E-Logistics who holds the high ground?

Logistics services for e-commerce enterprises is a sensible matter. In fact, in the progress of business plan discussion, few of them pay attention to the matter for a clear strategy and professional process. They tend to give the task to a third party- a professional logistics service enterprise. However, this is indeed an important step in creating competition abilities for enterprises in seeking loyal customers.

PRESSURE ON RETAILERS WHEN TAKING PART IN E-COMMERCE MARKET

It can be seen that logistics services are biggest challenges to retailers, especially the new ones and those developing from small models. There have been active changes in habit of using e-payment and buying things online. However, the toughest barrier is the logistics system. And it is more difficult to the models of retailer’s e-commerce due to widespread customers, high scattering of cargo while e-commerce model requires free quick deliveries and cash on delivery. These are pressures to Vietnam’s retailers when participating e-commerce market.

About transport-freight forwarding system, most of e-commerce transactions of retailers are goods that need direct freight forwarding. Enterprises should extend their business area to approach cross-country or international customers to make good use of e-commerce’s advantages: having no limit in area and time. Vietnamese retailers are young so that they do not have enough financial potential to develop professional transport and warehousing system, and they normally use the third transporters. But most of these companies are located in large cities and provinces only.

Free transport is also a problem to retailers. Vietnamese consumers, together with competition factors in e-commerce, requires them to apply free transport. In competition, the pressure becomes a certain criteria in shopping online. The expense will be counted to retailers’ profit and customers benefit. However, it will weaken competition abilities of e-commerce.

Logistics services works only there are many orders for low expense: providers are easy to invest or negotiate with partners. Large transport companies do not even do business with companies with small transactions. Feature of e-commerce is home delivery and cash on delivery, which is not expected by transport companies due to its risks and complexity and which also makes it difficult to choose partners for shipping and deliveries. With retailers taking part in e-commerce, cash on delivery is popular for 100% payment is impossible for shopping online. Enterprises should set up delivery teams at big cities and cooperate with transport units to have cross-country delivery and they should also have warehousing systems to ensure their supply. However, the requirements sometimes beyond the reach of many enterprises.

High logistics cost is also a big problem to retailers. Besides pressures of high cost when using professional transport cost, they have difficulties finding partners that satisfy their requirements of quality, coverage, serving manners, cash flow…

Solutions of organizing, managing and optimizing process

To solve the process of logistics, many solutions have been offered by retailers. First, consumers should be helped to get familiar to paid deliveries. In fact, free deliveries have been used as a tool to please customers. However, asking customers to pay for better services also increases enterprises’ values. The strategy that creates differences is also a competition advantage to enterprises.

The second solution is to implement measures to replace home deliveries by using delivery stations or expand store systems. This helps to have more customers and to encourage customers to receive goods at stores. Web-to-store solution is also an ideal solution for e-commerce. Click& collect is able to combine e-shopping channel to traditional shopping one. However, it is difficult for enterprises to build a large network.

Another solution is to transfer the whole process to a professional logistics service provider.  It is more expensive but it is professional and it helps avoid mistakes that may require much higher cost to solve. And to cut cost, another solution is to collect a large amount of cargo when requires professional delivery service. Increasing amount of cargo transported will help cut delivery cost to customers.

Therefore, e-logistics service is an important strategy to retailers and there have been various solutions for them. However, managing a system can be done in short-term in small scale and it can be more complicated with large cargo flow. Currently, most enterprises offer a service of tracking orders and managing deliveries to help their customers keep track of their cargo after placing orders.

In fact, there is no perfect solution… retailer should decide and estimate their abilities and volume of business for suitable logistics form and services.

Nguyen Van Minh _ Pham Van Kiem

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