Jarmo Reunanen: Logistics 5 forces of change 4/5 - Structural changes in global trade

Jarmo ReunanenThe key drivers of change in the logistics market in the near future are digitalisation, strong growth in global trade, leveraging learning software, structural changes in global trade and increased automation. This blog discusses the most important of these, market restructuring and its impact on regional trade competitiveness.

Global Trade

The strong growth of e-commerce and the pressure for fast and cost-effective deliveries (discussed in more detail in previous blogs in the series) are forcing logistics operators to make strategic changes. 55% of transport and logistics companies (source: PwC 2018 CEO Survey) plan to develop their business through industry-based alliances; To do this, 38% believe they will make acquisitions, 32% believe in alliances with powerful niche players and startups implementing new concepts.

As a result, global logistics are increasingly meeting the needs of local consumers. Global brands' own online sales will be more efficient, which will intensify the competition experienced by traditional distribution channels. Big e-commerce operators are also investing in their own logistics to take full advantage of economies of scale. For example, Amazon is reinforcing its “Shipping with Amazon” concept with a $ 1.5 billion investment program; The Otto Group, for its part, is investing $ 580 million in high-tech distribution centers and distribution network.

In the face of increasing market pressure, regional trading operators must reinforce competitive advantages that are difficult or costly for global players to seize. The diagram above shows the most important factors in choosing a consumer ecommerce site. According to the data, 59% of decision-making is still based on 'traditional' factors such as product mix and trade reputation. Although logistics plays a significant role (41%), the development of the logistics market will reduce the differences in delivery services between traders.

Global Trade

The key factors to the future success of regional trade is thus:

· A high-quality, consumer-inspired e-commerce platform; versatile product feature presentation, enabling customer-specific content (e.g. customer feedback), personalized user experience

· Strengthening the store brand image; uncompromising quality of customer service and communication, constant presence on social media channels and online content

· Utilizing the store network for deliveries; click-and-collect customer pick-up, quick home delivery by picking up products from stores near the customer, directing bulk product shipments to dark store points and shipping warehouses

· Strategic collaboration on activities that can enhance the e-commerce customer experience; for example, outsourcing return processing, agile last mile transportation services, etc.

64% of logistics companies believe that consumer requirements for a good e-commerce business will have a significant impact on their operations in the near future. Competition for global supply requires the effective exploitation of local competitive advantages. The role of the local store network and delivery warehouses is emphasized in this business development work.

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