The internet has undoubtedly revolutionized the retail sector since the beginning of this century, and that revolution is still continuing. E-commerce is known as retail’s ‘golden quarter,’ and while the media has focused on consumer frenzies on the high street, there are often similar if less visually spectacular rushes happening online. Indeed, the pressure of demand has actually forced the temporary closure of websites on several occasions, as the system and logistics are unable to cope with increasing customer expectation.
The nature of internet shopping has led customers to expect everything to be available all the time, and the system is set up to encourage add-on purchases they hadn’t previously considered. Not only that, but customers increasingly expect free overnight delivery and free returns. The logistics industry is caught between this demand and retailers requiring them to keep costs down. But this pressure in turn drives innovation and change.
While general postal deliveries such as letters have decreased dramatically since the advent of e-mail, e-commerce has caused the number of parcel deliveries to expand dramatically. This figure is expected to grow at a compound annual rate of 7.1% per year, reaching over 1.35 billion deliveries in 2018. But redelivery rates during peak periods are also up 20%, and some retailers experience more customer returns than new stock from their suppliers!
Logistics providers are at the sharp end of meeting these challenges. As executive vice-president and chief commercial officer of the CSX Corporation, Clarence Gooden has championed innovation in making CSX more responsive to customers’ needs. In 2006 CSX became the first freight rail and logistics firm to host an e-business customer forum. This now hosts 150-200 customers every year. Gooden also personally arranges workshops on the latest ShipCSX tools and oversees their updates. This has led to record revenue growth, and CSX has also become the first railroad in the US to create integrated customer profiles, incorporating technology such as GIS maps.
The future of delivery
There has been much discussion over the use of drones in future delivery of online retail purchases. In 2014 Amazon announced its plans to use miniature unmanned air vehicles (UAVs) for delivering goods weighing less than 5lbs to locations within 10 miles of an Amazon fulfillment center. The main hurdle is that commercial UAV technology is not yet legal in the US, and also that the public has expressed serious concerns regarding safety, privacy and the security of these goods. Nevertheless, it looks likely that these difficulties will be overcome sooner rather than later, and that drone-based deliveries will soon be with us.
A more pressing concern, though, is “the last mile” as online shoppers demand more flexible delivery options and technology that can accept deliveries on behalf of customers even if they are out. One possible solution is the Pelipod, a secure home delivery box that uses GPS technology to communicate secure codes for each parcel delivery.
The e-commerce revolution has been made possible by massive growth in the logistics sector, which continues to encourage future possibilities. Globalization has presented serious challenges that have in turn driven innovation, and the logistics industry must continue to adapt to changing circumstances.