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E-Commerce

Global e-Commerce sales have increased sharply over the recent years, driven by a growing
online population and changes in consumer behaviour. Internet penetration with service
providers giving plans at lower costs, Smartphone usage, demographics, regulations and
rules, industrial real estate facilities and most importantly, logistics, are some of the key
factors that directly impact the growth of e-commerce. E-Commerce in Asia specifically is
increasing steadily, thanks to China and India expanding e-commerce facilities by the day.
With the growth in internet and information technology, especially their increased
availability and decreased cost, they have become ubiquitous and one can argue that in
todays age, essentially are nothing but commodity inputs. From a strategic standpoint, they
become invisible. They have become a strategic necessity but not a source of competitive
advantage. It is solely the logistics of delivery that prove to be the deciding factor in the
growth and success of a company in the e-commerce domain. When a companys supply
chain management functions well, consumers are sure to prefer that business over any
other.
To win the faith and favour of the customer, the entire distribution process including
procurement, storage, invoicing and delivery need to excel in the following factors:
1. Speed, so the delivery is on time, every time
2. Accuracy, so people get what they ordered for
3. Scalability, so growth is met competitively
4. Surge, the traffic Vs fulfilment graph.
To ensure that a company is ahead of its competitors in the above mentioned factors, it is
imperative that the company has to come up with new and innovative distribution practices
and implement them effectively. The need for such innovations in distribution has been
become much more important in the e-Commerce era and arena.

Change in Distribution and Logistics Strategies with the advent of e-Commerce:
With the advent of e-Commerce industry, the distribution concepts as well as practice have
been impacted. Information Systems for supply chain management which used to play the
integration role are now playing the lead and control role. Logistics system management has
been transferred from tangible assets inventory management to the intangible asset
information and knowledge management. The basic logistics system with the conventional
techniques are in this e-commerce age facing economic problems, pursuing the lowest total
cost and offering individuation services. The logistics system is being changed from supply
promotion to demand.
E-Commerce is a huge area of change with technology, demographics, supply chains and
property all playing a pivotal role. The growth of e-commerce is transforming the Logistics
landscape and this revolution has just begun. This is not a short-term phenomenon, but
rather a long-term structural change, enabled by technology, driven by the way customers
choose to live and shop. Logistics and Supply Chain Management are critical to deliver the
best consumer experience and getting this right is a tremendous source of brand value.
According to a study by Soosay and Hyland
[9]
, the drivers for innovation in Logistics
functions can be categorised as push and pull factors. The push factors are the drivers or
causes, initiating a realization or a response. These include factors such as Employee
orientation and competition. The pull factors are actually the desired end outputs that the
firm wishes to achieve out of innovative efforts. These include customer orientation,
shareholder orientation, financial reasons, quality, speed, efficiency and leading edge in
their respective industry.
The major challenges being faced by the Logistics Businesses in this e-Commerce age are
mainly because till present the Logistics Management in the field of direct delivery was very
low, so it is challenged due to the rapid development of electronic commerce. In developed
economies, e-Commerce represents the latest big driver of change in retail logistics and
physical distribution networks, which has evolved substantially over the past 40 years or so.
As e-commerce business grows further, the drive to deliver orders to customers quicker will
become an increasing competitive advantage. This has essentially led to the need for
retailers to take care of the logistics needs themselves rather than depend on third party
logistics service providers in many cases. Earlier, purchased items were generally distributed
through a postal, parcel or courier network, but e-Commerce logistics models have led to a
wave of new demand for the following types of logistics facilities: Mega e-fulfilment centres,
sortation centres, delivery centres. In this emerging model, e-fulfilment blends with urban
logistics, as these facilities will be generally based near urban areas where the online sales
densities are highest.
The evolution that retail logistics has undergone in the past 40 years or so is being depicted
in the following diagram:

Source: E-Commerce boom triggers transformation in retail logistics, JLL, Nov.
2013
Innovations in B2C and B2B:
Especially in B2C business, the logistics partners need to demonstrate agency mechanism
and innovation. Integration of information flow, business flow and current flow is an
effective integration, and they are essentially in the dissemination of information. And
logistics have the support of integrated information technology, able to more safely, timely
and accurately serve to deliver to the clients, the goods or services he/she needs at the
place and time of his/her choice.
The next evolution in channel management will be the move from multi-channel to
Omni-channel. In multi-channel, the different channels (store, web, mobile) were
independently managed, but in Omni-channel, the channels will be truly integrated to offer
customers a seamless experience however they choose to shop. This helps in satisfying the
golden rule of channel management i.e. Meet the customer where the customer wants to
do business . For Omni-channel, the integration of processes, information systems and
infrastructure to meet the customer demand from whatever location or position is of
utmost importance.
The main factors that are responsible for the growth of e-Commerce in B2B domain are:
Changing customer demands and expectations, corporate revenue and market share growth
initiatives, competitor activity and performance, multi-channel strategy to increase the
customer reach, etc. The growth of e-commerce in B2B domain implies new and innovative
distribution strategies in this domain too.
Hence, innovation in B2B business logistics is also of paramount importance. Building
enterprise e-commerce platform within the site helps in collection of information and
gradually achieves Electronic Data Interchange, paperless trade, online transactions and
electronic payment. The optimization of the network enterprise logistics will lead to lower
costs, higher control and integration.

Reverse Logistics:
In todays e-Commerce era, many retailers are taking increasing control over their supply
chains. This increased control means that the retailers also need to take care of another
aspect in their distribution strategies. E-Commerce logistics is also driving demand for
another new class of distribution property, i.e. returns. Due to loss, damage or incorrect
delivery, e-commerce players also need to establish a reverse logistics unit that helps with
product returns. A good returns process coupled with an efficient Customer service team
will go a long way into rebuilding the trust of the customer who feels denied with a wrongful
or damaged delivery.
The whole supply chain of returns was earlier highly decentralized in the sense that each
supply chain member was self-serving. But nowadays the development in reverse logistics
has led to a centralized supply chain, in which the objective is to maximize the whole system
business value using some supply chain management initiatives such as vendor-managed
inventory (VMI) and collaborative planning, forecasting and replenishment.
The returns process varies from company to company. There exists a range of ordered
sequencing that different companies adopt depending on which activities are engaged in by
the firm. Xiaoming Li and Festus Olorunniwo
[11]
, in their study have developed a generic
returns process which gives an overview of the returns process that takes place in most of
the companies.

Source: Xiaoming Li and Festus Olorunniwo, An exploration of reverse logistics
practices in three companies, 2008

Many companies in their interest of reducing costs implement a Reverse Logistics strategy
only to achieve a certain desired customer service level consistent with industry standards.
Companies need to make more commitment to Reverse Logistics and build a better control
system, particularly in measuring system performance. Companies can take care of the
reverse logistics aspect themselves ensuring better control over it, ensuring better customer
service. As an alternative, companies in RL can utilize the differentiation strategy by
promoting corporation citizenship, establishing brand image, building extensive logistics
dealer network, etc. Companies can then enjoy privileged customer loyalty that will yield
higher profit margins and provide extra entry barriers to their competitors.
We can safely state that e-Commerce has helped bring the customers and companies much
closer. This aspect of e-Commerce has led to its adaptation by many companies across the
world. Many companies have entered the field with their e-commerce ventures, but only a
few have been able to make a mark. While a burgeoning growth in internet and technology
gives everyone an equal playing field, it is solely the logistics of delivery that prove to be the
deciding factor in the growth, success, competence and dynamism of any e-commerce
venture. With a strong distribution network and an ever changing, customer-centric, highly
innovative distribution strategy, Amazon has been able to develop a strong foothold in the
e-Commerce industry.



References
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7. John M. Gallaugher, E-Commerce and the undulating distribution channel
8. Han Dongmei, The Logistic Strategy Based on E-commerce
9. Claudine A. Soosay and Paul W. Hyland, Driving Innovation in Logistics: Case Studies
in Distribution Centres
10. JLL, E-Commerce boom triggers transformation in retail logistics
11. Xiaoming Li and Festus Olorunniwo, An exploration of reverse logistics practices in
three companies
12. Dale S. Rogers and Ronald Tibben-Lembke, An examination of reverse logistics
practices
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