this shift, leading retailers like Pandora rely on innovation to increase their business agility by enabling and scaling sustainable supply chain operations using AI and cloud.”
Yusuf said Pandora’s success was indicative of how to remain competitive by “finding new ways to create differentiated customer experiences that protect their enterprises from disruptions to help mitigate risk and accelerate growth”.