Monday 12th June 2017 – EAE Business School (www.eae.es) has presented its report entitled The impact of E-Commerce on global supply chain management, which analyses how e-commerce has transformed global supply chains at a fast rate, giving rise to a new reality that is extremely demanding for competitors, where concepts such as “one by one orders”, “elasticity” and “getting customers to repeat” are the defining features of this new competitive framework. The analysis focuses on four cases that are representative of the online shopping phenomenon: Amazon, Zara, Ikea and El Corte Inglés.
EAE’s research reveals that, in 2014, the average time for e-commerce services was 8 days between ordering and delivery while, in 2017, this time has dropped to an average of 5 days, with even same-day delivery being offered. However, 30% of home deliveries fail, normally because the customer is not in, which may eventually affect the quality and expiry of the product and increase the number of incidents (calls, complaints, returns, etc).
In this respect, delivery in different time slots and convenience points are set to become the great logistical allies of online sales. In the case of eFood, the best solution is home deliveries of food in two-hour time slots, but this requires traders to take on additional costs with the logistics provider and not all operators are equipped to offer and fulfil these slots.
With respect to users’ delivery expectations, the graph shows that the percentage of users who demand services within 24-48 hours rose over the last year. 1 in every 5 online shoppers demand services within 2 days
According to EAE’s report, 39.7% of Spaniards shop online at least once a month, 24% have shopped between one and three months ago, 22.9% between three months and a year ago, and 13.4% over a year ago. Over the last 5 years, Spain has experienced an exponential rise in e-commerce, with growth rates of more than 10% per year. Half of the population with internet access purchases some type of good or service online. In this respect, Spain ranks in 5th position in Europe in terms of e-commerce consumption, but is 18th with respect to logistical efficiency.
In terms of the Autonomous Communities, people from Aragón shop online most regularly (52.8% have done so in the last month). In second place are people from Asturias, with 47% having made an online purchase in the same period, followed by people from Galicia, with 46% of users having shopped online within the last 30 days. At the other end of the scale, just 30.4% of people from the Canary Islands have bought something online in the last month, followed by people from Cantabria, with 34.4%.
THE LEADING EXAMPLES OF ONLINE COMMERCE
With respect to the most exemplary cases of electronic commerce analysed in EAE’s research, Amazon is leading the global change in the design and execution of supply chains. The American giant is starting to use automatic robots to prepare orders completely. In the warehouse scheduled to open in October in El Prat (Barcelona), 3,500 robots will move 50,000 sets of shelving units- This system enables space to be saved and 50% more items to be stored per square metre. Within the framework of its vertical integration, Amazon manufactures its own logistics robots and, to this end, it purchased the company Kiva Systems in 2012.
Meanwhile, Zara’s vertical integration enables the company to shorten delivery periods and enhance flexibility with stocks reduced to an absolute minimum. A third of online purchases are collected in-store, and two thirds of returned goods are taken to physical outlets as well. Zara’s delivery times depend on the type of dispatch service selected. In 2016, the company incorporated technological improvements known as multishuttles at the Bershka plants in Tordera (Barcelona) and Atreixo (La Coruña). These systems enhance efficiency and precision in the management of delivery times, enable the dispatch, storage and collection speed of boxes to be doubled.
Ikea has rolled out online shopping of 100% of its product range in countries such as Sweden, the United Kingdom, Germany, Canada and the United States. In contrast, in Spain, Ikea launched the 1.0 version in September 2016, but with limited availability of products to keep the stock individualized for each store, rather than having a single range of stock across the board. In this respect, the company’s logistical structure was not equipped for online sales and so it will build a new distribution centre in Valls (Tarragona) to dispatch its products purchased online throughout Spain, Portugal and the south of France. Goods will be distributed from this central point to other logistics centres (30 of which are scheduled to be built) and from there to the shoppers’ homes.
Last but not least, El Corte Inglés has undergone sustained growth of over 35% over the last few years, with more than 8 million individual customers per month, having a great influence on the physical stores. In December 2016, it expanded its Click&Express online shopping service across all of its commercial stores, with delivery in less than two hours or within the time slot selected by the customer.
The radical boom in e-commerce has created a new scenario that will lead to the loss of jobs in the traditional sector of the economy, but will generate employment in areas such as data, computer engineering and digital marketing. However, technology is not a competitive advantage unless it operates in harmony with each company’s process and organizational structure.
In conclusion, EAE’s report sets out a number of challenges posed by the exponential rise in e-commerce, including the volume of traffic in cities, the roadmap in the food sector, sustainability in terms of time and space, especially in urban settings, and data gathering and corresponding analysis for improving the service.
- The average time of delivery services has fallen from 8 to 5 days in three years, with even same-day delivery being offered.
- Spain ranks in 5th position in Europe in terms of e-commerce consumption, but is 18th with respect to logistical efficiency.
- People from Aragón shop online most regularly (52.8% have done so in the last month), and people from the Canary Islands do so least regularly, with just 30.4% making an online purchase in the same period.
- 1 in every 5 online shoppers demand services within 2 days but 30% of home deliveries fail, normally because the customer is not in.
- Amazon is leading the global change in the design and execution of supply chains.
- Zara’s vertical integration enables the company to shorten delivery periods and enhance flexibility with stocks reduced to an absolute minimum.
- Ikea will build a new distribution centre in Valls (Tarragona) to dispatch its products purchased online throughout Spain, Portugal and the south of France.
- El Corte Inglés has undergone sustained growth of over 35% over the last few years, with more than 8 million individual customers per month.
- Delivery in different time slots and convenience points are set to become the great logistical allies of online sales.
- The impact of e-commerce leads to growth in areas such as big data, computer engineering and digital marketing.
The challenges posed by e-Commerce include the volume of traffic in cities, the roadmap in the food sector, sustainability in terms of time and space, especially in urban settings, and data gathering and corresponding analysis for improving the service.