Successful Online Selling Depends on Logistics

December 20, 2013

While traditional retail sales have seen minimal year-on-year growth, online sales have experienced substantial growth in South Africa. It is estimated that online retail growth in South Africa will average around 30-40% every year for the next five years. This growth promises a rich and exciting market for online companies, yet, it would appear that very few companies are prepared to meet the demands of this growth.

As ecommerce sales increase so can the cost and complexity of effectively managing the online channel. This is why quality logistics management and fulfillment is vital for widespread ecommerce success. Ecommerce and logistics complement each other and as an IBR article so appropriately put it: “Logistics is the fundamental guarantee for ecommerce”.

As the internet is a rather opaque purchasing method, customers don’t always understand where their product is coming from. Sellers (etailers) need to be proactive in and reach out to their consumers as much as they can. The customer experience is vital for successful ecommerce. In the United States 90% of online shoppers consider quality customer service to be critical when choosing a web merchant.

From the moment a customer purchases a product on a website to the physical delivery of the product, the etailer is under the critical, time sensitive, eye of the customer. People who shop online generally do so because online shopping provides a greater range of products, better pricing, ease of comparative shopping, and, most importantly, a high degree of convenience. The convenience of online shopping is only achieved if the ‘last mile’ is swiftly and reliably dealt with. The last mile generally refers to the final leg of the online purchase that involves direct-to-consumer deliveries. This is the link between an online ordering process and a physical product delivery.

A radically new approach to business brings challenges for established logistics providers as new and different idiosyncrasies need to be accounted for and addressed. Etailers also expect a lot from their logistics partners. There is a tug-of-war between etailers and logistics providers. Etailers want as many value-adds in the last mile as possible at the least cost. Logistics providers have to protect their margins. Logistics companies need to think like the etailer and understand the etailer’s needs while still remaining cost-conscious.

The great opportunity in South Africa is not just for the prospective etailers, established etailers and brick-and-click retailers. The inextricable link between ecommerce and fulfillment provides a substantial opportunity for forward thinking logistics and fulfillment providers.