Retail Logistics and E-commerce
Logistics is being impacted by E-commerce, particularly by its business to consumer segment. In a conventional retailing supply chain, customers are responsible to purchase their goods at the retailer's location; they are assuming the "last mile" in freight distribution by traveling to the store and back. For bulky purchases such as appliances and furniture, retailers offer local deliveries for their customers. Because location is an important dimension of retailing, significant costs are assumed by the retailer to retain such an accessible location (e.g. rent), which defines its market area (its customer base). These costs are reflected in the final costs of a good which is assumed by the consumer. The retailer maintains a level of in-store inventory (in the form of stocked shelves) which is replenished by regional distribution centers (RDC) where goods from a wide range of suppliers are stored. The most efficient retailers have a network of stores and distribution centers, some of which operating on the cross-docking principle.
The emergence of e-commerce has changed the relationships between customers and retailers (e-retailers):
  • Actors. In some cases, entirely new e-retailers have emerged, but the adoption of an online strategy by conventional retailers has also been very significant. In the emerging distribution system, the e-retailer is at the same time a retailer and a distribution center; an e-fulfillment center.
  • Locations. The locational choice of e-retailers is much more flexible, permitting the use of lower cost locations that would not have been considered otherwise as suitable for retail. Large e-retailers can maintain a network of distribution centers to optimize their market coverage and service regional markets from specific distribution centers.
  • Purchasing. Customers are virtually interfacing with a store and the orders are shipped through postal and/or parcel services, which take care of home deliveries. Figuratively, the customers are directly linked to the supply chain since their action of ordering a product reaches directly the distribution center.
  • Deliveries. The deliveries are now the responsibility of the e-retailer, a move away from standard retailing where the customer took charge of the goods as soon as they were purchased.
All of the above underline the intensiveness of distribution-based consumption. Due to the time delay of home deliveries, as opposed to the immediate access in stores, there are a range of goods that are less suitable for ecommerce. Groceries and medications have a lower e-commerce share than apparels, cosmetics and electronics. To capture additional market share, online retailers are trying to establish same day or next day deliveries by pre-positioning high demand goods in urban logistics depots.