Martin Marek (DODO): trends in logistics are shaped by data – smart planning will make delivery faster, more accurate and more sustainable
Logistics is an integral part of the shopping process and customers are beginning to see its importance more and more clearly, as they now purchase everything from electricity, furniture, and cosmetics to groceries online. A total of 87% of customers, according to Bringg data, believe that a positive experience with delivery is what convinces them to buy from a particular retailer again and again. Online shopping has gradually become mainstream, and the level of logistics services is therefore increasingly under the microscope. The fierce competition between retailers has brought even more emphasis on speed, flexibility, customer care, but also the quality of couriers, which is what the success of e-commerce stands and falls on today. In addition, the delivery of goods is increasingly dependent on technology and working with data – whether for the efficiency of the logistics process, to keep the customer informed, or to ensure the safe delivery of goods. What five trends will shape logistics and, through it, e-commerce in the next five years?
1. The faster one wins – the importance of demand forecasting will grow.
One of the key parameters by which the quality of a delivery service is judged is obviously speed. Every customer ideally wants their goods right away, and a number of services are meeting this need. Same-day delivery is becoming a market-wide standard, but in larger cities, services with extremely fast delivery times of hours or even minutes are becoming more common. According to the data mentioned above, 57% of customers say that if a company offers “same-day delivery”, it increases their loyalty towards the retailer.
For such a service to work, perfect route planning with respect to current traffic and excellent coordination of couriers and goods are needed. That’s why logistics operators today are primarily technological companies – the centre of efficient logistics is no longer the truck and the driver, but a technological data platform that manages the entire logistics process and uses real-time data as well as artificial intelligence and machine learning to plan the entire process before the customer even thinks of placing their order. Predictive demand modeling already plays an important role in logistics today, but it will be absolutely crucial in the future because it is the only way to meet growing customer demands.
2. Decentralisation of warehouses
Rapid logistics cannot do without a reassessment of the approach to the use of warehouses and dispatch points in the coming years. Due to changing customer preferences, the use of more and more small warehouses, the so-called dark-store, scattered around the city, where the most desirable goods will be concentrated at the moment of ordering and distributed from there to the end addresses in the most efficient way for the route – whether by courier in a small urban electric car, on a moped or on a cargo bike.
Similarly, the competence of in-store picking is also gaining in popularity, replacing the function of central warehouses to some extent, especially in the food segment. Under this service, which has already been introduced by the Penny chain in cooperation with DODO, for example, the order is assembled by a courier directly at a specific store, who then takes it to the end customer. The chains thus do not need warehouse space dedicated only to goods sold online, and at the same time this approach ensures that the assembly of online orders does not interfere with the smooth operation of the brick-and-mortar store.
One central warehouse outside the city will simply not be enough to serve a customer who requires a top-notch service with fast delivery. But it will be all the more important to supply these warehouses optimally and on time, thanks to technologies linked to demand forecasting in the micro-areas. This trend is also supported by the fact that, according to LogiNext’s technical researcher Stuti Mehrotr, a full 99% of retailers plan to provide ‘same-day delivery’ within three years, and a large number of them would also like to deliver their goods within 30 minutes of ordering.
3. Precise logistics and accurate delivery information
In addition to speed of delivery, customer information will be an increasingly important parameter of the logistics service. Customers want their goods not only quickly, but also and most importantly at a time that is convenient for them and that they can count on. Here again, technology and the ability for perfect planning play a key role, making it possible to deliver shipments in specific (maximum hourly) time slots chosen by the customer. Moreover, thanks to the technological connection of the e-shop with the logistics company’s platform, it is possible to inform the customer in real time about the location of the courier and give him a perfect overview of the delivery time. Data from Shipsy shows that a full 80% of customers today already take smart tracking of their shipment as standard, while 86% of them expect the retailer to provide them with the option to choose from several delivery methods so they can select the option that best suits their current needs.
Currently, delivery in precise time slots and the ability to track the courier in real time is primarily the domain of players in the food delivery space. But gradually, this service will become standard across segments. Logistics companies are already technologically ready for it and customers want such a service.
4. Sustainability as the Holy Grail that can be achieved through technology
Sustainability is often mentioned in the context of what modern logistics should look like. This is, of course, absolutely crucial in the context of rapidly growing e-commerce, but contrary to popular belief, it is not just about replacing diesel deliveries with electric ones. The path to sustainable logistics is all about data. So-called big data, business intelligence and machine learning enable logistics systems to continuously learn how to optimize processes. This is leading to logistics models that ensure that customers are served with perfect service while minimizing the negative impact of logistics on the environment and on the daily lives of people in cities. The issue of sustainability is also strongly perceived by customers themselves. According to a survey by the logistics data platform Sifted, nearly 70% of shoppers consider the environmental aspect of their purchase when placing an order. 91% of customers would like to have the option of environmentally friendly package delivery and more than half of customers (57%) would be willing to pay 10 percent or more of the shipping price for green delivery.
If a logistics company can plan the route correctly, maximize the use of the vehicle travelling along it and, through good communication with the customer, deliver all shipments on schedule and without delays, logistics can be done sustainably. A greener fleet is therefore a pleasant and nowadays expected bonus. With the decentralization of warehouses and the shortening of delivery distances, the trend will also be towards alternative means of transport, such as cargo bikes, which are gaining increasing support across Europe.
5. Quality couriers as an important link between the retailer and the customer
We already know that the quality of delivery is absolutely crucial to the customer experience and is a factor that determines whether a customer will return to a given retailer. The delivery process and the level of the courier’s performance in front of the customer is therefore crucial for the e-shop, because in e-commerce the courier is often the only point of contact between the customer and the shop.
Couriers who can represent the store and serve the customer excellently are the factor that determines the success of the brand. Czech e-commerce is extremely competitive and it is true that customers rarely give an e-shop a second chance after a bad experience – there are usually enough competitors. Therefore, companies are becoming increasingly aware of how crucial added value is a quality logistics service, and the role of the courier is changing rapidly – he is no longer a “messenger”, but an important brand ambassador for the merchant. According to Bringg, 76% of customers see delivery as a key stage of the entire buying process, the quality of which shows how much the retailer values them.
The lockdowns associated with the coronavirus pandemic have shown just how fundamental couriers have become in today’s society – it is no exaggeration to say that the courier is now part of the basic infrastructure of a functioning state. And they should be viewed accordingly. Therefore, in the future, the trend of logistics companies to invest in further training of couriers and to create the best possible working conditions for them will become more and more visible.