european supply chain overview e-commerce · 2. omnichannel shopping will become more prevalent 3....

European Supply Chain OverviewE-commerce

Version 1.6

June 2019

2

Contents

Chapter & page number

1. Introduction 3

2. Industry definition and market overview 4

3. Trends & Developments 25

4. Supply Chain Characteristics Europe 37

• Supply chain challenges 38

• Top business challenges 48

• Popular supply chain models for e-commerce 52

• Finding the right location for your E-fulfilment operations 67

• The last mile 72

5. The Netherlands as your fulfilment hub 79

6. Consumer protection in Europe 100

7. Taxation of pan European BtoC sales 107

8. E-commerce innovations in The Netherlands 120

9. Setting up your supply chain operations in the Netherlands 128

10. Case studies 151

3

Introduction

About this document

This logistics proposition has been composed by HIDC (Holland International Distribution Council) and its members. It is a background document containing information on the sector, logistics characteristics and the Dutch logistics proposition. Also, it is a living document, being updated regularly to reflect changes in the market and supply chains.

The target groups for this document vary from Dutch logistics companies to anyone that is involved in acquiring logistics flows and investments for The Netherlands. As the clientele for this document is broad, its goal is to provide a variety of background information rather than a ready-to-use marketing document.

HIDC welcomes any additions and suggestions to improve this document.

More information:

NDL/HIDC www.hidc.nlJasper Eggebeen [email protected]

http://www.hidc.nl/

mailto:[email protected]

4

Industry definition and market overview

5

Industry definition

What is E-commerce?

Before we get into the nitty-gritty of the e-commerce realm, let’s first answer one

fundamental question:

What is e-commerce?

E-commerce refers to commercial transactions conducted online. This means

that whenever you buy and sell something using the Internet, you’re involved in

e-commerce.

6

E-fulfilment: in the heart of E-commerce

⚫ E-fulfilment is the entire supply chain management process behind the online web shop

to ensure consumer orders are processed, products are delivered on time and that

returned orders are managed efficiently and effectively

Warehouse- Inbound- Storage- Order picking- Loading

Transport- Shipment- Delivery

Returns- Return transport- Return handling- Delivery of

other product

E-fulfilment

Logistics Back officeFront office

On-line shop- Assortment- Website design- E-marketing- Product development

Back office- Customer service- Stock management- Waranty- Fin/adm. services

Source: Buck Consultants International , 2012

7

E-commerce in Europe 2018

▪ €268 million consumers buy

online and spend € 198

billion.

▪ UK has the highest % of

online shoppers where 93%

of the population between 15

and 79 shop online.

▪ 200 million European

consumers buy from abroad

online

8

Online sales per EU country

47,9

44,5

29,6

19,7

19,1

14,9

10,87,7 4

Sales (€ Billion)

UK

Germany

France

Spain

Italy

Nordic region

Poland

Netherlands

Belgium

▪ Europe’s largest e-

commerce markets are

Germany, UK and France

▪ The German, UK and

French online sales account

for more than 50% of all

European online

consumption

Source: PostNord E-commerce in Europe 2018

9

Top 12 product categories bought by Europeans online


Clothing & footware, Electronic goods and Books are among

the most popular online categories

10

Online shopping from abroad

▪ China remains the most popular

country to buy from

▪ This trend that accelerated when

consumers continued to scour

platforms such as Wish and Ali

Express for cheap small electronic

devices, mobile phone accessories,

footwear and clothes.

▪ Second and third in the export

league, the UK and the USA, attract

consumers more in fashion and

branded goods, but also offer

possibilities for large-scale buying

via platforms such as Amazon and

eBay.


11

EU cross border turnover will nearly double in the next 4 years

Source: Cross border commerce Europe 2018

▪ 23% of EU E-commerce revenu in 2018

was cross border

12

Nordic countries buy most from abroad

▪ the percentage of consumers shopping online from abroad is at its

highest in the Nordic countries due to high internet maturity

Source: Postnord 2018

13

Why consumers buy from abroad


▪ Low prices get the interest of long-distance consumers

14

A Global Overview of the Top Marketplaces

▪ Amazon and eBay are

dominant in Europe when it

comes to their website ranking

▪ Alibaba group is moving in

from the Eastern countries

Source: E-commerce Foundation

15

Globally marketplaces own 56% of cross border e-commerce

▪ Amazon is the most popular cross

border webshop in Luxembourg

(72%) and Austria (64%)

▪ eBay leads in Cyprus (63%)

▪ AliExpress was most popular in

Russia (69%) and the Netherlands

(35%)

Source: E-commerce Foundation

16

Amazon in Europe

17

European e-tailers

France Germany

Spain Denmark Netherlands

Norway

Top 4 Largest Online Retailers

Zalando

Amazon

Saxo.com

eBay


Amazon.de

Otto.de

Zalando.de

Notebooksbilliger.de

Cyberport.de


Auchan

Castorama

Darty

E.Leclerc

Priceminister


Komplett

Elkjøp

Zalando

Netonnet

CDON


Bol.com

Coolblue

Wehkamp

Zalando

Albert Heijn Online


Amazon

Carrefour

Ebay

El Corte Ingles

Mediamarkt

Source: E-commerce Foundation & Postnord 2017

18

Major differences in delivery requirements between EU countries

▪ EU consumers are highly demanding

in terms of fast, convenient delivery

▪ Normally, three to five days from the

time of order is regarded as a

reasonable time for delivery

▪ As far as demand for really fast

deliveries are concerned, The

Netherlands stands out.

▪ Choice regarding delivery options

(time and place) is important to EU

customers

▪ Next day delivery is standard across

many EU countries

Source: E-commerce Foundation & Postnord 2018

19

Preferred delivery method is at home (daytime)

▪ In most EU countries, home delivery

during daytime is the preferred

delivery method.

▪ Demand is increasing for delivery in

the evening when one is home from

work

▪ Consumers increasingly want to

have control over the delivery time

and place.

▪ Even after the order has been

dispatched, customers want the

flexibility to change the delivery

according to their preferences.


20

Simple and convenient returns process

▪ The lack of convenient return

arrangements may be a barrier to

consumers especially in markets

with a lower level of e-commerce

maturity

▪ Clear returns information is regarded

by many consumers to be an

absolute must.

▪ German and Dutch consumers

return the most goods relative to the

size of the country’s population;

more than half of online consumers

in these countries have returned at

least one e-shopped item in the past

year.


21

Customers demand clarity and simplicity from their online shop

▪ Clarity, low prices, local adaptation

and fast delivery are the most

important reasons for buying online.

▪ A clear indication of the total price

including any cost for freight,

customs clearance etc. is a must

and increases conversion rates

▪ Good, clear information and pictures

of the products are another success

factor in being competitive on the

European e-commerce market.

▪ Offering a shopping experience in

the language of the local market is

regarded as important to European

consumers.


22

Shopping via mobile devices is showing steady growth

▪ To succeed in e-commerce

in Europe, creating a clear

and simple buying process

via mobiles is of the utmost

importance.

▪ For Europe as a whole, six

out of ten consumers have

used their mobile phone or

tablet for shopping in the

past year.

▪ Shopping via mobile devices

is growing throughout

Europe.


23

Right payment method means customers do more shopping

▪ Offering the right payment method can

make the difference between success

and failure.

▪ Preferences differ from one EU country

to the other

▪ Most shops offer different payment

options to make more customers feel

secure

▪ The two most popular payment methods

are debit cards and payment services

such as PayPal and Ideal.


24

Payment systems in different European countries

▪ Payment services and credit cards are the most

preferred payment methods

▪ In The Netherlands, IDEAL is the most

preferred payment method.

Source: E-commerce news Europe & Dataprovider.com

25

Trends & Developments

26

Trends and developments to watch

The most important e-commerce trends for the coming years:

1. European e-commerce sales to hit 418 billion by 2022

2. Omnichannel shopping will become more prevalent

3. Social shopping is on the rise

4. The centre of e-commerce is shifting from the western hemisphere

5. Domestic shoppers go cross-border shopping

6. B2B e-commerce is a bigger giant

7. E-commerce personalization will be a standard

8. Mobile shopping revolution

9. Voice commerce is on the horizon

10.New payment options will emerge

27

▪ European E-commerce sales are

predicted to continue growing

▪ A new all time high in 2022 of $418

billion represents a 61,6% growth since

2016

European E-commerce sales to hit 418 billion by 2022

Sources: Statista 2018

28

Omnichannel shopping will become more prevalent

▪ 73% of customers are using multiple channels

during their shopping journey

▪ Multi Channel customers spend 9% more

compared to single channel shoppers

▪ The key is to decode what, where, when, why,

and how people are purchasing the products

you sell on a particular channel

▪ Key success factors

▪ Convenient purchasing options for

customers researching online and

purchasing offline

▪ Adopt a click and collect strategy

▪ Synchronize your online and offline data

29

Social shopping is on the rise

▪ Shopping via social media channels is

on the rise

▪ People can now conveniently and

quickly purchase products on their

chosen social media platform.

▪ Instagram, Twitter, Pinterest,

Facebook, and YouTube are among

the social media channels which rolled

out the “buy” buttons

▪ Social shopping allows customers to

shop more productively cutting time

and effort to make a purchase

Source: Beeketing.com

30

The centre of e-commerce is shifting from the western hemisphere

▪ The US share of total global E-commerce is

projected to decrease by as much as 16,9% in

2020

▪ Asia accounts for 79% share of total global e-

commerce

▪ The main driver of the decrease is the rise of

globalization and the improvement of

technology and infrastructure from non-

western regions

▪ This requires adapting a global business

model but does not mean you need a physical

presence outside your own country

▪ Trusted partners in a country or region where

you have a high demand could provide access

to new markets. Percentage share of total global e-commerce


31

Domestic shoppers go cross-border shopping

▪ Shoppers are increasingly looking for

products outside their home country

▪ 57% of online shoppers made an online

purchase from an overseas retailer in

the last 6 months

▪ In Europe that percentage is higher at

63,4%

▪ China remains the most popular country

to buy from

32

B2B e-commerce is a bigger giant

▪ When compared to business to consumer

(BtoC) e-commerce industry, BtoB e-

commerce is projected to by two times

higher that BtoC in 2020

▪ In the US alone, BtoB e-commerce sales

will hit 1.184 trillion by 2021

▪ The BtoB e-commerce is more complicated

and requires development in more

seamless transaction building in advanced

functionalities such as

▪ Quote management

▪ Price negotiation

▪ Easy ordering

▪ BtoB order & inventory management


33

E-commerce personalization will be a standard

▪ E-commerce personalization will continue

to be a huge trend

▪ 33% of customers have ended their

relationship to a business with insufficient

or no personalization in place

▪ 48% of consumers spend more when their

experience is personalized

▪ 74% of consumers get frustrated when

content has nothing to do with them

▪ Personalization is about dynamically

displaying unique and relevant information

ranging from demographics, browsing

behavior, buying history etc.


34

Mobile shopping revolution

▪ Estimates show that 50% of e-commerce

revenue will come from mobile users

▪ Mobile shopping will account for $175,4 billion

in revenue by 2020

▪ 54% of consumers buy from a mobile app

▪ Conversion rates for large screen devices

such as tables are significantly higher

▪ Mobile e-commerce requires

▪ A user-friendly mobile checkout

▪ A mobile app

▪ Apply app store optimization to increase

visibility of your app in the app store

▪ Use push notifications to promote and

re-engage

35

Voice commerce is on the rise

Source: Mastercard

▪ In the EU, 1 in 5 consumers have already shopped using voice or text agents

▪ New devices such as Amazon echo and Google home lead to new ways on how

people interact online

▪ According to OC&C, voice commerce will reach $40bln in the US alone by 2022

▪ Trust and ease of use will be key in driving adoption

36

New payment options will emerge

▪ Payment options are essential drivers why customers

will push a transaction

▪ Without the available payment channel of their

choice, customers will not purchase from your online

store

▪ Digital wallets provide more frictionless shopping

experience

▪ Digital wallets such as google pay, PayPal, Apple or

Samsung pay are widely implemented by e-

commerce business.

▪ 70% expect digital payments to takeover cash and

cards by 2030

▪ Cryptocurrencies are cooking up a storm for a while

now and see more and more adoption


37

Supply Chain Characteristics

Europe

38

Supply chain challenges

39

The E-commerce Dilemma: Growth vs Profitability

Customers expect:

▪ Choice in delivery options

▪ Fast delivery

▪ Time defined delivery slots

▪ Guaranteed delivery date

Retail dilemma

▪ How to offer fast, convenient and cost-

effective delivery?

Source: Buck Consultants International

40

Complex supply chain

What makes management of the e-commerce supply chain complex?

• Small individual shipments

• High return rate

• Multiple shippers

• Multiple products

• Hard to predict demand

Key influencers:

• Business requirements: stringent cut-off times, lead times

• Product characteristics: consolidation of small/large, light/heavy,

food/non-food, ambient/temp controlled items

• Volume: # orders, order lines, pieces, Ltrs

• Order profile: from pallet/case level to piece level

• Distribution: from weekly to daily transportation, from store address

to Customer address

• Inventory allocation: inventory sharing, long tail (X-dock)

• Explosion of returns flow Source: Buck Consultants International

41

Key elements for a successful cross border e-commerce model

Key elements for a successful cross border e-commerce

model include

▪ Website in local language

▪ Displaying prices in local currency

▪ Offering country specific online payment, delivery and

return options

▪ Apply a business model linked towards e-commerce buying

and shopping behaviour.

Key challenges

• Every EU country has its own online environment with

dominant logistics and transport partners, infrastructure,

consumer preferences and consumer regulations

• Local fulfilment presence in all countries is expensive and

unnecessary to meet customer requested delivery time

Source: Postnord/Buck Consultants International

42

Profitability is the key challenge

Supply chain Challenges

▪ High delivery costs due to increasing pressure on the last

mile (i.e. speed, location, flexibility)

▪ High returns costs as customers expect free returns

▪ Increased fulfilment complexity due to

▪ piling up inventory

▪ Increase in SKU’s

▪ Inventory closer to demand, especially in seasonal

fashion products

▪ High IT investments for supply chain visibility

▪ No uniformity due to complex financial (i.e. tax), legislation

(i.e. labour laws) and cultural (i.e. language) landscape

across Europe.


43

Assessing necessary supply chain elements

▪ Channel assortment : Sell all products through all channels, or make choices per channel

▪ Inventory management : Single or segregated pool of inventory across channels

▪ Delivery choices : delivery options, free or paid, speed of fulfilment & delivery

▪ Fulfilment and storage : dropship, international or local stock, hybrid network

▪ Last mile network : delivery, pickup and returns

Source: DHL/Buck Consultants International

44

Choose the best e-fulfilment model

The e-fulfilment landscape from the manufacturer to the customer: many options

Source: Buck Consultants International, 2012

45

Production Consumer

Production DistributionCentre

Shop

Consumer

Production

DistributionCentre

DistributionCentre

Shop

Consumer

Production DistributionCentre

Shop

Consumer

Production

DistributionCentre

DistributionCentre

Consumer

1

2

3

4

5

1. Direct delivery – Often for unique custom made products

2. Combination centers –Stores and on-line customers serviced from same facility

3. Dedicated centers –Stores and on-line customers serviced from separate locations

4. Store distributed – on-line customers are serviced from stores

5. Hybrid model –Combination of the above strategies based on geography, SKU segment (type or velocity)

Choose the e-fulfilment distribution model that works best for you


Shop

46

• Different product groups ask for different network solutions, depending on their characteristics

• We expect that as products are sold more internationally, Regional and European DCs will become more common for e-fulfilment

For each product group, a different solution

1) + = high, 0 = average, - = low2) EDC = European Distribution Centre, SDDC = Single Domestic DC, MDDC = Multiple Domestic DC, RDC = Regional DC


47

Cross border online shopping still has its challenges

How to provide a superior customer experience

• Provide the customer choice in delivery (place and day/time)

• Reliable delivery against low costs and convenient return process

• Offer tailored and targeted marketing based of gathered data

• Logistics makes a big difference in customer satisfaction

Source: e-commerce Europe 2018

48

Top business challenges related to supply chain

49

What are your top business challenges related to supply chain

▪ The world of retail has changed dramatically over the past decade.

▪ Direct-to-consumer sales are now between ten and twenty-five percent of retailer revenue.

▪ Demand patterns are far less predictable than they were in the past.

▪ Retail supply chains now need the flexibility to accommodate shipping both tonnage and individual parcels,

everywhere from distribution centers to stores to consumers themselves.

Source: RSR Research 2018

50

Supply chain contributes massively to your company's performance

Supply chain is not a small thing

▪ Most retail winners believe the supply chain is having

a positive impact on their performance while just over

half of all others express the same confidence

▪ But close to one-fifth of non-Winners acknowledge

that the supply chain has had a negative impact on

their business

▪ Almost a third find it to be simply covering its costs.

This is s no small thing.


51

Top three business supply chain challenges

Main Challenges

▪ Competition regarding delivery speed to consumers

▪ Changing Consumer demand patterns

▪ New Costs


52

Popular supply chain models for e-commerce

53

Two popular e-commerce supply chain models

International shipping

International stock Local Stock

E-fulfilment from abroad European E-fulfilment

54

E-fulfilment from abroad


55


Characteristics

▪ Goods not stored in the country you are shipping to

▪ Orders cross borders and go through customs

▪ VAT and import duties may apply

For who?

▪ For most small sellers shipping from one warehouse,

cross-border fulfillment is the easiest and lowest-cost way

to handle international fulfillment

Important factors

▪ Understanding of receiving countries product regulations

and/or restrictions

▪ Seller must inform international buyers that delivery duties

may be added per their countries tax laws.

Source: Fit Small Business

56


Advantages

▪ Minimal setup required

▪ No/minimal integration with outside partners to launch

▪ Scalable quickly

Disadvantages

• International shipping rates can be quite high

• Complexity, different in carrier rates and delivery times

• Incorrect customs declarations cause unexpected

delay and costs

• You must ensure that ordered items adhere to

destination countries regulations

• You must offer expensive international returns service

Source: Fit Small Business

57

Getting closer to your international buyers is key to further growth

Sources: Baymard institute, Arvato, Metapack

Did you know:

• 61% of shoppers will abandon their cart if shipping,

taxes, and other fees are too high.

• 53% of shoppers say that speed of delivery is an

important factor when it comes to evaluating their online

orders.

• 38% of shoppers will never shop with a retailer again if

they had a poor delivery experience.

• 25% of shoppers have canceled an order because of slow

delivery speeds.

➢ Once you have seen your international sales grow, you can put your products closer to your

international buyers.

➢ Amazon is a major player in this arena, but there are plenty of international and regional fulfillment

opportunities to explore

https://baymard.com/lists/cart-abandonment-rate

https://www.prnewswire.com/news-releases/retailers-must-deliver-on-fulfillment-to-drive-conversions-a-new-study-by-arvato-reveals-668024593.html

http://www.metapack.com/state-of-ecommerce-delivery/

https://www.prnewswire.com/news-releases/retailers-must-deliver-on-fulfillment-to-drive-conversions-a-new-study-by-arvato-reveals-668024593.html

58

European E-fulfilment

59

European E-fulfilment

Two popular models

▪ Fulfilment by Amazon (FBA)

▪ E-fulfilment partner

60

Fulfilment by Amazon

Source: biccommerce.com

Characteristics

▪ Fulfillment By Amazon is the system that Amazon makes

available to you so that all you have to worry about is

restocking your products:

▪ they receive your products, store them, ship them, handle

returns, and provide customer care in the right language

for each customer.

For who?

▪ FBA is designed more for individuals or small businesses

than for huge companies which are extremely effective at

receiving merchandise, processing and shipping orders,

and providing customer care

Important factors

▪ Understand the costs

▪ Understand the pro’s and con’s

61

Fulfilment by Amazon: beware of costs

Advantages

▪ Potentially unlimited storage space

▪ Discounted shipping rates

▪ Effortless logistics and quick shipping & delivery.

▪ Customer service management

▪ Management of returns taken care of

▪ Fulfillment of orders from other channels

Disadvantages

• Costs

• High fees for products that are stored longer

• Easy returns process may result in more returns

• Strict guidelines on how to prepare and ship your items to Amazon

• Option for inventory mingling means that the product that goes to

the buyer may not be the one you sent to Amazon (caution for

counterfeits).

• Inventory management is tricky, especially in peak seasons

• Competition


62

Amazon costs

Indication of costs*

▪ Fixed fee : €39 per month

▪ Platform fee : 10 – 15% of sales

▪ FBA fee : 5%

▪ Pa-FBA : 5%

▪ Marketing : 10%

▪ Time : +/- 20 hours per week

depending on your business

* may change and depends on type of product and volume

Source: emerce.nl

63

E-fulfilment partner

Characteristics

▪ E-fulfilment is the process of storing, picking, packing and

shipping your products to consumers

For who?

▪ Any online seller that aims to grow their online business

▪ Online seller with high seasonality in demand

Important factors

▪ E-commerce store and fulfilment center integration

▪ Receiving and inventory management

▪ Order fulfilment

▪ Returns processing


64

E-fulfilment partner

Advantages

▪ Lower customs valuation due to import in bulk

▪ Lowering overhead costs

▪ Faster and cheaper delivery

▪ Improve scalability

▪ Your E-fulfilment provider will be invested deeper into your success

▪ Access to expertise and local knowledge

▪ Access to latest technology (API’s, inventory control, reporting etc.)

Disadvantages

▪ You may have difficulty of giving up control of your fulfilment

operation

▪ It requires IT integration

▪ You will manage your operation from a distance. A strong reliable

partner is key.


65

Choice of fulfilment depends on targeted service level


Cross border E-fulfilment Local E-fulfilment model

Direct ship from vendor

• Vendor fulfils order from abroadDescription

• Minimal setup required

• Minimal integration with outside partners

• Scalable quicklyBenefits

• High international shipping rates

• Complexity due to many delivery partners

• Compliancy

• Expensive international returns

Points to consider

• At least 3 days to deliveryService

• Centralized dedicated facility for online ordersDescription

• Optimized location for online channel needs

• High level of automationBenefits

• Additional infrastructure

• Inventory duplication across channels/regions

Points to consider

• Same day, next dayService


Direct ship from vendor

66

Local E-fulfilment improves service levels

Local E-fulfilment is better at providing service levels

preferred by EU customers

▪ Faster and more flexible last mile at lower costs.

▪ Remember: 53% of shoppers indicate that

speed of delivery is an important factor when

purchasing online

▪ High choice of last mile service providers (local hero

delivery model)

▪ Ability to predict delivery moment

▪ Delivery day/part of the day

▪ Provide estimation of delivery timeslot

▪ Low cost return options

maturity


67

Finding the right location for your e-fulfilment operations

68Source: Buck Consultants International, 2018

Find the right location

Costs

1. Labor costs of (blue color) distribution employee

2. Lease costs for logistics space

3. Transport costs (in- and outbound)

Quality

1. Infrastructure

2. Labor availability & quality

3. Labor regulations

4. Availability of transportation hubs

5. Facilities & sites

6. Proximity to market

7. Customs & taxes

Competition on fast, reliable, and

efficient delivery for low costs

Critical location criteria for your e-fulfilment operation(s)

69

Region’s included in the benchmark


Region’s

▪ Belgium, region of Flanders

(focus city: Genk)

▪ Germany, region of North-Rhine

Westphalia (focus city: Duisburg)

▪ France, region of Nord-Pas-de-

Calais (focus city: Lille)

▪ The Netherlands, Southeast

Netherlands (focus city: Venlo)

70

Warehouse profile assessed

The four countries (and 5 regions) have been assessed based on the following 2 warehouse profiles:


71

Netherlands most attractive location for E-fulfilment

In terms of cost and quality, the Netherlands ranks highest

for locating you E-fulfilment

• From a quality point of view, Southeast Netherlands has

the highest overall weighted score (3.93) and no real

weakness

• Germany follows Southeast Netherlands very closely

(3.75) with good scores on most factors but limited

availability of real estate

• Belgium is ranked fourth (3.57), but it still offers good

quality for logistics companies

• France follows on a bit further distance (2.74) and offers

lowest quality of the four countries.


72

The last mile

73

E2E Supply Chain costs

• Efficient SCM typically makes the difference between a profitable and loss-making e-commerce operation

Typical “pain points”:Low delivery reliabilityHigh customer service costsHigh return ratio’s and costsFaulty inventory administrationToo high cost-to-serve

Source: Districon 2014

E2E Supply Chain cost typically ranges between 20-30% of revenues for an E-commerce company

74

Last mile: consumers want to choose

75

Lead time and delivery time

• E-tailers and retailers compete on lead times, since quick delivery is seen as part of the product offering and can bring substantial competitive advantages. There are higher costs involved because there is a need for being very close to the market

• Most important is however, that the consumer can decide the lead time for itself. E-tailers will have to offer the choice to the customers. In most cases, the client chooses for the standard option of 3-5 working days. Next-day or same-day delivery is much more expensive. It differs per product groups. For food for example, delivery is required within one day. For a gift, it should be tomorrow. For most products, a three day-delivery is fine. For a study book, it can be two weeks. For furniture, several weeks or even months is fine.

• Choice in windows of delivery times Dutch consumers want to have the choice when products are delivered: 50% of Dutch consumers prefer the evening as time of delivery. Albert.nl has higher prices in the evening than during the day. Delivery times have to be specific: Nespresso has a window of 30 minutes

76

Location of delivery

Choices in where the products are delivered and can be returned to: • this can be at their homes or at another address given • or at a pick-up / drop off point (also for returns). Examples of pick-up points are

Kiala, DHL servicepoint, and PostNL Postal office. Many bricks and clicks companies give the option of free collection at the (own) stores, like in HEMA, where 80% is picked up at the stores. Also Albert Heijn will come with this solution. It is often the lowest cost option

• collect at warehouse

The highest costs of delivery are for the so called “last mile”: delivery at the door. In part this will be solved because once the volumes increase, it is also more feasible to organize joint delivery

One increasingly popular solution to deviate the high costs that are involved with home delivery (“the last mile”) is pick up and drop off points. Kiala (bought by UPS), has 6,500 locations in 5 countries, of which 500 in the Netherlands. Kiala points are located in supermarkets, gas stations, and boutiques DHL has 750 DHL service points in The Netherlands (manned and unmanned), maximum distance is 4 km for 93% of Dutch citizens. They are also located in supermarkets, gas stations, boutiques, drug stores, etc.

77

Last mile solutions

• Late cut-off times

• Deliveries everywhere the customer would like

• Next day deliveries or even faster

• Flexible return policy

• Local collection addresses

• Deutsche Post AG (DPW)’s DHL unit is in talks Volvo Car Group on a partnership that would allow the parcel-delivery service to remotely open autos made by the Swedish manufacturer. Discussions with other automakers are also ongoing, and a program that enables one-time access by a delivery agent may be announced in the coming weeks (Bloomberg nov 2014)

• Delivery by drones – Amazon Prime Air drones,

the goal of this new delivery system is to get

packages into customers' hands in 30 minutes

or less using unmanned aerial vehicles.

78

Last mile expectations


Delivery times of the Netherlands are a global exception with > 80% deliveries within 24 hours

79

The Netherlands as your fulfilment hub

80

The Netherlands at the top of logistical performance

Source: e-commerce Europe 2018

81

The Netherlands as your fulfilment hub

170 million consumers within 500 kilometres

Within a 1000 kilometre radius of the Netherlands, you can reach:

Value of close EU E-Commerce markets

• 3 biggest E-Commerce markets in the EU

• 244 million customers• Area with 90% of all EU

sales in E-Commerce

#3

244 million consumers within 1000 kilometres

Sources: ecommerce Europe 2019

82

Why The Netherlands?

1.300 kms350 million consumers

✓ Trade history

✓ Central location within the European market

✓ Sea- and airport facilities

✓ Extensive infrastructure with fast and reliable connections

✓ Excellent and well developed logistics industry

✓ Taxation advantages

83

Short lead-times to European consumers

1 day

3 days

2 days

100 million consumers



84

Europe’s most desired warehouse locations

Source: Prologis 2014

85

Lower last mile costs

60%

Inbound Last mile

Supplier E-DC Consumer

Handling

30%

10%

20%

40%

50%

Supply

chain

cost

Euro

pe

60% of E-supply chain costs in Europe is for last mile distribution

The Netherlands provides significant cost savings:

• Direct access to national networks in Germany, Netherlands and Belgium for outbound and returns

• Bundling opportunities because of high volumes in region

• Short distance to major EU hubs

86

Examples of e-fulfilment service providers in the Netherlands

The Netherlands is home to around 12,000 road hauliers, of which 500 provide logistics services. 3 categories, aimed at adding value to e-commerce companies

“Regular” 3PL’sSpecialized E-fulfilment suppliers Express networks

http://www.vds-fulfilment.nl/Home

87

Variety for last mile solutions

The Netherlands has several e-fulfilment service providers, all with their own profiles and specialization (overlap & combinations are frequent):

• Postal companies– often used for small, low value delivery of products such as DVD‟s, books, some fashion etc. Most countries in Europe have good postal networks. However, most postal comps don't use track & trace systems. Dutch players are Post NL and Sandd. The share of e-fulfilment delivery by regular post is deteriorating.

• 3PLs / logistics service providers, such as Menlo, Ceva, Geodis, Rhenus. They care of the first part of the e-fulfilment process. Final delivery to the end-consumer is commonly not offered by these parties.

• Parcel/courier providers. These are used most frequently as the preferred delivery model. Domestic parcel providers often allow for larger shipments at a low cost. They also offer track & trace and their domestic networks are often dense which means a high amount of shipments can be handled and delivered on a next day basis. There are a handful of international parcel providers operating across Europe which offer similar benefits to the domestic parcel providers at similar prices. The key advantage is being able to use one parcel provider for a number of countries or for the whole region versus many domestic transportation partners. Dutch examples of parcel providers are DPD, GLS, Selektvracht / DHL.

88

Variety for last mile solutions - II

The Netherlands has several e-fulfilment service providers, all with their own profiles and specialization (overlap & combinations are frequent):

• Global Express providers. These networks such as TNT Express, Fedex, DHL Express and UPS are typically used only when product value is high (more than 20 Euro/kg) and/or speed of delivery is key. This model lends itself to “direct ship” programs where the product is typically produced in one part of the world and shipped to another part. It allows for low to zero stock holding

• Specialized e-fulfilment players, such as Arvato, Docdata, S+H, T-Logistics, Moduslink, Freightways Distriservices B.V., Carpenter Europe Group. They offer all services, including back office activities and in some cases even front office activities

• Pick-up drop off points (PUDO) offered through partners such as postal companies (eg. PostNL), Kiala, DHL Express, etc. Alternatively, companies like Zara and HEMA use their own stores as collection point for online customers

89

Players in Rotterdam

90

Players in Brabant: e-tailers & retailers (B2C & B2B)

http://www.zooplus.de/

http://www.thesting.nl/

http://www.komplett.nl/Komplett/site/KomplettHome.aspx

http://www.nedis.nl/index.php

http://www.vanharen.nl/NL/nl/shop/welcome.html;jsessionid=128D29A27F2ACA81CACA7B29196419FF.appserver04t1

http://www.docdata.nl/klanten/overzicht-klanten.aspx

http://www.forever21.com/EU

http://www.xenos.nl/

http://www.google.nl/aclk?sa=L&ai=C6WOxFd3yT_3AOcKa8AOMj5WADJepwKECz9GvlyzLpMMFCAAQASCTrPsFUIKP0N8EYJHcjoX4F8gBAakCnbazoBEbtT6qBB5P0A-H8g90L4-WJAgqlOPGMyaQiyVFCtZlqtqbzPmgBho&sig=AOD64_3As80yT3tYJqDCMg7-Y-1UuYRyAA&rct=j&frm=1&q=dell+afbeeldingen&ved=0CEUQoxI&adurl=http://adfarm.mediaplex.com/ad/ck/12424-76139-2056-31?mpl=58328070&secrid=11763585375&senetid=search&mpre=http://lt.dell.com/lt/lt.aspx?CID=41292&LID=1069596&DGC=ST&DGSeg=dhs&ACD=1242476139205631&ST=dell&DURL=http://adfarm.mediaplex.com/ad/ck/12961-95497-3840-1?

http://www.debijenkorf.nl/

http://www.dorel.nl/index.php?lang=nl

91

PackNed

Players in Brabant: fulfilment & support services e-commerce (100% specialists)

http://www.indicia.nl/

http://www.mcsfulfilment.nl/

http://www.tlogistics.eu/

http://www.docdata.nl/

http://www.promese.eu/typo3temp/pics/ec632d105f.jpg

92

Limburg: EDC’s of E-Commerce Companies

93

OostNL: location of e-commerce companies

94

Limburg: EDC’s of E-Commerce Companies

E-commerce business examples

(benefiting late cut off + border loc.)

EDC mail order / direct selling company of business gifts 220 empl.

EDC for online sales of posters, prints and framed art 250 empl.

Internet pharmacy for the German market 500 empl.

Internet pharmacy for the German market 180 empl

EDC for protein shakes and drinks, energy supplements

and personal care products

140 empl.

E-Fulfilment Centre of healthcare anti aging product,

packaging and distribution

75 empl.

Printing of small and large series of business and greeting

cards, marketing materials, stamps, labels

450 empl.

E-Fulfilment Centre of Dr. Hittich personal care products 150 empl.

E-Fulfilment Centre for Europe (garden, lifestyle products) 170 empl.

E-Fulfilment Centre, customer service center 500 empl.

http://www.drhittich.com/

95

Zeeland | (E)DC’s of E-commerce companies

Headquarter and DC for online sales of fashion & lifestyle products and supply of mortar shops

Ca. 200 employees

Headquarter and EDC for online sales of personalized gifts (both B2B and B2C)

Ca. 150 employees

Headquarter and EDC for online sales of music products

Ca. 440 employees

Headquarter and DC for online sales of computer and other electronic related

Ca. 140 employees

DC for nutritional supplements and medical aid products for the Dutch, Belgium and French markets

Ca. 30 employees

Headquarter and DC for interior of the international professional Retail market

Ca. 250 employees

96

E-commerce: challenges and competences

97


98


99


100

Consumer protection in Europe

101

Trust marks

• Many different trust marks across Europe

• Local heroes should be supported for country sites

• Some trust marks have their own terms & conditions impacting shipping and return policies

102

Standards, Compliance & Security

• Strong know-how and focus on standards, security and compliance aspects throughout the life cycle of implementations

• Focused security specialists, Business analysts, Technology and QA Architects with specialized focus on contemporary practices around compliance and security

• Strong experience on pertinent standards and regulations, includes strong experience in PCI-DSS, PA-DSS, MasterCard SDP, VISA-CISP, Verified by Visa, MasterCard Secure Code, Net Safe, SAS 70, ISO 27001

• Strong Security solutions expertise on: – Business Continuity Solutions:

• Spambot avoidance, Replicated multi data centre solutions, Recovery solutions

– Threat management: • Threat modelling, Penetration testing, Vulnerability assessment and concealing,

security audits, Siege detection and Intrusion prevention solutions

– Cryptography solutions

Source:Cybage.com

103

European Directive on Consumer Rights

The Directive on Consumer Rights aims at achieving a real business-to-consumer (B2C) internal market, striking the right balance between a high level of consumer protection and the competitiveness of enterprises. It is renewed as of 13 June 2014.

The following are the 10 most important changes for consumers in the new Directive:1) The proposal will eliminate hidden charges and costs on the Internet Consumers will be protected against "cost traps" on the Internet. This happens when fraudsters try to trick people into paying for ‘free’ services, such as horoscopes or recipes. From now on, consumers must explicitly confirm that they understand that they have to pay a price.

2) Increased price transparencyTraders have to disclose the total cost of the product or service, as well as any extra fees. Online shoppers will not have to pay charges or other costs if they were not properly informed before they place an order.

3) Banning pre-ticked boxes on websites When shopping online – for instance buying a plane ticket – you may be offered additional options during the purchase process, such as travel insurance or car rental. These additional services may be offered through so-called ‘pre-ticked’ boxes. Consumers are currently often forced to untick those boxes if they do not want these extra services. With the new Directive, pre-ticked boxes will be banned across the European Union.

Source: European Commission

104


4) 14 Days to change your mind on a purchase

The period under which consumers can withdraw from a sales contract is extended to 14 calendar days (compared to the seven days legally prescribed by EU law today). This means that consumers can return the goods for whatever reason if they change their minds.

• Extra protection for lack of information: When a seller hasn’t clearly informed the customer about the withdrawal right, the return period will be extended to a year.

• Consumers will also be protected and enjoy a right of withdrawal for solicited visits, such as when a trader called beforehand and pressed the consumer to agree to a visit. In addition, a distinction no longer needs to be made between solicited and unsolicited visits; circumvention of the rules will thus be prevented.

• The right of withdrawal is extended to online auctions, such as eBay – though goods bought in auctions can only be returned when bought from a professional seller.

• The withdrawal period will start from the moment the consumer receives the goods, rather than at the time of conclusion of the contract, which is currently the case. The rules will apply to internet, phone and mail order sales, as well as to sales outside shops, for example on the consumer's doorstep, in the street, at a Tupperware party or during an excursion organized by the trader.


105


5) Better refund rights

Traders must refund consumers for the product within 14 days of the withdrawal. This includes the costs of delivery. In general, the trader will bear the risk for any damage to goods during transportation, until the consumer takes possession of the goods

6) Introduction of an EU-wide model withdrawal form Consumers will be provided with a model withdrawal form which they can (but are not obliged to) use if they change their mind and wish to withdraw from a contract concluded at a distance or at the doorstep.

7) Eliminating surcharges for the use of credit cards and hotlines Traders will not be able to charge consumers more for paying by credit card (or other means of payment) than what it actually costs the trader to offer such means of payment. Traders who operate telephone hotlines allowing the consumer to contact them in relation to the contract will not be able charge more than the basic telephone rate for the telephone calls.


106


8) Clearer information on who pays for returning goods If traders want the consumer to bear the cost of returning goods after they change their mind, they have to clearly inform consumers about that beforehand, otherwise they have to pay for the return themselves. Traders must clearly give at least an estimate of the maximum costs of returning bulky goods bought by internet or mail order, such as a sofa, before the purchase, so consumers can make an informed choice before deciding from whom to buy.

9) Better consumer protection in relation to digital products Information on digital content will also have to be clearer, including about its compatibility with hardware and software and the application of any technical protection measures, for example limiting the right for the consumers to make copies of the content.Consumers will have a right to withdraw from purchases of digital content, such as music or video downloads, but only up until the moment the actual downloading process begins.

10) Common rules for businesses will make it easier for them to trade all over Europe. These include:A single set of core rules for distance contracts (sales by phone, post or internet) and off-premises contracts (sales away from a company’s premises, such as in the street or the doorstep) in the European Union, creating a level playing field and reducing transaction costs for cross-border traders, especially for sales by internet.


107

Taxation of pan-European B2C sales

108

• E-Commerce legal requirements differ per country

• In many industries country specific regulations are applicable

• VAT-registration per country required

Legal and regulations

109

Distance sales

EU VAT considerations when selling physical goods to B-2-C consumers

✓ Selling products directly to private consumers, cutting out the ‘middle man’ so to speak, is called ‘Distance Selling’ in EU VAT regulations. Such sales are subject to special EU VAT regulations which include special invoicing requirements.

✓ The term ‘Distance Selling’ also encompasses sales via catalogue and internet. In addition, businesses engaged in distance selling across borders have to heed specific EU VAT regulations aimed at ensuring that customers pay the correct VAT with respect to country and rate.

✓ Sellers are responsible for the correct calculation, reporting and payment of VAT. The regulations regarding distance selling only apply to business-consumer sales. The sales to other EU businesses which have a valid VAT ID number (i.e. B-2- B sales) may be VAT exempted if the VAT liability can be shifted to the customer. This is referred to as ‘reverse charge of VAT’.

Source: Biddge 2017

110

Distance sales

Distance sales

✓ The ground rules with regard to distance selling are relatively straightforward. Businesses engaged in distance sales (i.e. sales to EU consumers who do not have a VAT ID number) are allowed to charge the VAT rate of the country the business is located.

✓ Once the particular annual sales threshold (see Table: Individual country thresholds) has been reached however, the business is required to apply the consumer’s local VAT rate to the sale. This requires the business to VAT register with the local tax authorities of that country, and report and pay over VAT collected.

Source: Biddge 2017

111

2 main types of B2C sales

• Goods → Purchased online and then shipped to consumer.

• E-services → Downloads (for example games, apps, online news, etc).

112

Selling from EU?

1. General rule, goods taxed in country of customer. Local VAT registration required;

2. Exemption: VAT thresholds. When selling to other EU countries. → No local registration required if sales under these annual thresholds.

Selling from EU to non-EU consumer?

1. No VAT applicable on invoice.

2. Local legislation may require registration.

Goods supplied from non-EU countries?

The above applies plus import VAT (normally refundable) and custom duties.

Briddge can assist with registration in the Netherlands and keeping the company tax compliant.

Where are goods taxed?

113

Consequences of direct import

• Importer of record necessary in Germany, France, Italy, etc.• Additional compliance costs• No consolidation in country of export: higher transport costs• Local warehouse solutions means extra costs• Local import VAT directly payable• Different VAT rates applicable:

- risk of different sales prices- software adjustments

• No VAT reclaim on returned goods

B2C supplier

France 20%

Germany19%

Italy22%

Source: FocusonVAT

114

Consequences of local set-up

• Centralized clearance: no local importer of record necessary• No prepayment of import VAT in NL• Only additional compliance costs when sales go up• Centralized warehousing: no sales, no VAT due• Returned goods = VAT reclaim• Centralized VAT payments

Set-up through fiscal representation• Power of attorney + contract • Start and finish when B2C supplier wants: maximum flexibility• Import deferment license available = No import VAT due• Quarterly or Monthly report of all EU sales• Monthly payment of VAT to Focus on VAT (bulk transfer to trust account)

or to the tax office directly• EU coverage for local registrations

Source: FocusonVAT

115

VAT structure

NL

FR

DE

UK

< € 100.000 = 21% NL VAT

> € 100.000 = 19% DE VAT + Registration

< GBP 70.000 = 21% NL VAT

> GBP 70.000 = 20% UK VAT + Registration

< € 100.000 = 21% NL VAT

➢ € 100.000 = 20% FR VAT + Registration

21% NL VAT

Import 0% VAT(deferment license)

Collected VAT

from actual Sales

Local tax authorities

Collected VAT from

actual Sales

B2Csupplier.com

Fiscal rep+

Broker

Source: FocusonVAT

116

Sales from non-EU: taxed?

Taxed in country of consumer → Local registration required → Different VAT rates per country → high administrative burden.

Changes per 1 January 2015

Sales from EU and non-EU both taxed in country of consumer.

Moss-ruling

To prevent local registration, all VAT declarations can be done from one country. Local tax authority arranges VAT payments to respective tax authorities.

Registration in one EU country is mandatory!

Where are E-services taxed?

117

VAT structure 2015 E-services

Jan 2015: VAT is based on where the e-consumer is based

Applicable for:•Gaming, e-books and distance teaching•Software and software upgrades•Websites, data storage, hosting, VoIP and content•Music, films, images and photographs•Gambling & games•Marketplaces•Digital goods and subscriptions

118

VAT structure 2015-2019 E-services

• 290.000 merchants in Europe

• You need to identify the country of each customer

• You need to apply the VAT rate of the country where the consumer is based (VAT-rate of registration country can be applied for all sales, if annual B2C services are not >EUR 10,000 (regulation per 1-1-2019)

• You need to remit the money through the MOSS

• You need to identify your customer through:

• IP address

• Billing address

• Bank Details

• Mobile country code

• Other commercial relevant information

• You need to store all data you collect for 10 years and be open to an audit from any country in EU

• You need to adhere to VAT laws in 28 countries of invoicing (around 14 are a bit different)

119

Proposed Expansion VAT-MOSS 2021

• Plans are to expand the current VAT-MOSS portal to B2C E-commerce of goods

• System would work the same as current E-service platform, but would include B2C E-commerce of goods

• This would entail that distance selling thresholds for B2C E-commerce will no longer apply and a single VAT-MOSS registration in one EU Member State would suffice

• Legislation is expected to go into effect on 1-1-2021 but is uncertain at this stage.

120

E-commerce innovations in The Netherlands

121

Knowledge institutes – e-commerce

Eindhoven University of Technology

Erasmus University Rotterdam

University of Groningen

University of Amsterdam

University of Twente

Tilburg University

Knowledge Distribution Center Limburg (University of Applied Sciences Fontys)

122

Spare parts supply automotive after sales

IZI Motive▪ A Dutch SME originating from a DINALOG demonstration

project.▪ With an innovative approach of the core of the automotive

business and its aftermarket: spare parts.▪ Solutions for spare parts management, procurement, planning,

inventory management and logistics.▪ Control tower that connects manufacturer and garage. ▪ Approx. 70 affiliated garage businesses.

SOLUTION▪ Online supply chain control

tower IZI2 Connect for car mechanics

▪ Developed with Slimstock and Eindhoven Technical University

▪ Integrated planning system▪ Parts stock optimization▪ Night distribution via cross-

dock locations▪ Supply chain orchestration of

return flow, warranty and repair support

Source: IZI Motive

BENEFITS▪ Direct ordering from

independent parts suppliers▪ Optimal attunement between

stock, planning and orders▪ Reduction of number of

deliveries Cost saving of 15-20% on parts for mechanics

▪ 35% total supply chain cost saving

▪ 15% transport and warehousing cost saving potential

REQUIREMENTS▪ Reduction of costs of spare

parts for car repairs▪ Quick response including

same-day deliveries▪ Reducing the number of

deliveries to mechanics per day

123

Innovation in e-commerce

Transsmart▪ Dutch company founded in 2008 automates and optimizes

the logistics processes between suppliers, warehouses and clients.

▪ Transsmart offers multi-carrier software solutions for online retailers with ERP or WMS or webshop systems (ao Exact, AFAS, Unit4, SAP)

▪ 12 employees, more than 600 clients in the Netherlands, Belgium, Germany and US who supply in more than 200 countries worldwide

▪ No 11 in Dutch SME Innovation top 100▪ No9 in Deloitte Technology Fast50 – the Netherlands

SOLUTION▪ Extension for webshops to

send products quicker and more efficient for mainly SMEs

▪ Direct order of shipment at carrier

▪ Multi-carrier send software▪ 3 modules: send, location

selection, returns▪ Initial purchase plus monthly

fee

Source: Transsmart

BENEFITS▪ Multi-carrier and multi-

webplatform▪ Direct sending via webshop▪ Upload from Excel file or manual

input via online platform possible▪ Direct coupling with ao PostNL,

DHL, DPD, GLS, Selektvracht, UPS, Kiala, Dynalogic, ABC mail

▪ Printing of professional labels▪ Tracking & Tracing, automated

emails

REQUIREMENTS▪ Web platform independent▪ Carrier independent▪ Direct solutions,

automated or manual input

▪ For webshops with more than 5 shipments per day

▪ Tracking & tracing▪ Time and cost efficiency

124

Innovation in e-commerce

12return▪ A Dutch SME originating from a DINALOG R&D project.▪ Providing returns management software that supports a

customer centric and sustainable supply chain that covers the return and re-use of products that cannot be used or are considered undesired or obsolete by it’s current user.

▪ Helping retailers to increase service, decrease costs and achieve a sustainable way of doing business.

▪ A Control Tower coordinating several reverse supply chains.

SOLUTION▪ Returns Management Software▪ Implemented software tool:

Product Routing Algorithm (PRA) for dynamic routing.

▪ Clear return instructions for the end-user.

▪ Informing and planning the reverse supply chain.

▪ Optimizing international returns.

▪ Multi-vendor / drop-shipment returns.

Source: 12return

BENEFITS▪ 12Return platform handles

returns from 13 European countries to the Netherlands and from Australia and the USA to Great-Britain.

▪ Efficient returns at several webshops including Conrad with 200-500 returns every day and Neckermann with 200-300 returns every day.

REQUIREMENTS▪ Value creation in the

reverse supply chain (sourcing, customer, environmental and information).

▪ Economies of scale through supply chain coordination by a control tower.

125

Innovation projectCross Chain Order Fulfilment for Internet Sales

1. Multi-channel strategies2. E-commerce Information

Platform3. Intralogistics4. Network design

Integrating e-commerce in supply chain control & coordination

PartnersVU University Amsterdam, Erasmus University Rotterdam, University of Amsterdam, Rijksuniversiteit Groningen, CTAC, CB Logistics, Scanyours.com, Sectorinstituut Openbare Bibliotheken (SIOB), DHL, Vereniging Openbare Bibliotheken (VOB), Districon, Beurtvaartadres, CAPE groep, WDM, Centric IT Solutions, PostNL

126

Innovation projectCross Chain Order Fulfilment for Internet Sales

1. Cross-border e-tail logistics employing local last-mile distribution and customer preferences

2. Cross-chain online and offline retail logistics on operational, tactical and strategic level

3. Chain integration including customer involvement in deliveries

Competitive Advantage Through e-Commerce Logistics

Partners:De Bijenkorf, Blokker, CAPE Group, Centric, Coolcat, Geodan, LogiXperience, NicOud, PostNL, VDS Fulfilment, vLm community e-commerce, Bisnode, WICS, University of Amsterdam, University of Twente

127

Innovation projectDesigning sustainable last-mile delivery service in online retailing

Development and evaluation of

prototype decision support tools to

facilitate innovative operating strategies

and to analyze the design of retail

networks including an online channel

that provide the most benefits in terms

of various sustainability criteria

1. Optimizing the delivery operations

2. Designing the last-mile retail

network

Designing sustainable last-mile delivery service in online retailing

Partners:Erasmus University (Rotterdam School of Management, Rotterdam School of Economics), Albert Heijn, ORTEC, Thuiswinkel.org, EVO, Arnhem Nijmegen City Region, Rotterdam City Region

128

Setting up your supply chain operations in the Netherlands

Logistics hub for E-commerce – key reasons

1. Central location within the European consumer market

2. Excellent connectivity to all Europe destinations

3. World class fiscal and customs environment

4. Strong logistics base for e-commerce

5. Highest quality and competitive cost

European hub for E-commerce – number 1

▪ as most connected country (DHL Global Connectedness Index, 2016)

▪ on the EU Transport Scoreboard (European Commission, 2018)

▪ in European Union in logistics performance (The World Bank Logistics Performance Index, 2016)

▪ on quality of air infrastructure (IMD World Competitiveness online, 2018) 1

Easy access to largest European markets

Germany

France

U.K.

$72 billion

$107 billion

$166 billion

▪ Located between Europe’s three major

e-commerce markets: UK, Germany, France

▪ To be reached by road within a few hours

▪ The Dutch trading mentality and cross

border business environment resulted in

many multinational companies establishing

their European logistics base in the

Netherlands

▪ The Netherlands is economically and politically

stable

Source: Remarkety, 2017

Size of West European

e-commerce markets

European hub for E-commerce – omnichannel

▪ The Netherlands is used a European base for

e-tailing companies, as all sales channels

can be fulfilled efficiently

▪ Amsterdam Airport Schiphol is the main x-

dock for intercontinental drop shipments

▪ Direct access to integrator hubs and

national postal networks for B2C

▪ Quick access to Amazon warehouses for

Fulfilment by Amazon (FBA)

▪ Close proximity to main urban regions for

retail fulfilment

▪ Within a 300-kilometer (180 mile) radius:

▪ Rotterdam and Antwerp, the two

largest container ports in Europe

▪ Amsterdam Airport Schiphol,

the #2 best connected airport in

the world and #3 cargo airport

in Europe

▪ UPS and FedEx/TNT, the two

main European integrator air hubs

▪ In between is the European sweet

spot for e-fulfilment

TNT / FedEx Air Hub

UPS Air Hub

Brussels

Airport

Port of Antwerp

Port of Rotterdam

Amsterdam Schiphol Airport

BELGIUM

GERMANY

Excellent in- and outbound infrastructure

Main logistics hot spots

Short lead times to European markets

1 1-2

1-2

2-4

2-4

2-3

2-3

2-4

3-5

3-5

2-3

Delivery time in days

from the Netherlands

▪ Most European countries can be reached

within one to three days with regular

road transport and parcel networks

▪ National postal networks provide cost

saving opportunities for small packages

▪ Express networks provide opportunities

for next or same day delivery in Europe

▪ Pick-up point networks provide several

delivery options for consumers

Source: Royal Rotra, 2017

▪ Port of Rotterdam: largest share of

container handling

▪ Maximum size container ships

(21,000+ TEU) can be

accommodated 24/7

▪ Total throughput in 2017 exceeded

13.5 million TEU

▪ Growth is facilitated by expansion of

terminal capacity until at least

2030

Source: Port Economics 2017

Number of containers handled (x1.000 TEU)

Deep sea connections

0 2.000 4.000 6.000 8.000 10.000 12.000 14.000

Barcelona (ES)

Marsaxlokk (MT)

Piraeus (EL)

Felixstowe (UK)

Valencia (ES)

Algeciras (ES)

Bremerhaven (DE)

Hamburg (DE)

Antwerp (BE)

Rotterdam (NL)

Amsterdam Airport Schiphol: E-commerce hub

▪ Amsterdam Airport Schiphol is a major European air hub for E-commerce

▪ Third largest airport in Europe in terms of cargo volume

▪ Second largest hub connectivity in the world

▪ It allows swift distribution of consumer goods

Source: Amsterdam Airport Schiphol, 2017

Air connectivity

322 destinations worldwide

31 freighter lines

1.7 million tonnes of cargo

North America

23 locations

Asia

31 locations

Middle East

14 locations

Source: Amsterdam Airport Schiphol, 2017

Europe

194 locations

Africa

32 locations

South America

28 locations

Rail and barge connectivity

Rail terminals

Rail-Barge terminals

Barge terminals

▪ Extensive network of inland terminals,

for both rail and barge

▪ These inland locations offer ample

opportunities for E-commerce

logistics

Fiscal climate – customs

Source: UNESCAP, 2017

0 50 100

IrelandPortugal

ItalySwitzerland

FranceBelgium

SpainGermany

AustriaNetherlands

Transparency

Formality

Institutional arrangement and cooperation

Paperless trade facilitation

Cross-border paperless trade

▪ The Netherlands: best overall

performer in trade facilitation

(119 countries)

▪ This is due to the pro-business

attitude of customs

▪ Meaning a speedy transshipment of

goods and a low risk of product being

delayed at ports or DC’s

▪ Netherlands scores 94%; EU average

is 62%

Fiscal climate – VAT attractiveness

0 2 4 6 8 10 12 14 16

Switzerland

Spain

Germany

France

Luxembourg

Italy

Ireland

Austria

UK

Belgium

Netherlands

Source: Deloitte VAT Index, 2016

Fiscal climate – VAT deferment

The advantages of the Dutch VAT system:

▪ VAT deferment at import leads to a considerable cash flow advantage

▪ Apply Dutch VAT rate on B2C sales to other EU countries (until threshold)

▪ Be completely VAT compliant without an entity in Europe by using a fiscal representative

Fiscal climate – bonded warehousing

The advantages of a customs-bonded warehouse:

▪ Avoidance of double duty payment and postponement of duty payment

▪ Possibility of storage for an unlimited period of time

▪ Less customs interference

▪ Value added logistics in a customs-bonded warehouse and bonded transport (T1)

Note: Bonded warehousing is possible anywhere in the country

and is not limited to, for example, Free Trade Zones

Business climate - Ease of doing business

Source: IMD World Competitiveness Online, 2018 (Selection of European countries)

▪ Doing business in the Netherlands is

supported by regulations: best score

in mainland Europe

▪ The regulatory environment in the

Netherlands is most conducive to the

start-up and operation of a European

e-Fulfilment Center

1 2 3 4 5 6 7 8

Italy

Czech Republic

Spain

France

Belgium

Poland

Germany

Portugal

United Kingdom

Ireland

Netherlands

Executive Opinion Survey based on an index from 0 to 10

Labour force – language skills

Source: EF EPI English Proficiency Index, 2018

▪ The Netherlands ranks first in terms

of adult English proficiency

▪ Additionally, the Dutch speak a variety

of foreign languages (such as

German and French)

English

German

French

55

56

56

62

64

64

70

0 20 40 60 80

France

Spain

Italy

Poland

Germany

Belgium

Netherlands

Value added logistics (VAL)

Fulfilment service providers:

▪ Assembly, reverse logistics and repair

▪ Testing, sampling and quality control

▪ Customisation and configuration

▪ Packing, re-packing and sealing

▪ Storage and de-consolidation

▪ Labelling and coding

▪ Many Dutch 3PL’s qualify for the highest

TAPA* certification, or were approved as

AEO**

* Technology Asset Protection Association - ensures safe and secure transport, storage and warehousing

** Authorized Economic Operator – complies with WCO or equivalent supply chain security standards

Value added services (VAS)

Value added services include:

▪ Inventory management

▪ Order processing/invoicing

▪ Fiscal representation

▪ Customs (import/export)

▪ Bonded warehousing

▪ Track and trace, Control towers

▪ Customer service, WMS/TMS systems

▪ Forward stock locations and/or PUDO’s

Tracking and tracing

▪ The Dutch logistics industry offers a high degree of visibility of the supply chain, for

better planning, and monitoring of consumer sales

▪ More and more Dutch logistics services providers offer ‘control tower’ functionality

Source: Buck Consultants International, logistics benchmark 2017

▪ The Netherlands ranks as a

competitive country in terms

of operations costs, with

four specific locations

▪ These locations are also able

to meet E-commerce RDC

requirements from a quality

perspective.

High quality and competitive costsC

ost -

Qu

ality

ma

trix

Cost leaders Quality leaders

tota

l co

st

quality

E-commerce – who’s there?

http://www.forever21.com/EU

About HIDC

HIDC/NDL is:

▪ A public/private, non-profit organization

▪ Founded by Dutch logistics industry

▪ Representing more than 300 members

▪ Promoting the Netherlands abroad as

‘Gateway to Europe’

▪ Working closely with the Netherlands

Foreign Investment Agency (NFIA)

Services include:

▪ Advice on cost-effective and agile set-

up of European supply chain

▪ Entry into European market by

exporters from North-America and Asia

▪ Matchmaking and fact finding trips

▪ Connect to logistics partners

▪ Free of charge and confidential

Holland International Distribution Council | The Netherlands | www.hidc.nl | [email protected]

151

E-commerce business examples

(benefiting late cut off + border loc.)

Case studies

152

E-Fulfilment: case study

153

• Fulfilment from US stock can work for unique products

• DDU shipping: no go!

• Important to give transparency on total costs

• Good solutions available in the market

Local fulfilment: what are the benefits?

154

E-Fulfilment: case study

Source: www.tlogistics.eu

155

• Inditex (Zara, Berschka, Pull&Bear) opens their first DC outside of Spain in Lelystad, the Netherlands in May 2019

• It will employ more than 800 people in 100,000 m2 (first phase) on a 35 ha plot

• The vicinity of Amsterdam Airport Schiphol, and the availability of space and personnel were major location factors

• Order lead time to stores is 48 hours globally, which drives use of air freight globally and trucking within Europe

Inditex - Lelystad

156

• Online retailer VidaXL adds 80,000 m2 of DC space to its existing 100,000 m2 in Venlo in 2019

• This expansion will add 175 jobs to the region

• It benefits from the logistical qualities of the European logistics hot spot (source: Prologis 2018)

• Inbound shipments are transported by daily barges and trains from Port of Rotterdam

• Outbound consumer deliveries are quick and cheap due to the location in the gravity point of the EU and proximity to parcel hubs

VidaXL - Venlo

157

• Location of the state-of-the-art distribution center is Trade Port North in Venlo

• The new European Distribution Center (EDC) will service all of the luxury fashion brand’s European and Middle Eastern retail, wholesale and, eventually, e-commerce needs

• The 93,000 m2 EDC is operational since 2016

• Michael Kors’ EDC will be a green building with a host of environmentally friendly features, including LED interior lighting and a solar-panel roof

• The new facility has created more than 400 jobs in the region

“The construction of a new, innovative distribution center is an important and exciting step in the evolution of Michael Kors. The scale and sophistication of the facility reflect our commitment to substantial growth across all channels of distribution in both Europe and the Middle East.”

John D. Idol

Chairman and CEO Michael Kors

Michael Kors - Venlo

Source: fashionunited 2016

158

• Online fashion company Techstyle has chosen 3PL Bleckmann and European logistics hot spot Venlo for its European fulfilment operation

• The company runs concepts like Justfab and Fabletics, where consumers receive personal styling advice

• The operation employs 130 people and started in 2018

Justfab - Venlo

Source: De Limburger 2018

159

• StockX is a live marketplace for buying and selling limited edition sneakers, watches, handbags, and streetwear. Buyers place Bids, sellers place Asks, and when a Bid and Ask meet, the transaction happens automatically - across a true market price

• StockX announced in May 2019 will establish an Authentication Centre in Eindhoven, The Netherlands. They chose Eindhoven because of its location at the heart of Europe’s transport and logistics network, and the vibrant local sneaker and fashion scene

• The centre will employ more than 100 people

StockX - Eindhoven

Source: BOM Foreign Investments 2019

160

• H&M e-fulfilment center for Benelux, France and Scandinavia is based in Tilburg

• Right next to the barge terminal (with daily connections to Rotterdam), XPO operates this 62,500 m2 distribution center

• The facility boasts a pocket sorter, outbound sorter for carriers and fully integrated conveyor system and employs approximately 500 people

161

Hennes & Mauritz AB - Tiel

H&M returned from Germany to the Netherlands, Tiel, operational May 2015:

✓ dc of 24,000 m2

✓ pick-to-voice

✓ approximately 170 jobs

Main drivers:

✓ shorter time-to-market

✓ reducing total logistics costs by simplifying the logistics activities resulting in a faster replenishment of the 124 stores

✓ higher sales volumes and better margins

✓ less out-of-stocks due to higher efficiencies in the goods flows

✓ less environmental impact

✓ motivated local work force

Sustainability:

✓ climate control system

✓ motion sensors

✓ LED lighting

Source: www.logistiek.nl

Holland International Distribution Council | The Netherlands | www.hidc.nl | [email protected]

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