When the basic operational method of a business changes; it turns upside down many ancillary services that depend on it. Innovation in technology has turned the e-commerce concept into a juggernaut that seems to be changing the face of many a business landscape. Traditional supply chain and logistics—being an important part of the retail brick-and-mortar model—is currently at the receiving end and its new avatar has assumed nonpareil importance in the current e-commerce ecosystem. In the new logistics model, it all boils down to faster and on-time order delivery that makes all the difference between winners and also-rans.
Today’s consumer prefers buying anything and everything online through marketplaces and online stores. The monumental shift in retail, from brick to click and physical store to e-store, demands logistics to be leaner and agile to serve the new-age consumer who wants orders to be delivered faster and at their preferred time and location. While this decisive shift is playing the role of a growth panacea for e-commerce players, it is proving to be a game changer for 3PL companies and is keeping a lot of 3PL CEOs awake at night. 3PL CEOs are experiencing this unprecedented turbulence because of the fundamental differences between traditional and e-commerce logistics operations. Had these differences been minor or insignificant, the traditional logistics industry wouldn’t have had reasons to worry but the glaring nature of these dissimilarities necessitates better understanding for corrective actions that these CEOs need to take to stay afloat.
Here, understanding the nature of change in retail—though a no-brainer—would help. In the traditional model, consumers visit a physical store to purchase goods. For this to work, brands deliver their products to warehouses/fulfillment centers that in turn send them to physical stores for consumers to purchase. The new e-commerce model is primarily different in the way it operates. Consumers visit online marketplaces or e-stores and purchase products online. Depending upon the agreements, sellers or marketplaces ship the products to the consumer and the transaction is complete only after they are successfully delivered. This basic change in the retail business process has completely altered the role of logistics in the larger scheme of things and has brought it under a bright spotlight.