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 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
The emergence of e-commerce has changed the relationships between
customers and retailers (e-retailers):
- Actors. In some cases, entirely new e-retailers
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 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.
- Tracking. Customers want accurate
time-in-transit information for the various shipping options
such as next day deliveries.
This challenges the distribution industry to implement
information systems to track parcels as well as vehicles.