The logistics industry has faced many dramatic challenges since the Covid pandemic arrived and turned most industries upside down. Logistics has underpinned the growth of many industries as a result of Covid, such as the explosion in e-commerce, but there has also been a difficult global supply chain snarl-up. Like most industries, there have been both opportunities and challenges at the same time.
Investment bank Morgan Stanley has suggested that the global growth in e-commerce is going to stay, so we need to prepare for a new reality in the logistics landscape that supports this. In 2021, around 22% of global retail sales were via e-commerce – up from about 15% in 2019.
The Morgan Stanley research suggests that over the long term, the e-commerce market has plenty of room to grow and could increase from $3.3 trillion in 2022 to $5.4 trillion in 2026. “We believe that the Covid-driven bump will not flatten future e-commerce growth,” says Brian Nowak, an equity analyst covering the U.S. internet industry. He sees e-commerce reaching 27% of retail sales by 2026. “Across the world, we have yet to see a ceiling for e-commerce penetration.”
So there are two sides to the story for logistics – supply chain challenges and an enormous opportunity with strong growth still predicted for e-commerce. DHL published a statement suggesting that they have rebuilt their business to withstand future shocks: “Many logistics companies redesigned their supply chains, introduced changes in their workforces, opted for logistics automation and new warehouse management programs, setting a precedent for future challenges.”
Freight costs are down 45% since last year and the number of vessels lined up outside the port of Los Angeles has dropped by 75% since the start of this year, despite 2022 being a busy year for freight and logistics. This all points to a reduction in concern about the supply chain crisis caused in the middle of the pandemic.
But managing the opportunities could be a challenge for many companies.
New e-commerce brands that jump onto this global growth in online shopping need to be aware of just how important logistics will be to the success of their business. A strong logistics partner is needed to ensure that any e-commerce brand can deliver their promises. In addition, a very strong customer service strategy that can connect the brand to the logistics partner and reflect a single voice.
This is vital because customers don’t usually care about the process of logistics. They just want their stuff delivered on time to the right place. A fashion brand cannot say ‘the problem is with our logistics partner’ and expect customers to keep ordering.
If you are experiencing hypergrowth because of post-covid demand or you are entering the e-commerce marketplace now, then these questions around logistics are extremely important. Finding the right partner has to be blended with building a customer service solution that connects the dots together from the warehouse to the customer’s home.
The golden rule here is to eliminate friction. The most common customer question will be ‘where is my stuff?’ If you can ensure that simple questions like this can be answered easily, in seconds, and 24/7 then you are already on the right track. Even, for more complex questions around logistics and delivery, a focus on reducing customer friction and ensuring they can get their order as easily as possible is a good way to structure the process.
Logistics underpins many other industries and as an industrial sector it has seen both challenges and opportunities in the past couple of years. As the Covid challenges start to decline it is time to ensure that logistics can play an important role in the development of the industries that rely on it working every single time.
Let me know what you think about these issues of pain points and competition in logistics, and the potential for e-commerce to grow as fast as Morgan Stanley suggests. Please contact me via marketing@quantanite.com or get in touch directly via my LinkedIn.
CC Photo by Shaah Shahidh
