Booming cross-border e-commerce driving change in supply chains

Online shopping and e-ID 44905065 © Gajus | Dreamstime.com

The global e-commerce sector grew 18.2% last year, driven by greater volumes of cross-border traffic, according to new research from logistics consultancy Transport Intelligence.

Ti’s recently published Global e-commerce logistics 2019  e-commerce is moving from simply being business-to-consumer (B2C) into B2B, C2C and even C2B

It says: “The explosive growth in cross-border e-commerce is bringing all stakeholders in the supply chain into direct contact with one another and challenging the status quo.

“Whilst gaining access to millions, if not billions, of new consumers is an attractive proposition for e-commerce companies, targeting purchasers in foreign markets is not necessarily the easiest of strategies.”

However, despite the headlines it has attracted, mostly because of its explosive growth rates, the e-commerce market remains surprisingly small: Ti values it at €245m and expects it to have a compound annual growth rate of 11.8% through to 2023.

The report adds that the largest potential growth market for logistics service providers (LSPs) is to be found in the small- to medium-sized enterprise (SME) sector, which it says is driving “opportunity and growth in the e-commerce fulfilment market”.

“Although SMEs are aware of the global e-commerce opportunities, many are still unsure on how best to navigate difficult waters when it comes to cross-border exports and overcoming the logistics challenges that come with doing business overseas.

“The SME segment has typically been underserved, as LSPs focused primarily on larger clients, and now represents a major growth opportunity in the e-fulfilment market,” it notes.

For larger e-commerce operators, Ti says, the degree of outsourcing is dependent on whether it is a marketplace or brand name retailer.

The former, with advanced IT systems, typically only require freight transport services and rarely outsource the end-to-end supply chain. The reverse is true of brand-name retailers that sell goods through their own websites – termed “brands.com” by Ti.

“Brands.com represent the largest market for e-commerce logistics providers, as they are most likely to benefit from 3PLs’ investment in technology systems and operational knowhow.

“The omni-channel push plays a significant role in this. Outsourcing logistics functions is a cost-effective way for brands.com to get the competency they need to properly manage the process from multi-channel to omni-channel,” it says.