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What’s next in e-commerce? Digital megatrends are transforming logistics

(Source: FedEx)

The digital explosion triggered by the pandemic has permanently transformed everything, from the way we learn and work, and even how we shop. 

This is especially true in the Asia Pacific, Middle East and Africa (AMEA) region. Asia Pacific alone is now generating nearly two-thirds (64 per cent) of global e-commerce spending, according to Statista. Shoppers have rapidly switched to purchasing online, and so have many businesses.

Megatrends making waves

New digital megatrends – long-term behavioural shifts – are having a global impact. Few places better illustrate the impact of this digital transformation than the world’s biggest market – China – where vast numbers of people and organisations are embracing the internet and reinventing the way life is lived and business is done. 

In a recent FedEx white paper, titled E-commerce Megatrends to Watch, we shared some of the most significant drivers of e-commerce and analysed the implications for e-commerce enterprises. Take the rise of connected consumers, for example.

Individual, empowered customers creating and maintaining virtual relationships isn’t new. However, this group is evolving quickly and spinning off a host of sub-trends in the process, making shopping a more ‘connected’ experience across platforms. These include “mobile-only” where a phone or tablet fulfils all of someone’s daily needs. Another is “social commerce,” where groups or communities make their purchases over social networks. New virtual communities, what some might call “digital tribes,” are springing up around shared interests in specific topics. 

Mobile-commerce and social-commerce hold huge growth opportunities for e-tailers to connect with consumers in a more personalised and engaging way – something that consumers today desire. But success depends on innovative logistics models that can ensure smooth end-to-end shopping experiences. China’s success in actively adopting super apps like WeChat, as portals for consumers to access logistics services, could be a blueprint. Brands outside China could use the same tactics to reinvent their sales and supply chain strategies.

Logistics plays a role in the sharing economy

The sharing economy is another megatrend. Powered by nearly ubiquitous mobile connectivity, the search for greater access and convenience in daily life has moved beyond typical areas, such as taxis, offices, and accommodation. This is opening the door to even more services – from on-demand handymen to professionals such as therapists and even lawyers. 

As cities become more congested, the process of sharing resources gets complicated and expensive. That is where the logistics industry comes in. Logistics firms already have the expertise and infrastructure to distribute shared products, such as shared bicycles, across a town or province, helping businesses balance product supplies in a cost-efficient manner. And there is every reason to expect the same scenario to play out in the field of e-commerce.

The data reflects that hypothesis. Based on the percentage of the population owning a smartphone, the Asia Pacific region, led by China, is already sitting near the top of this trend. That is in line with McKinsey’s prediction that Asia’s e-commerce logistics market will account for 57 per cent of total market growth from 2020 to 2025.

From a potential pain point to an e-commerce enabler

Tackling the element of logistics has been challenging for e-commerce players, according to Shopify research, especially for small to medium businesses looking to expand overseas. The effort of building an international presence rises dramatically as distances and potential customer numbers increase.

The rise of front-end marketplaces, such as Ebay and Shopify, has provided a partial solution. Now e-tailers can certainly build their own online ‘click-and-sell’ stores almost instantly and reach customers across the world on a single platform or use multiple platforms to accommodate prevailing demographic or geographical trends.  

However, when it comes to fulfilment and delivery – getting goods into the hands of customers – the picture is still incomplete. Delivery performance isn’t always consistent, varying from platform to platform. That makes meeting and maintaining customer expectations a tougher proposition for e-tailers interested in differentiating through excellence.

The logistics industry is rising to the challenge of turning this pain point into a pathway for business success. FedEx recently announced two new programs designed to help e-tailers sell effortlessly on e-commerce platforms and enjoy instant access to reliable and affordable shipping solutions.

Designed to maximise choice, flexibility and cost-efficiency, the new FedEx Compatible and Alliances programs essentially create a new e-commerce ecosystem that integrates more than 20 leading e-commerce marketplaces and platforms. 

Image: FedEx.

In addition to providing e-tailers across the Asia Pacific with direct access to FedEx services at favourable rates, the programs make building a cross-border e-commerce business and managing customer shipments less daunting. For example, allowing e-tailers to automatically generate their own “personalised” FedEx shipping labels without leaving the e-commerce marketplace platforms reduces the management burden, eliminates delays, and increases customer satisfaction. Efficiency for the win!

Developments like these could be game-changers. And not just for online entrepreneurs. The biggest winners could be the legions of offline merchants, who are now more determined than ever to leverage their brand power on the digital frontier by creating the best possible customer experience.

Customer experience still key to e-commerce success

Customers seem to agree. According to PwC, 73 per cent of them rank customer experience as a factor that helps to drive their buying decision. Forbes has noted that two-thirds of companies already compete based on customer experience, and businesses that focus on improving it could enjoy an 80-per-cent increase in revenue.

Ultimately, every business needs to think holistically and stay on the lookout for ways to add value, convenience, and speed to their customers. Because in the increasingly digital, post-pandemic world, how you make people feel will be just as, if not more, important, than what something costs. 

For more insights for small businesses on the growth opportunities in the Asia Pacific, please visit FedEx Business Insights

About the author: Kawal Preet is president of Asia Pacific, Middle East, and Africa (AMEA) at FedEx Express.