We cannot ignore it anymore: online orders. Everybody shops online these days, from clothing and vacations to electronics. The E-commerce is booming in The Netherlands. Some say: we have gone from bricks to clicks. From buying in stores (bricks) to the digital sources (clicks). Is this premise correct and what means E-commerce for the logistics of (web)shops.
How big is E-commerce?
Webshops generated 10,6 billion euro sales in 2013. An increase of no less than 8,5% compared to the year before. Last year, almost 11 million people in The Netherlands (!) have ordered something on the web, a increase of 2%. E-commerce is crucial in our economy. The number of orders increased as well; with almost 100 million orders the growth was 11%. This means that the online orders are getting smaller. In the different segments, especially "fashion" is growing enormous. A growth of 16% in 2013, lead to a total sales of 850 million in this particular industry.
The logistical challenges
E-commerce brings big logistical challenges with it. The two biggest webshops in the Netherlands, Coolblue and Bol.com, are way ahead the competition on logistical services. On Bol.com, if you order before 23:00, you have your order delivered the next day, on Coolblue this promise is even given when ordering before 23:59. These are gigantic companies of course, but also smaller companies are promising a next day delivery as well. The customer in The Netherlands is experiencing this more and more as a common thing. This has influence on the logistical processes. There has to be a lot of automation to offer these guarantees. Every logistical process asks for a perfect execution. Especially now, during the busy month of December, a lot of webshops are being tested if they are able to fulfill the promises given to the customer.
Besides the delivery time, placing, storage and the removal must be controlled well to manage the distribution process as effective as possible. Products cannot be stored in the distribution centre for a long time to reduce the storage costs. At all times there has to be insight in the location of the products, to execute the order pick process properly. And there are many more logistical challenges, which have to be fulfilled as good as possible.
Bricks and clicks
Does E-commerce mean the end of physical stores? No. At first, consumer will always keep shopping in shopping malls, because of the customer experience of shopping.
But furthermore, we also see a tendency towards physical stores. The usage of multichannel is increasing: a combination between bricks and clicks. While Bol.com has pickup points in the Dutch supermarket Albert Heijn, we see that more and more fashion stores are handling online orders from the stores. Using pickup points, but also sending online orders from the store to the consumer. This creates a win-win situation for the organization. The webshop can reduce its storage, while the store has the profit of an extra sale. With accurate shipping, the promise of a next day delivery can still be kept. Multichannel means complicated logistical processes, which means sales from multiple sources. At the same time the total stock should be monitored constantly, to not let down any customers. The margin of the sales has to be controlled as well. The return merchandise authorization, usually one of the least efficient logistical processes, has to be executed fast and inexpensive. When using a Multichannel strategy, a proper software solution is essential, because every company has different desires to fulfill the different channels.