Impact of eCommerce Growth on the Logistics Sector


Quite undeniably, the world of online retail is undergoing massive evolution like never before. The forecasts for the eCommerce industry look to be encouraging along with the prospects are getting bigger with each day. eCommerce logistics is building up momentum and witnessing growth which is steady and rapid. Going further, infrastructural enhancements like digital connectivity,  logistics, increased cognizance, and greater incentives on online shopping are accelerating factors for both eCommerce and logistics companies. 

One of the biggest boons of this particular industry is that there is no halting and no possible revenue slack in the coming future. It gets better and bigger and pretty much nothing until too worse can stop this prospering growth. Along with the unfurling of more opportunities and newer markets, the impact of logistics and supply management on eCommerce capabilities looks to be impressive.

With the demands being so high, companies are doing their best in formulating strategic acquisitions which empowers them to have the market presence and penetrate newer markets and niche segments. Overall, the logistic market is estimated to see a growth of 3% annually until the year 2020 and truly justifies the sector to be at the fifth rank amongst thriving industries in India.

India, with its varied opportunities, accounts for being one of the finest developing markets in the world; thus, different eCommerce logistics outlines are in their right places based on awareness, market development, and product type. So long these patterns keep on growing with a fair acceptance, it will bring in visible changes in the actual delivery networks and physical supply. 

The Statistical Overview 

At certain times, this Himalayan rise of eCommerce and the digital marketplace is phrased as “The Amazon Effect”. It has revolutionized the composition of customer purchasing behavior and demands. Speaking from the consumers’ point of view, they always look out for fast, accurate, free shipping that comes along with competitive pricing too.  

eCommerce shows a growing share in the retail markets and reports say that the sector has accounted for almost 14.3% of all retail sales in the year 2018 which is 15% year-over-year. Experts forecast that worldwide eCommerce sales will rise to 17.5% of retails sales by the year 2021.  This massive demand and growth are definite to have a solid impact on the transportation and logistics industry

Custom strategies need to be formulated and adhered to for managing more and more influx of delivery expectations and increased volume of orders. With in-depth analysis and scrutiny of industrial and collateral knowledge, logistics companies can leverage from determining ways to stay successful and competitive amidst market shifts. 

Working of an eCommerce Logistics 

One of the most pivotal factors and driving forces of an eCommerce business is on-time delivery and stands vital to understand the working of a logistics sector.  However, logistics pose a great challenge in a developing country like India with frequent hurdles of product returns, improper deliveries, misrouted items and much more.

One noticeable and poignant thing of the logistics industry is that consequences arising from an unmanaged logistics organization or a company disturb both the buyer and the eCommerce seller.

There have been multiple drawbacks of the logistics sector over a couple of years and they have brought down the entire momentum of growth for eCommerce. Even worse, those drawbacks have taken a toll on consumers’ faith in overall online business.

It is where the decision to implant technological advancements in logistics companies came into the picture to bring in the reduction of errors and offers to an improvised management system. The tracking system which includes looking into the movement of the respective shipment right from the time it has been dispatched till the time it has been received has become inevitable to implement for the consumers. 

Both the terms logistics and eCommerce goes along side by side in a symbiotic way and respect to a business environ it is absolutely pointless without the other. 

For India, logistics is seen to be an industry that serves as the backbone of the nation’s economy and is evolving at a rapid speed. With the eCommerce industry coming into the picture and going alongside the logistics sector, many people are served effectively and successfully thereby satisfying online shopping needs. Estimated to be exceeding over $6.7 trillion by 2020 and touching more high numbers, the future exponential growth of eCommerce and logistics is clearly visible. 

Current Impact of eCommerce on Logistics

Speaking in terms of the recent and modern Indian logistics industry, it includes both inbound and outbound segments with respect to service supply chains and manufacturing. Experts have forecasted that the logistics industry will have a good amount of potential growth with the percentage ranging between 10-15% annually. 

When one raises the question of what a logistics company does, two answers are most obvious that come up. The first one is about the product moving in the forward direction, leaving the rest in the backward direction. When the products move in a forward direction, the action is termed as freight forwarding and involves the shipping of a particular product from the sellers’ end to the customers.

The second one is known as a reverse movement and officially labeled as reverse logistics. This happens when a product does not reach the customer. In a sense, most often reverse logistics is considered to be a reverse logistics process that eradicates any kind of product damage thereby allowing it for reuse. 

To make sure that delivery happens properly, it is vital to define a specific shipping strategy.

Setting a shipping strategy for ecommerce

Set up of Shipping Rates and Methods

With a setting of an appropriate shipping rate, you will have the leverage to analyze the profit you are drawing from the business. With in-depth market research and understanding, you can check whether you would be willing to shift the entire shipping cost to the customer or ready to bear a certain amount of it.

You may also consider sending the delivery without the shipping costs being charged to them. Quite obviously customers are much more willing and inclined towards companies who do not apply or charge them any shipping cost for their respective order. 

Weighing the products

The calculation of product value is done by various shipping companies based on the weighing proportion of the product. This further aids them in identifying shipping, labor, and transportation costs and having a fair idea about providing an approx. cost to the consumers. 

Requirement Based Packaging

With packaging, quite a few numbers of choices become available and you have the liberty to select the type of packaging material in accordance with your product. This is essential so that the product reaches the customer in an undamaged manner and completes a satisfying shopping experience. Here, the calculation of the shipping cost becomes crucial again and therefore makes sure that it aligns with such other respective factors.

The Real Game of 2020

So far, we have been mostly talking about the overall impact of eCommerce on logistics but it must also have to-the-point relevance in respect to the current year we are in. Standing in the competitive year of 2020, the game is even bigger and tougher with each player chasing towards the goal of being number or one. With the growth of the eCommerce industry, each logistics brand is on its toes to claim their rewards. Analyzing the current situation, let’s delve deeper into the impact of eCommerce on logistics in the year 2020

Increase in the Same-Day-Delivery Consumers

As previously being discussed, when it comes to online shopping, customers are deeply and primarily concerned about the delivery time rather than the cost. With the competition getting stiffer, retailers dwelling in the same domain have brought in the concept of same-day-delivery commitment. Taking data from Business Insider research, the estimated valuation of the same-day-delivery market by the end of the previous year was between $3 and $4 billion. Such sales reflect the demand for same-day deliveries and clearly denote the choice of a huge section of audiences who are ready to pay additional or extra charges for the same.

A good chunk of the audience, let’s say, the millennials can involve and be participative in creating and boosting an eCommerce trend. With the digital world being more dominated by the millennial group of audiences, eCommerce shopping experiences for them have to be seamless and fast. Thus, even bigger giants have started working out on actionable strategies that would ease the occurrence of same-day deliveries while making the process to be cost-effective at the same time.

Adoption of Digital Technology and Automation 

With respect to verified sources on the analysis of artificial intelligence and its significance in the logistics sector, it seems to be pretty much conquering the entire of it. The little streaks of artificial intelligence in the eCommerce industry are seen via the performance of emails and making use of big data it collects the preferences of customers and gives them ideal product suggestions. Such a potential technology is further used in optimizing sales actives thereby configuring post-sales feedback loops.

Artificial intelligence and automation make a strong appearance in the exchanging process that takes place between multiple points of contact in a typical supply chain. Right from the stage of dispatch to the time the delivery happens, including the return processes too, tracking and recording of data take place at several intervals and automatically becomes a pivotal part of an eCommerce delivery chain. With automation and AI, these processes are even more accurate, faster, and effortless.

For eCommerce, the checkout system has to be easy and perfect too and with the adoption of securely saved data and pre-filled forms, the processes on which logistics work have become smoother. Artificial intelligence has also opened up new avenues for enhancing routing optimization that is based out of data such as delivery addresses and distances that needs to be covered by delivery drivers.

With technologies such as geofencing along with AI, deliveries and returns are made cost-effective and seamless by mobile logistics solutions for both retailers and customers.

Integration of Chatbots

Chatbots have become pretty famous and truly gets a firm position when we talk about the impact of eCommerce on logistics in the year 2020. They are appearing quite everywhere and enhancing the overall eCommerce experience. Having twice than human efficiency, bots are generally much more intelligent and good in handling conversations. eCommerce platforms are leveraging the data generated and collected by the chatbots and analyses customers ‘preferences. These studies reveal a better picture of how to serve the consumers diligently and let them enhance the logistics too.  

Augmented Reality

What had once been committed by Google Glass, may seem to be coming for real thereby fulfilling the needs and desires of the executives who represent the eCommerce industry. Augment reality or AR can be brought in to enhance customer shopping and browsing experience. There is a direct correlation between customers’ browsing experience and ordering and logistics; an advanced browsing experience influences logistics.  

Let’s take the example of online spectacles or glasses which helps customers to visually see how they would look in their respective chosen frames. Having such a ‘try and buy’ feature automatically reduces the possibility of returns and customers are clear about their choices already. 

The Final Thought

Thus, the mounting popularity of eCommerce is no more a fantasy game; people know it, companies are working hard to survive in the race and the economy is progressing as well. When things rolling at a high speed, the only concern remains the rate of survival. eCommerce industry will grow in leap and bounds and with heavy potential and demand in the coming future too, logistics have to be equally active and emergent about new ideas and strategies.  

The impact of eCommerce on logistics in the year 2020 huge and looks to be much more opportunistic than it seems. Having a symbiotic understanding ratio between both logistics and eCommerce suggests that, if one is growing, the prospering chances of the other one automatically increases. 

Looking for an e-commerce shipping solution? Get started with iThink Logistics