All change in distribution as retail becomes e-tail

Joel Ray, Transport Intelligence’s Head of Consultancy, sat on a panel of industry experts on the first day of Multimodal 2013, discussing the impact of e-tailing on the logistics industry. Citing a recent study undertaken by Ti and Savills, he described how the market is developing right now and trends we can expect in the future.

By 2020, 60% of all UK shopping will be done online, compared with just 30% today. However, attendees to the seminar heard that there is no single successful business model as traditional bricks-and-mortar retail evolves into e-tail.

Ray said too much attention was being focused on the growth of the market and the complexities of last-mile delivery rather than the underpinning logistics. “The market is enduring a number of growing pains,” he said. In contrast to companies that had custom-built their systems from scratch, such as Amazon, legacy retailers had found that meeting the needs of online customers “has not been an easy switch”.

E-fulfilment is more labour-intensive than managing a traditional store-based business and will probably result in a shift away from historic distribution hubs in the Midlands. Cheaper areas of the UK, with greater availability of land, higher unemployment and thus more affordable labour, could offer a more practical solution, Ray suggested. Locating new distribution centres closer to suppliers could reduce inbound logistics costs as well as attracting incentives from local authorities, he said.

However, citing research recently undertaken by Transport Intelligence and Savills, Ray announced that retailers and 3PLs see the future rather differently. While 3PLs envisage existing physical store networks remaining in place, and acting as “click and collect” points, a larger proportion of retailers responded to the recent survey with the belief that centralised, direct delivery will become the dominant e-fulfilment model.

Eighteen of the UK’s top 20 e-tailers are operating their e-fulfilment logistics in-house, Ray said, even where different back-office systems were needed. Therefore, as suggested in Ti’s recent report, Europe e-commerce Logistics 2013, logistics providers must improve their e-commerce offerings and provide more sophisticated services for e-tailers to outsource their logistics operations.

Click here to download a free copy of the Ti/Savills whitepaper “E-tailing & the impact on distribution warehouses” or to read a copy of Joel Ray’s presentation at Multimodal 2013.

Further information

For more information regarding the UK’s e-commerce market or if you are interested in developing a research project in the sector, contact Joel Ray, Ti’s Head of Consultancy, at [email protected].

Alternatively, you can purchase Europe e-commerce Logistics 2013 for £1,095 for a single user copy.