Development of an Alternative Transportation Service for E-Commerce Deliveries
Total Page:16
File Type:pdf, Size:1020Kb
Development of an alternative transportation service for e-commerce deliveries João Peliteiro Coutinho Master’s Dissertation Supervisor: Prof. Eduardo Gil da Costa Master in Industrial Engineering and Management 2018-07-02 Development of an alternative transportation service for e-commerce deliveries “Life is not accumulation, it is about contribution.” Stephen Covey ii Development of an alternative transportation service for e-commerce deliveries Abstract This report is part of a Master's thesis of the Faculty of Engineering of the University of Porto, held in the e-commerce department of Rangel & Distribuição Logística. The challenge posed is related to the last mile delivery - the last stage in the transport of an order until it arrives at the final destination - of Business to Consumer (B2C) orders from e-commerce. The company intends to offer a B2C delivery service that increases customer satisfaction and differentiates from the competition. Therefore, a theoretical study was made regarding the themes of e-commerce and last mile delivery that indicate its main trends these days, as well as a benchmarking of the companies that work in these segments. The study allowed concluding that a service with enormous potential for Rangel in this segment would be the deliveries made on the same day of purchase, the "Same Day" service. Two days were spent with the driver of the city of Porto to understand closely the inefficiencies of the B2C network, which is currently integrated into the Business-to-Business (B2B) network. Then, in order to perceive the relevance of the Same Day service in the Portuguese market, three online stores and two courier companies were interviewed, and a survey was also launched at FEUP, which obtained 216 responses. With this, what was suggested by the previous study was corroborated. Thus, in addition to developing the Canvas business model of the new service and designing its operational model, SWOT and Porter's 5 forces analysis were done. A financial model that demonstrates the feasibility of the solution by calculating the Net Present Value (NPV) over a period of three years, including an estimation of the market size for this service in Portugal, was followed. The results suggest that Rangel should invests in this service since the VAL calculated was 374.027 € and the estimated Portuguese market was over 42 million euros per year. iii Development of an alternative transportation service for e-commerce deliveries Desenvolvimento de um serviço de transporte alternativo para entregas de e-commerce Resumo Este relatório surge no âmbito de uma tese de mestrado da Faculdade de Engenharia da Universidade do Porto, realizada no departamento de E-commerce da empresa Rangel & Distribuição Logística. O desafio proposto está relacionado com o last-mile delivery - a última etapa no transporte de uma encomenda até que esta chegue ao destino final - de encomendas do tipo Business to Consumer (B2C), provenientes do e-commerce. A empresa pretende oferecer um serviço de entregas B2C que aumente a satisfação dos clientes e que se diferencie da concorrência. Assim sendo, foi feito um estudo teórico dos temas do e- commerce e do last-mile delivery que indicam as suas principais tendências nos dias de hoje, bem como um benchmarking das empresas que atuam nesses segmentos. O estudo permitiu concluir que um serviço com enorme potencial para a Rangel neste ramo seria o das entregas feitas no mesmo dia da compra, o serviço “Same Day”. Foram passados dois dias com o motorista da rota da cidade do Porto para entender de perto as ineficiências da rede B2C, que atualmente é integrada na rede Business to Business (B2B). De seguida, de forma a perceber a pertinência do serviço Same Day no mercado português foram entrevistadas três lojas online, e duas empresas de estafetagem, e foi também lançado um questionário na FEUP que obteve 216 respostas. Com isto corroborou-se aquilo que o estudo anterior tinha sugerido. Assim, para além de desenvolvido o modelo de negócios Canvas do novo serviço e desenhado o modelo operacional do mesmo, foram feitas as análises SWOT e 5 forças de Porter, seguidas de um modelo financeiro que demonstra a viabilidade da solução através do cálculo do Valor Absoluto Líquido (VAL) num período de três anos, incluindo uma estimativa do tamanho do mercado para este serviço, em Portugal. Os resultados obtidos sugerem que a Rangel invista neste serviço, uma vez que o valor do VAL calculado foi de 374.027€ e o mercado português estimado foi superior a 42 milhões de euros anuais. iv Development of an alternative transportation service for e-commerce deliveries Acknowledgments This thesis closes an important chapter of my life, for which I could not feel more grateful, since it gave me memorable experiences and made me a better person academically, but above all personally. For that, I would like to begin by thanking FEUP for being my second home for the last five years. I want to thank Rangel by making this experience possible, to all the company’s staff who have been in some way connected with my research, providing essential information for its development, especially to my advisor Ricardo Borges. I’d like to thank the other three interns of Rangel that spent the past five months by my side as well. I feel lucky to have had Professor Eduardo Gil Costa as my FEUP supervisor, for his constant willingness to help whenever necessary, as well as for his excellent work in the revision of this document, so I want to also thank him for that. I would also like to thank Professor Maria Dulce Lopes for the inputs offered in the financial analysis of this work, and to Professor Ana Camanho, who although did not make a direct contribution to it, was the Professor with whom I created a stronger relationship throughout the course and this certainly influenced me positively. Some of the strangers in the early months of college are friends for life today, and that was the best gift university gave me, real friends, and I must thank them. If we think about it, this is probably the last step of our lives to make such close friends. We may befriend somebody on a trip, or a job, or another random and unexpected episode, but that would hardly beat the daily living with our university friends. That makes me smile because I'm sure that I have at my side fantastic people, people much better than me. The spirit of comraderie among colleagues was amazing and served as a great learning experience, because, as it happened during these past five years with my colleagues, I believe that generosity and concern for others will transform anyone's destiny for the better. My path at FEUP was strongly marked by my involvement in associativism, both as a member of ESTIEM but mainly as President of AGE-i-FEUP. What I experienced during my mandate was the most remarkable experience of my student life and I am fortunate to have lived those moments with absolutely incredible people. So, a big hug to all my board members of the 2015/2016 term. I want to thank my family for their unconditional support since entering college. To my brother, my father who also contributed to the execution of this work, my uncles and cousins, and to my grandparents, especially to my recently deceased grandfather. I dedicate this work to my mother too, who gave me an incomparable support and has always made the biggest effort to give me all the necessary tools to succeed in the last five years. Lastly and foremost, once I saw a video where the presenter showed that what gives longevity to the human being is the creation of deep and lasting relationships. Therefore, I cannot forget to thank to the person who everyday provides me a relationship as strong as if it was an indestructible bridge, with a pure and true meaning. I can say that I am fortunate to have built such a relationship with the person I consider my love, you, Clara. v Development of an alternative transportation service for e-commerce deliveries Contents 1 Introduction .......................................................................................................................................... 1 1.1 Company Presentation and Project Motivation .................................................................................... 2 1.2 Project Presentation ............................................................................................................................. 3 1.3 Aim and Objectives of the Project ........................................................................................................ 4 1.4 Approach and Methodology ................................................................................................................. 4 1.5 Structure of the Report ......................................................................................................................... 5 2 Literature Review ................................................................................................................................ 6 2.1 Urban Delivery Industry ........................................................................................................................ 7 2.1.1 Portuguese Market Overview ............................................................................................. 7 2.1.2 Portugal VS International Markets ..................................................................................... 8 2.2 Future Outlook for E-commerce and Last-Mile Delivery ....................................................................... 9 2.2.1