E-commerce logistics: How the key market trends and technology solutions reshape the logistics market

Dr. Eleni Zampou

Innovation Project Manager, Logistics and Supply-Chain ELTRUN: The eBusiness Research Center Athens University of Economics and Business Who we are

is the E-Business is Research Center of the Athens University of Economics and Business and belongs to the Department of Management Science and Technology. It was established in 1994. TT 5 40+ 100+ Research groups Members Research and industry projects

Rethinking urban Energy and Applying big data Cognitive logistics Ongoing transportation carbon efficiency solutions to operations through collaboration on through advanced in the Supply transform e- dynamic and ad-hoc online grocery tools and supply Chain commerce logistics collaborative logistics and chain collaboration networks related challenges Contents

1. Key aspects 2. Innovative 3. Partnerships 4. Key trends 5. The e- fuelling the technologies and acquisitions shaping the e- commerce growing transforming in the e- commerce logistics complexity of e- replenishment commerce logistics market ecosystem commerce and distribution logistics market logistics processes Key aspects fuelling the growing complexity of e- commerce logistics

New set of Growth of e- Growing consumer commerce competition expectations

More fulfilment Economics are and delivery the challenge options to solve The e-commerce growth was doubled in the Post-Covid era New market growth opportunities in specific product categories New set of consumer expectations turns logistics from cost source to a growth opportunity

87% stated that they’d be highly more likely to shop again with an online merchant following a positive delivery experience.

61% of e-commerce shoppers said they decided to purchase from one retailer over another because they provided more delivery choices.

55% of consumers said that they will switch to a competitor if that competitor offers a faster service.

46% of shoppers abandoned their shopping cart because the delivery time was too long or not stated. Consumers who get groceries delivered at least weekly are more likely to prefer 49% of customers stated that, clear communication delivery subscription plans, to buy regarding delivery time is the most important element of online and pick up in store or collect the delivery. deliveries from parcel lockers. 73% of consumers said that receiving the delivery in a convenient time slot is more important than receiving it quickly. Same day delivery is the new the norm intensifying competition Key players employ varying fulfilment and delivery options Only 10% of international retailers make a profit from the online channel

Retailers are absorbing part of the cost of last-mile delivery

Absorbing a part of the last-mile delivery cost can potentially hurt retailers’ profitability by 26% Contents

1. Key aspects 2. Innovative 3. Partnerships 4. Key trends 5. The e- fuelling the technologies and acquisitions shaping the e- commerce growing transforming in the e- commerce logistics complexity of e- replenishment commerce logistics market ecosystem commerce and distribution logistics market logistics processes Innovative technologies cover the three key areas of e- commerce logistics operations

Logistics and delivery Planning, forecasting 01 03 and inventory management Sample text

02

Warehouse and in-store backrooms automation Many of these solutions have already been implemented…

In - car delivery

▪ GM and Volvo, and Honda offered delivery to a customer’s car when it is parked at home or office ▪ Provided by Amazon and Migros

▪ Ocado built automated order ▪ Waitrose is the first retailer in Britain fulfilment centres for Kroger in the US, to offer this service Morrisons in the UK, Casino in , ▪ The Dutch supermarket chain, Sobeys in , and the ICA Albert Heijn, a subsidiary of Ahold Group in Delhaize, is also experimenting with ▪ The Alibaba store, “Hema,” is this service designed as both a store and delivery ▪ Amazon offers the Amazon Hub center with overhead conveyor belts. Apartment Locker Warehouses automation In - home delivery …in corporate and productive environment

Autonomous vehicles

▪ Ford, Walmart, and delivery service are collaborating to design a service for delivering groceries and other goods to Walmart customers using autonomous vehicles.

▪ DB Schenker has tested long cargo ▪ UPS has ordered 10,000 Generation bikes that can carry two containers of 2 Electric Vehicles packages ▪ Amazon has 100,000 custom ▪ UPS recently piloted e-bike delivery electric delivery vans on order after deploying it in European cities. along with another 1,800 electric ▪ Amazon and DHL are also piloting e- vans bike delivery in New York. ▪ Picnic, a Dutch online supermarket, ▪ Velove, a Swedish company, offers an delivers orders in electric vans electric cargo bike for faster deliveries Cargo bikes Electric vehicles … while others have been in trial phase

Sleek electric cargo bikes

▪ A new delivery vehicle from a German startup called Ono looks like a tiny truck. But it’s actually an electric bike, narrow enough to easily move through traffic and even fit in a bike lane when necessary.

• 7-Eleven was the first to successfully ▪ Roxo lean into FedEx Freight Direct complete a Federal Aviation Administration approved drone delivery in July 2015 • Since then, several retailers – including Amazon – have piloted these.

Drones Robots … covering, however, a wide range of processes

Inventory management and placement

▪ Zara uses Radio Frequency Identification (RFID) to track garments and reduce out of stocks. ▪ Walmart moved back room inventory onto the top shelves on the shop floors to improve real time visibility and reduce ‘ghost inventory.

▪ Amazon and P&G joined forces to ▪ Amazon has applied A.I to inventory sell products such as diapers directly management. from P&G’s warehouses, ▪ Metro Mymarket has applied AI to ▪ Zalando and Adidas - one of stores replenishment. adidas’ distribution centers was linked up to Zalando’s inventory system. ▪ YOOX NET-A-PORTER and Valentino Connected inventory AI-enabled inventory and forecasting Contents

1. Key aspects 2. Innovative 3. Partnerships 4. Key trends 5. The e- fuelling the technologies and acquisitions shaping the e- commerce growing transforming in the e- commerce logistics complexity of e- replenishment commerce logistics market ecosystem commerce and distribution logistics market logistics processes 159 partnerships and acquisitions by key market players have been recorded in the period 2018-2020

#28 #93 e.g. Kroger with Mirakl, e.g. Carrefour and , with Costco partnerships with digital intermediary platforms, such as Instacart, , Postmates or Eats.

#38 2. CAPABILITY e.g. Kroger and Microsoft, Ocado with retailers including Partnerships for automating Kroger, Casino, Coles, Sobeys and warehouses or jointly develop solutions in areas such as AI, Morrisons cloud computing or voice Partnerships and acquisitions concern different strategic goals and capabilities

Launching marketplaces Entrance to new markets Offering new services Promoting innovation

• Kroger with Mirakl • Farfetch, Alibaba and • UPS with Stamps to offer • DB Schenker with start-up • Carrefour France - with Richemont in global luxury discounted shipping rates accelerator Plug and Play Mirakl/ 52% SMEs industry • UPS with ShopRunner to offer • Ahold Delhaize partnering to

Strategic • Instacart with Costco in free two-day shipping and launch Artificial Intelligence prescription delivery returns for Retail Lab • Alibaba with hypermarket • DB Schenker with Magento chain, Sun Art Retail Group • FedEx and BigCommerce to Ltd SMEs • Kühne + Nagel acquired Indonesian Wira Logistics

Augmented Voice – based In-vehicle Shipment Warehouse Digital Blockchain Shelf cameras Robotics reality shopping applications visibility automation strategy

• Flipkart Walmart Walmart Carrefour Audi and Kuehne + Kroger Ocado 7-Eleven acquired and Canada and Alibaba Nagel use acquired has Scapic VeChain with Google and Ocado Kindred entered • Alibaba in China Focal Zebraxx technolo Systems strategic acquired Systems gy and partnershi Capability Infinity AR Haddingto ps with n Adobe Dynamics. and Microsoft Microsoft and FedEx Distribution … as well as distribution capabilities and alternatives Launching or expanding home home expanding or Launching • • • • • • • • • • SEKO Logistics and DB Schenker’s with ShopRunner eCommerce by buying FedEx makes major foray into delivery to London Aldi UK in collaboration with groceries) Ireland. Lidl with and Google, , Instacart Postmates, 7 Service based in New York City. FreshDirect Ahold customers Morrisons with Amazonand And Rongai Towns, ) Glovo within 30 mins. France and Uber Eats and Carrefour - Eleven Eleven with delivery platforms Delhaize Delhaize acquired with Carrefour in Ngong Buymie delivery - 30 mins grocery , a Grocery Delivery DoorDash (ondemand Bringg uShip – and delivery delivery in in . Expanding the click collect click the and Expanding • • • • • • partnership with BP. Ahold this year. installed at Lidl stores nationwide that 500 DHL DHL Group and Lidl announced with Lidl InPost SisalPay the network of with bookstore chain Amazon'snew Counter service Amazonwith Next stores Click & Collect AmazonAustralia with Myer on points networkpoints (post lockers) partners Delhaize Delhaize would expand its stores. Packstations Fermopoint Giunti will be will and and Autonomous • • • vehicles TuSimple platform trucking UPS with Motors) General of (affiliate Cruise Inc. with Walmart Zoox startup driving self acquired Amazon - Crowdsource d services services d Joyrun Walmart - vehicles its 10,000 of tobuy ARRIVAL UPS with Vehicles Vehicles Electric electric • Drones gen, urceBer Ameriso or distribut ceutical pharma le wholesa with toUPS Health CVS with Forward Flight UPS Houston delivery in us grocery autonomo launced Nuro Kroger and Delivery Delivery Robots Contents

1. Key aspects 2. Innovative 3. Partnerships 4. Key trends 5. The e- fuelling the technologies and acquisitions shaping the e- commerce growing transforming in the e- commerce logistics complexity of e- replenishment commerce logistics market ecosystem commerce and distribution logistics market logistics processes Seven key trends shape the e-commerce logistics market

Revisiting the supply chain Investments in new e- design commerce fulfilment and last mile logistics start-ups Growth of parcel shop and 04 locker networks

03 Specialized e-commerce 05 logistics companies are emerging Direct customer opportunities for 02 consumer product 06 brands

Partnerships and acquisitions Returns are the new 07 01 normal Market Trends Specialized last mile and e-commerce logistics companies are emerging

▪ Online platform for food 02 ordering and delivery ▪ On-demand delivery services UNICORNS ▪ E-Commerce logistics company SEMICORNS ▪ Self-driving vehicles, drones, robots ▪ Tech-enabled fulfilment services to e-commerce businesses ▪ AI-based fleet management & vehicle tracking systems, AI-based delivery management software MINICORNS More than $ 12 billion have been invested in start-up logistics companies since 2015 03 ▪ Around USD 28 billion has been invested, almost all New Data, HiveBox, Nuro, Delhivery, Ninja of which was raised Van, Instacart, in 2015 or later Xpressbees ▪ Most funding goes to startups working on last-mile and Best freight platforms i.e. Shippo, ShipBob Instacart, Manbang, and Flexport

Note: ▪ New last-mile delivery models: Offer innovative last-mile delivery services to retailers and individuals by using crowdsourced delivery, drones, AVs, etc ▪ New entrants in the parcel business: Act as a traditional parcel business: include pickup, sorting, and delivery ▪ B2B e-commerce specialists: Provide a specific value-chain-focused solution to online retailers (e.g., return logistics, e-fulfillment, conversion optimization) Revisiting the supply chain design to include stores and micro-fulfilment centres 04

Retail stores becomes a Adding micro-fulfilment strategic key asset centers (Mini-CFCs) can make last-mile delivery quicker and more cost- effective solution

▪ Using existing stores rather than new warehouses— ▪ Several leading grocers including Walmart, Ahold could be the entry gate to same-day delivery for Delhaize, Amazon, Albertsons, Nordstrom and aspiring retailers. Woolworths, Carrefour have been partnering with ▪ The Alibaba store, “Hema,” is designed as both a technology start-ups (e.g. Alert Innovation, Takeoff store and delivery center and consumers within Technologies, Food-X ) to explore mini-CFCs. three kilometers receive grocery orders in 30 ▪ Kroger revamps distribution plan to add Mini-CFCs minutes. and Ocado is also trialling its Ocado Zoom service in London using mini-CFCs. Fast growth of parcel shop and locker networks

05 ▪ Since 2018 the total global number of ▪ The key success factors of an locations has increased by 36% independent are: ▪ More than 1.2m parcel shop and locker – open / agnostic network, many locations, locations worldwide (over 890,000 parcel long hours, awareness shops and more than 350,000 locker ▪ 48 leading networks including locations) – Hive Box with 150,000 lockers ▪ Two business models differ between – DHL Pakstation with 3,500 locations. operators: – Amazon’s locker network locations in the US and the UK have increased by 50%. – Most (but not all) carrier-owned networks – Finland’s Posti recently will significantly expand its handle only their own volumes parcel locker network so that, by 2022, there will be – Most independent networks are open to a 4,000 Posti parcel lockers in Finland, meaning up to range of carriers. In some cases they act as 85% of Finns will have a Posti parcel locker less than first tier supplier, working directly with one kilometer from their home. retailers, while in other cases they act as a – Other major operators are include Best, UPS Access subcontractor to their carrier partners Point, InPost, FedEx, Sposter/China Post, Hermes, DPD (La Poste) and GLS (Royal Mail). ▪ 13 locker manufacturers including KEBA, TZ and Zhilai Direct customer opportunities for consumer product brands 06 ▪ Product subscriptions models is the way forward. ✓ 46% of the consumers want to automate repeated purchases through product subscriptions ✓ 96% of consumer product firms seeing subscription models as a means to provide more convenience and value to customers ▪ Brand loyalty programs are a big attraction. ✓ with 59% of consumers selecting this as the reason they buy from brands ▪ Many are already seeing the fruits of their efforts. ✓ 5% of Unilever’s North America sales are online, with a growth rate of 50% and P&G and Shopee drove record sales on Show Me My Home initiative ▪ Shared warehouses and logistics can be used for last-mile delivery ✓ 97% are considering joining forces with other consumer product firms Returns are the new normal reaching up to 30%

07 That sweater you don’t like is a trillion-dollar problem for retailers. Contents

1. Key aspects 2. Innovative 3. Partnerships 4. Key trends 5. The e- fuelling the technologies and acquisitions shaping the e- commerce growing transforming in the e- commerce logistics complexity of e- replenishment commerce logistics market ecosystem commerce and distribution logistics market logistics processes The e-commerce logistics market includes "old" and "new" players

Logistics /3PLs /Parcel Retailers and Marketplaces Specialized e-commerce fulfilment companies delivery companies / Walmart, Alibaba, Byrd, Rakuten Super Logistics, ShipBob, Couriers Carrefour, ShipMonk, Red Stag Fulfillment, Fulfillify, DHL, Amazon, Kroger eFulfillment Service, FedEx fulfilment, Fulfillment United Parcel Service, JD, Lidl, 7-Eleven, by Amazon, Deliverr FedEx Corporation, Kaufland, Costco, Maersk Logistics, DB Asda, Ocado Brands with B2C Parcel shop / locker Schenker, channels networks Kuehne+Nagel Inc., On-demand logistics and Unilever, Miele, Lego, Postis , Keba , Collect+ NYK logistics., Union delivery services providers P&G, J&J delivery, InPost, Doodle Pacific Corporation, Glovo, parcel2go, Technology providers for last mile delivery and and BNSF Railway Postmates, DoorDash warehouse automation Company, Uber Eats, Grubhub, Starship Technologies, Nuro, Routific, Loginext, ARAMEX, XPO Instacart, De liveroo, Ocado, TeleRetail, Parcelly, Onerail, Shippo , logistics , , Delhivery ShipHero, Bringg Thank you!

Dr. Εleni Ζampou [email protected] ELTRUN, The E-Business Center Dpt. of Management Science and Technology Athens University of Economics and Business Tel. : +30 210 8203663 www.aueb.gr | www.eltrun.gr