Inside Logistics

Major brands lack e-commerce skills

Logistics underpinnings for successful operations need bolstering: study says


December 29, 2020
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While there are key logistics capabilities required to build and maintain successful e-commerce operations, few brands excel at any of them. This is the key finding of a new study by Geodis and Accenture Interactive.

The study confirms that the pandemic greatly accelerated online commerce growth. Brands estimate that e-commerce in 2020 will represent nearly half of their sales (compared to a third before Covid-19).

Before the crisis, companies were making 34 percent of their sales online, 28 percent on average in marketplaces and six percent on their own websites. During lockdown, 65 percent of sales were made online: 38 percent via marketplaces and 27 percent on brands’ online stores.

The increase was greater in Europe than in the United States. European companies without online sales solutions were heavily penalized, with 40 percent of the brands surveyed estimating that sales lost due to Covid-19 will exceed 15 percent of their earnings on average.

Owning the e-commerce platform

Within three years, 77 percent of American companies and 56 percent of European companies surveyed wish to sell directly to consumers via their own websites, aiming to make 20 percent of their total sales there. This would reduce reliance on third-party marketplaces.

“Direct sales from brands’ retail websites currently represent five to eight percent of online sales. Brands would like to increase that to 20 percent or 30 percent in the next three to five years,” said Sohel Aziz, managing director, Accenture Interactive. “The survey shows that brands are aware of the fact that improving their omnichannel logistics capabilities, such as customer experience – through customization of delivery options and tracking, or customers’ ability to modify orders, for example, is essential and urgent if they are to reach this goal.”

Currently, 38 percent of American brands offer two- to three-day shipping nationwide, and 56 percent plan to do so within three years (25 percent and 57 percent for European brands).

The holy grail – three-day shipping

For international (intercontinental) shipping, no American brands currently offer two- to three-day shipping, although 17 percent plan to do so within the next three years; 15 percent offer four- to five-day shipping, with 66 percent planning to do so within the next three years. As for European brands, none of them currently offer two- to three-day international shipping, although seven percent plan to do so within the next three years; four percent offer four-to-five-day shipping, with 76 percent hoping to do so within the next three years.

The study reveals the ambitious objectives of the brands to reduce shipping times to three-day shipping within a maximum of three years for the domestic market and four-to-five for intercontinental shipping.

Poor visibility

The survey points to the fact that just 16 percent of the companies questioned are able to get real-time key performance indicators for their supply chain (only 25 percent of American brands and 10 percent of European brands say they have access to this information). In addition, 40 percent of European brands say that their analytical capabilities are too rudimentary, generating data in a fragmented way, often manually and without clear governance.

“Only a minority of them have real-time supply chain inventory visibility. However, this visibility is essential to ensuring product availability, offering a variety of shipping choices and informing the customer of the product’s shipping status. In short –
satisfying the customer,” said Ashwani Nath, vice-president and global head of e-channel solutions, Geodis.

“Behind the scenes, this means optimizing the logistics cost for each order and overcoming many logistical challenges: reconciling the physical with the digital, maintaining a real-time inventory, optimizing stock, managing transportation, orchestrating orders while dealing with a variety of processes and partners.

“This calls for integrating stores with e-commerce networks to serve as order processing centres, collection points, shipping facilities and fulfillment centres. One thing is for certain: inventory will have to be closer to the end customer, no matter where they may be, to ensure agility and availability,” Nath concluded.

For the study Accenture interviewed 200 European and American companies with revenues between US$100 million and $20 billion that operate multiple channel logistics about their e-commerce-related expectations.