aldo d'agostino

E-commerce Growth: Opportunities and

Challenges for the Logistics Industry

DHL | PageNZPO EMS Service

Agenda

1. Gauging the global e-commerce opportunity

2. The impact of delivery choices on e-shopper buying behaviour

3. Challenges for the Logistics Industry

4. Where to from here?


Global e-commerce market size

3

Source:eMarketer


With the globalization and internationalization of companies,

cross border online shopping is growing significantly.

Global cross-border online shopping will be worth $105

billion this year, with 94 million consumers regularly buying

from overseas websites.

4

Source: Paypal Report, Modern Spice Routes: The Cultural Impact and

Economic Opportunity of Cross-Border Shopping, July 2013


By 2018, it is expected to grow nearly 200% to $307 billion,

with 130 million cross-border online shoppers.



5

Australia is one of the world’s six key shopping destinations for cross-border

shopping, accounting for 16% of international online sales.

Source: Paypal Report, Modern Spice Routes: The Cultural Impact and

Economic Opportunity of Cross-Border Shopping, July 2013


Agenda






Consumer delivery expectations

7



• E-commerce and Delivery - A study conducted by Copenhagen

Economics between 10th and 30th January 2013 with 3,077 e-shoppers, 70

e-retailers , 61 delivery companies and 26 national postal regulators in EU.

• This study analyses how delivery of products bought online can be

improved to increase the amount of domestic and cross-border e-

commerce in Europe. Improving delivery services is an important driver to

enhance e-commerce*.

8

*This presentation focuses only on the e-shopper perspective

DHL | PageNZPO EMS Service 9

0% 20% 40% 60% 80% 100%

Low delivery prices

Convenient return options

Free delivery

Flexible and convenient delivery

Delivery within 2-4 days

Accurate delivery date (delivery on pre-definedday)

Electronic delivery notification (e-mail or SMS)

Track n'Trace shipments

Next day delivery

Important features for shopping from same web shop again

Source: Copenhagen Economics, E-shopper survey




0% 20% 40% 60% 80% 100%

Delivery to the home address

Delivery to the post office

Having ability to redirect the parcel to a different point

Delivery to neighbor in case that one is home at thedelivery time

Delivery to relay point (shop)

Delivery to relay point or parceol kiosk specified byyou

Delivery to work adress

Delivery to parcel kiosk (automated locker)

Importance of point of delivery for e-shoppers



0% 10% 20% 30% 40% 50% 60% 70% 80% 90%100%

Free delivery

Standard delivery

More convenient but more expensive delivery thanstandard delivery

Faster but more expensive than standard delivery

Importance of price options for e-shoppers




0% 10% 20% 30% 40% 50% 60% 70% 80% 90%100%

Electronic delivery notification (e-mail or SMS)

Track n'Trace

Insurance related to delivery

Cash on delivery

Extra service at delivery, e.g. installation ofproduct bought

Importance of value added feaures for e-shoppers





0% 10% 20% 30% 40% 50% 60% 70% 80% 90%100%

Take return parcel to a post office/ collectionpoint

Track n' trace of return parcel

Organize a specific picuk up with the deliveryoperator

Take the return parcel back to a physicalstore(same as webshop)

Return product immediately at the moment ofdelivery

Importance of return options for e-shoppers



The impact of delivery on shopping cart abandonment

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Share of e-shoppers dissatisfied with delivery aspects

Note: Horizontal line shows the average level of dissatisfaction (18 per cent).


18%

Consumer satisfaction


Agenda






Challenges

• E-shoppers have an almost infinite choice in terms of what they can buy,

where they can buy it, and when they can buy it.

• E-shoppers expect similar choice and control when it comes to delivery of the

products bought. When shopping online, e-shoppers buy both a product and a

delivery service.

• Delivery operators need to develop customer-oriented delivery solutions that

offer convenient delivery options at reasonable prices.

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The e-commerce delivery value chain

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E-shoppers: Buy products and

delivery services from e-retailers;

E-retailers: Buy services from delivery

operators and logistics intermediaries;

Delivery operators: Deliver the products

on behalf of the e-retailers. Delivery

operators may use other delivery

operators as subcontractors.

Logistics intermediaries: Operate in

the intersections that exist between

e-shoppers, e-retailers and delivery

operators.


Problems that might occur along the value chain

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Step in value chain Example of problem

1. Order placed Inadequate information provided at e-retailer’s website. Lack of

customer-oriented delivery options (speed, price, value added

features etc.). Lack of transparency.

2. E-retailers choose

delivery partners, delivery

mix and delivery prices

High delivery prices faced by e-retailers and/or e-shoppers. Limited

access to logistics intermediaries. Preferred services not available

from delivery operators.

3.Pick-up of products No notification of pick-up sent to e-shopper.

4.Domestic/cross-border

delivery

Lack of tracking, long delivery times. Lacking interoperability between

delivery operators. Lack of transparency.

5. Last mile delivery High share of failed first delivery attempts, inconvenient collection

procedures (e.g. opening hours, parking facilities), mismatch between

e-shopper’s expectations and delivery performance.

6. Return process Complicated and/or expensive return procedures. Difficult to find

information about returns on e-retailer’s website.

Even the best online shopping experiences could

be tarnished by delivery problems!


The impact of e-commerce growth on the logistics industry

20

Source: IPC


The need for information (tracking, e-mail notifications etc.) requires

investment in technology.

Growth in air cargo demand, including express cargo and general air cargo,

requires investment in infrastructure to keep up with the growth.

I.e. Cathay Pacific Airways put on a number of extra flights and charters

in order to meet air cargo demand, buoyed by new products from

Apple, Samsung and Microsoft.

Domestic carriers need to adjust to the increase in parcel volumes vs.

declining mail volumes. Having principally moved goods between

business customers not so long ago, they are now the agents of e-

commerce, helping retailers move an increasing volume of online purchases

to consumers.

Growing consumer expectations in terms of delivery choices and places

require logistics companies to rethink their delivery model.

The impact of e-commerce growth on the logistics industry


Agenda






The aspects of delivery found to cause the greatest dissatisfaction to the

consumers were:

Complaints made to the e-retailer (30% e-shoppers unsatisfied)

Returns (26% e-shoppers unsatisfied)

Delivery prices (21% e-shoppers unsatisfied)

Delivery speed and value added delivery services (16% e-shoppers

unsatisfied)

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Where to from here?


The research by Copenhagen Economics reveals that the most important

aspects of delivery for e-shoppers are:

Delivery to the home address at a convenient time (mentioned by at least

90% of e-shoppers)

Low delivery prices (mentioned by at least 85% of e-shoppers)

Access to electronic delivery notifications and track and trace (mentioned

by at least 80% of e-shoppers)

Convenient return options (mentioned by at least 80% of e-shoppers)

24

Where to from here?


Q&A Time


Aldo D’Agostino

Head of Sales, DHL Global Mail

Mobile +61 413 885 116

[email protected]

Thank you!

To download the E-commerce and Delivery study go to :

http://ec.europa.eu/internal_market/post/doc/studies/20130715_ce_e-commerce-and-delivery-final-report_en.pdf

DELIVERING SUCCESS. WORLDWIDE.

aldo d'agostino

Presentations & Public Speaking