eCommerce Supply Chain Challenges in 2018

Introduction

Introduction

Hello, my name is John Stoltz, director of conferences and events for Apex. I will be your host for today's webinar, "eCommerce Supply Chain Challenges in 2018." Before we begin, I'd like to run through a few logistical details with you. We have time planned for a question-and-answer session at the end of the presentation. If you look at the right toolbar on your screen, you'll see a question box. At any time during the presentation, simply type your question in the designated box and select "send question" to send this on for review.

For today's webinar, I'm joined by Dmitri Antonov. Dmitri is the vice president of domestic product management at DHL eCommerce Americas. He and his team focus on developing and enhancing the US domestic product portfolio to provide the best match for the needs of the e-commerce sector. Prior to joining DHL eCommerce, Dmitri was an associate partner with DHL Consulting, leading the global retail sector practice and specifically focusing on omni-channel model development. Dimitri's presentation content today was also featured at the Apex 2017 conference last year in San Antonio.

About DHL eCommerce

DHL eCommerce is a branch of DHL that specializes in the e-commerce sector’s needs in terms of delivery within the US. We operate in three segments:

1. Domestic Delivery: The b2c residential delivery of packages.
2. Cross-Border Delivery: Export from the US globally.
3. Fulfillment: Network of warehouses for single order fulfillment.

In the last year, we processed almost half a billion packages through our network of 19 distribution centers in the US, employing more than 4,000 people.

The Importance of eCommerce

The opportunity within the e-commerce sector is massive. It's estimated to reach $ 3.4 trillion by 2020. This is equivalent to the GDP of Germany, the world's fourth-largest economy. Despite skepticism around e-commerce as an opportunity due to its current size and growth curve projection, the data tells a different story. From 2010 to 2018, the growth rate has consistently exceeded forecasts, driven by several key factors.

Consumer Needs

The e-commerce journey began with price, but a shift has led to a focus on convenience and technology. Initiatives like Tesco's virtual grocery stores in South Korea and Nike's personalized shopping experiences highlight how convenience and personalized offerings drive consumer engagement. Innovations like AI, augmented reality, and fast, convenient delivery are transforming consumer expectations, making supply chain efficiency crucial.

Business Implications

The rise of e-commerce impacts businesses significantly. It facilitates cross-border trade, introduces disruptive market entrants, supports mass customization, and poses profit challenges despite increased sales.

1. Cross-Border eCommerce: Enables global sales, intensifying local competition.
2. Disruptive Market Entrants: Companies like Dollar Shave Club disrupt established markets with direct-to-consumer models.
3. Mass Customization: Technologies allow personalized products, challenging the one-size-fits-all model and benefiting niche markets.
4. Profit Challenges: Retailers face margin dilutions, necessitating supply chain optimization.

eCommerce Supply Chains

Supply chains must evolve to meet new e-commerce demands.

1. Decentralization: Companies are shifting to decentralized distribution models to meet faster delivery expectations while managing costs.
2. Multi-Node Fulfillment: Robust systems are needed for real-time inventory and order management.
3. Last Mile Innovation: Emerging technologies like crowd-sourced delivery, drones, and delivery robots address last-mile challenges.

Looking Ahead

The future of e-commerce is expected to continue its rapid growth, fueled by technological advancements and demographic shifts. Companies must adapt, leveraging partners and embracing new technologies to stay competitive. Key strategies include revisiting sunk costs, adopting a Lean Startup mindset, sharing risks with partners, and carefully planning future-proof strategies.

Keyword

• eCommerce
• Supply Chain
• DHL
• Cross-Border Delivery
• Fulfillment
• Decentralization
• Mass Customization
• Technological Innovation
• Last Mile Delivery
• Consumer Needs
• Profitability Challenges
• Lean Startup Mindset

FAQ

1. What are the main segments DHL eCommerce operates in?

   • DHL eCommerce operates in three main segments: domestic delivery, cross-border delivery, and fulfillment services.

2. Why is decentralization important in eCommerce supply chains?

   • Decentralization helps improve delivery speeds and reduce last-mile delivery costs, enabling effective supply chain management in high-demand areas.

3. What disruptive trends are impacting the transportation arena in eCommerce?

   • Significant trends include the urbanization of last mile delivery, utilization of RFID technology, and the development of unmanned delivery systems like drones and delivery robots.

4. How are businesses dealing with profit challenges despite growing eCommerce sales?

   • Businesses optimize their supply chains, decentralize their fulfillment networks, and leverage technological advancements to manage costs and improve efficiency.

5. What new technologies are being tested for last-mile delivery?

   • Technologies include crowd-sourced delivery services, parcel lockers, drone deliveries, and delivery robots, all aimed at improving the last-mile delivery process.

6. How does eCommerce affect consumer needs?

   • eCommerce affects consumer needs by prioritizing speed, free delivery, convenience, and transparency, all contributing to enhancing the overall consumer shopping experience.

7. What strategy should businesses adapt to stay competitive in eCommerce?

   • Businesses should focus on revisiting sunk costs, adopting a Lean Startup mindset, engaging in shared risk with partners, and staying updated with technological advancements.