Logistics: A Game-changer For The Evolving Global E-commerce Market

In 2021, the global e-commerce market is estimated to increase to US$4.5 trillion . Karen Reddington, president of FedEx Express Asia Pacific, shares her vision on how logistics advance the E-commerce market.

The global e-commerce market is exploding and is estimated to increase to $4.5 trillion in 2021[1]. There are some powerful businesses that barely existed a decade ago that act as testaments to the extraordinary opportunities ahead of us.

 

Mobile has become the main touch point with customers[2] and they expect the kind of customer experience and convenience that we take for granted today, whether we’re ordering a ride or paying through WeChat. Whether it’s secure payment, returns, last mile, cross-border – or a multitude of others such as fulfilment, tracking, transport, even shopping cart management[3], each element is part of a highly complex ecosystem supported by logistics which is the engine of global e-commerce.

While we’re not going to be able to predict exactly how e-commerce is going to evolve[4], there are a few areas that we believe are important.

  1. Investment in infrastructure

A virtual buying and selling world must be rooted in the physical, and there is not enough focus on what happens from the mobile phone onward[5]. This is equally important for retailers – there is an incredible opportunity for retailers to leverage their infrastructure in combination with the kind of services FedEx provides[6].

  1. Distinguishing between local and global needs

What China needs and wants is very different from Singapore or Japan. For instance, in arguably the world’s leading market – China, we are using WeChat to enable mobile payments. We also need to separate out what are essentially local delivery challenges – what we call “last mile” – as opposed to what’s needed globally.

  1. Increasing efficiency and convenience in delivery

Residential e-commerce is the fastest growing market and requires innovation to make delivery to consumers more efficient[7]. As more and more consumers shop online, we have to expand alternative delivery options from having a package shipped directly to their doorstep to self-collection solutions like 7/11 and locker boxes, to more flexible and convenient customized home deliveries[8].

We also need to gear more services to small and medium-sized businesses, who need access to a logistics network that helps them achieve profitable and scalable global growth, to ship seamlessly to international locations[9].

Another area is returns, which may not sound glamorous but is an increasingly important part of the picture for global e-commerce. E-commerce has a much higher rate of returns than brick and mortar purchases – it ranges from 15% to as high as 30%[10], and we must increase confidence if cross-border commerce is to grow.

With 90% of logistics happening behind the mobile phone[11], there are no apps or innovations that can replace the aircraft, trucks, or other infrastructure that enables the physical transportation and delivery of goods around the world every day. We must keep evolving to meet the changing needs that digital and e-commerce is bringing. FedEx believes the future for e-commerce must be viewed within a wider framework as a complex ecosystem.

 

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[1] Air Cargo Management Group E-Commerce Revolution Report, Oct 2017, https://www.ajot.com/news/global-e-commerce-expected-to-double-in-next-five-years

[2] Mirrored messaging, Raj Subramanian, http://csr.fedex.com/stories/the-global-citizen.php

[3] FedEx presentation on e-commerce ecosystem framework as shared by J Khong from KMR

[4] Mirrored messaging, Frederick W Smith, FedEx Earnings Call Transcript, Q1 2018, https://seekingalpha.com/article/4108165-fedexs-fdx-ceo-fred-smith-q1-2018-results-earnings-call-transcript

[5] Some mirrored messaging, FedEx-approved messaging, FedEx-Economist interview briefing & messages, Sept 2017

[6] Some mirrored messaging, FedEx investors transcript 2017

[7] Mirrored messaging, FWS, FedEx Investors transcript, 2018 Q1 Sept 2017

[8] Mirrored messaging, FedEx-approved messaging, FedEx-Economist interview briefing & messages, Sept 2017

[9] Mirrored messaging, FedEx-approved messaging, FedEx-Economist interview briefing & messages, Sept 2017

[10] Mirrored messaging, FedEx-approved messaging, FedEx-Economist interview briefing & messages, Sept 2017

[11] FedEx-approved messaging, FedEx-Economist interview briefing & messages, Sept 2017

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