Parcel delivery companies that position themselves well can take advantage of tremendouschanges, growth and opportunities in e-commerce taking place over the next three years, according
to Ebay’s European head of shipping.Christoph Homann highlighted the particularly strong potential for those improving theconvenience and tracking of shipments, and for carriers that try to meet the growing demand ofconsumers in countries like Italy, France and Russia for cross-border trade.
He told last week’s The Future of UK Postal Services conference that e-commerce was “truly at aninflection point, which means that in the next two to three years we will see more change than inthe previous 10 years combined”. This shift was primarily due to the “blurring of the lines betweenthe online and offline worlds” through the use of smartphones, which allow buyers to check onlineprices at any time while looking at making high-street purchases.
“In the US now, 30% of all product purchases are influenced by internet searches, and we canresearch internet prices very easily now with bar-code scanners,” said Homann. “Why is thisimportant? Because so much is going to switch to online commerce, as people realise prices are somuch cheaper, which means more sales for us and more opportunities for delivery companies.”
Homann said people were already wanting to see the convenience of the online purchasingexperience extended into the delivery process. “What people are really looking for is a combinationof a really good service at a competitive price.”
For him, this meant next-day delivery for domestic purchases. “That is where the market isheading,” he said. “Sure, some people are prepared to trade off money and time, but the market ismoving towards one-day delivery. And people are looking for convenience for pick-up and delivery –to be able to pick it up or drop something off where and when they like.”
Homann said some traditional carriers that tried to get involved in e-commerce deliveries werekeeping “many of the old restrictions from a bygone era”, such as limited delivery times andvisibility of shipments. But tracking was increasingly important to customers. “Tracking helps givepeople confidence to make a purchase, because they know they will get it, and when they will getit. Increasingly I think we need to stop thinking about tracking as a premium service, but as anormal part of the delivery experience.” The opportunity to choose a delivery time and date wasalso an important factor, he added.
Homann said the UK was “not looking bad” in terms of domestic delivery costs, but there was roomfor improvement in terms of innovation and service levels, in comparisons with Germany and the US.Delivery costs are lower in the UK than in the US and Germany, but Germany leads the UK in servicelevels and innovation, with the US trailing behind in third place.
The e-commerce executive acknowledged that it was sometimes hard to meet all the needs ofcustomers, but there were tremendous opportunities for those getting it right. This was alsoevident in cross-border transactions, which currently make up around 20% of Ebay shipments. “Ibelieve that 20% is just scratching the surface of the tremendous potential,” he commented.
“We have a number of very strong economies, although less strong than three years ago, but wherethere is tremendous demand for goods of a certain quality, and an imbalance of supply and demand.The UK and Germany have a very strong supply base, and so supply and demand come together in allsorts of categories. But other countries, such as France, Italy and increasingly Russia, there is areally aggressively growing consumer population but where supply does not exist.”
Homann said there was three things holding back the expansion of cross-border e-commerce salesto customers in these countries: language; customs authority issues – although this was not aproblem for intra-EU shipments; and delivery – “particularly delivery that feels as much aspossible like domestic delivery for the consumer”.
Homann adds: “We know that adding a single day or two to delivery increases the likelihood of apurchase not happening, and concern that the product is not going to arrive because it is nottracked also increases the chance that a person will not buy. So there is a need for low-costdelivery, tracked across borders.” He said the ideal sweetspot at the moment is three-day deliveryfor intra- EU shipments and five days for the rest of the world.
“I would encourage all of you to think about how your organisation can meet those needs andstimulate this tremendous potential demand. I believe that by enhancing the cross-border deliveryexperience, we can unlock tremendous rewards,” he declared. “The dimensions of what customers needare really not that different: it is all about cost and convenience. It is about the right productat the right price, with a particular need for trackability; a competitive product andtimeframe.”
Homann concluded: “Tremendous change is coming, and that will bring opportunities for those thatare well positioned to reap the rewards. As we think about shipping, it is really about improvingconvenience, improving tracking, and about the cross-border trade offers that really try to meetthe demand of consumers in countries like Italy, France and Russia.”
