How logistics adapts to the changing business landscape

The origin of e-commerce industry can be traced back to orders being placed from television shows and a landline phone to sell just about everything. Internet has transformed modern day e-commerce in the way, we acquire and interact for goods and services. We have become accustomed to purchasing anything we want online, including industrial, aerospace, automotive and healthcare shipping solutions.

FedEx was firmly established when the online shopping explosion transpired, leaving the business well placed to meet shipping demands of a new generation of retail businesses and online shoppers.

Growth and transformation in e-commerce
South Africa is the 42nd largest market for e-commerce with a predicted revenue of US$6,322.1 million by 2023. Revenue is expected to show a compound annual growth rate (CAGR 2023-2027) of 11.9%, resulting in a projected market volume of US$9,910.0 million by 2027. Even traditionally hesitant online shoppers have adopted e-commerce. Covid-19 also accelerated the increase in no-contact purchasing, and online shopping sites have become easier to navigate.

With low barriers to entry, e-commerce and the internet mean businesses anywhere in the world are now able to trade across borders. Even companies with small production numbers can create a presence online.

With an increase of social media channels and platforms, that can help businesses directly target their desired audience, small and medium enterprises (SMEs) are able to compete with retail giants on a global stage. Outside the traditional retail model, costs for e-commerce traders can be kept down and lower prices can be passed on to consumers.

As the world’s largest express transportation company, FedEx has evolved with the logistics sector, giving the business a unique perspective as one of the main facilitators of the global e-commerce expansion.

Challenges to logistics adapting to the business landscape
South Africa is only the 42nd largest online shopping market, despite being ranked 33rd by per capita GDP. This difference can be attributed to several factors, inadequate road infrastructure and sometimes insufficient address data. Logistics companies that remain technologically innovative are looking to overcome such challenges by utilizing GPS systems, and robust delivery fleets.

Beyond this, there is also unequal access to reliable internet connectivity, limited digital literacy, and low technology adoption rates in certain communities, which hinder the growth of e-commerce and logistics.

There is a growing environmental consciousness, where consumers are increasingly inclined towards businesses that prioritise sustainability. FedEx is harnessing the unmatched power of our data insights to increase sustainability throughout the value chain. FedEx Dataworks is focused on optimising our network and end to end operations to improve efficiency through intelligent network planning, route optimisation, load consolidation and providing greater visibility by leveraging artificial intelligence and predictive tools to proactively monitor shipments. This enables us to minimise disruptions, improve customer satisfaction, and mitigate financial risks by enhancing supply chain resilience.

“As consumer expectations continue to evolve, SMEs reliant on logistics service providers must be able to offer cost-effective services that combine convenience with speed.”

Natasha Parmanand, Managing Director of FedEx Express Sub-Saharan Africa Operations

Recently, we’ve launched FedEx Sustainability Insights, a revolutionary tool that enables customers to access near real-time emissions data. The tool is designed to provide new levels of transparency to our customers and create a feedback loop for making our own operations more efficient. Additionally, we have incorporated Electric Vehicles into the Gauteng Fleet, to meet the demand of fast and efficient service while prioritising planet earth.

Shipments are also expected to be quick and efficient. This makes it even more important for e-commerce businesses to be supported by a reliable logistics company that can expertly manage the delivery of the product and do it in a sustainable manner.

Opportunities
Logistics is an enabler of e-commerce. Data by logistics consulting firm Knight Frank shows that the cost of transportation represents 50% to 75% of the retail price of goods. With an estimated 5 billion internet users, and a 2022 e-commerce sales sector valued at $5.7 trillion, this represents a massive proportion of the total value of the e-commerce industry.

Logistics and e-commerce have developed a symbiotic relationship and created excellent user experiences – from the click of a mouse at online checkouts, to the fulfillment of the order at the customer’s chosen delivery location.

The evolution of e-commerce gives small and medium-sized enterprises (SMEs) a unique opportunity not just to boost sales, but also to position themselves for long-term success — although it is important to realize that competition is stiff. As consumer expectations continue to evolve, SMEs reliant on logistics service providers must be able to offer cost-effective services that combine convenience with speed. To this end, many players are employing innovative technology to deliver more tailored shopping and shipping experiences that increase the chances of a sale.

One potential pitfall is the significant gap between SMEs’ assessment of how they’re meeting customer expectations and how consumers view the experience. Our analysis shows that the biggest expectation gaps occur around having an efficient returns service and access to customer support.

The delivery service can have a critical impact on a small business’s reputation. For this reason, it’s increasingly important for businesses to work with a logistics partner that can take their business to the next level.

As the logistics landscape continues to grow, with increasing trust in the online retail sector, businesses of every size need to consider how an equitable partnership, with an expert logistics company.

Natasha Parmanand is the Managing Director of FedEx Express Sub-Saharan Africa Operations. Parmanand has been with FedEx for nine years and is based in Johannesburg, South Africa.