The e-commerce landscape has drastically changed over the past two years and will continue to change in 2022. The unprecedented growth in online retail, especially in direct-to-consumer services in 2021, has led to consumers desiring a seamless process, low prices, faster shipping and a stronger focus on sustainability.
In 2021, the limited supply of delivery drivers caused a global shortage in transport capacity. This shortage, along with the aforementioned focus on sustainability and the need for cheaper and faster shipping, has increasingly reinforced the use of technology and 3rd party logistic services (3PL).
While there are many areas in this sector that continue to rapidly evolve, we’d like to discuss 4 important trends regarding the e-commerce market in 2022:
- An increase in demand for 3PL services
The demand for outsourced third-party logistic (3PL) services will continue to grow as e-commerce sales grow. 3PLs will expand their offerings to include providing distribution facilities in multiple locations to offer more efficient order processing and fulfillment. In 2022, we are likely to see more micro-warehouses in urban areas, allowing for closer access to the customer. Retailers that operate multiple distribution facilities will be able to manage increases in order volumes, have better inventory management and achieve shorter delivery times.
- Optimizing last-mile logistics
The “last mile” is one of the most critical points in e-commerce logistics, as it involves the conclusion of the delivery to the customer. It has a vital influence on both the overall delivery experience and customer satisfaction. There are many innovations aimed at solving the last mile challenge. These include light electric vans, eCargo bikes, autonomous vehicles and drones.
While the technology continues to make major progress, there are also ways to improve the supporting infrastructure and reduce the high cost of the equipment. That being said, there is considerable interest in “last mile as a service” (LMaaS), and we expect that some 3PLs will try to focus more on these last-mile opportunities. By optimizing transport routes while providing live delivery updates to customers, they will be able to provide more affordable rates.
- An increasing focus on sustainability
Sustainability in logistics continues to be a business imperative. E-commerce companies that have defined a sustainability strategy and managed to implement it are seeing a significant competitive advantage in the marketplace. According to a recent survey by McKinsey, people now prefer a brand that is actively making sustainability efforts to become greener. Over 70% of consumers would pay a 5% price premium for products of equivalent quality produced by more sustainable means.
Any company can reduce its carbon footprint using more fuel-efficient vehicles. Micro-warehousing can also contribute to minimizing carbon emissions as well as improving the speed of delivery. Recyclable and efficient packaging is now an expectation from customers, and it is both eco-friendly and reduces shipping costs. Overall, collaborating with suppliers on sustainability initiatives promotes innovation, customer loyalty, saves on input costs and limits supply chain risk.
- Technology will continue to be the enabler
Cloud-based solutions that provide access to real-time and reliable information will be the key to making informed decisions and reducing inefficiencies. Digital transformation programs and the adoption of 5G have contributed to the fast take up of software solutions – the latest developments in AI and internet of things (IoT) tools will continue to contribute to this regard.
In 2022, the automation of numerous processes in logistics is predicted to continue. Real-time tracking and location systems will continue to be applied in transport logistics to ensure the safety and security of cargo and drivers. There’s also a need for more transparency and improved quality-assurance (QA) in logistics that technology tools can provide. Full visibility of the location and condition of shipments means that problems can be tackled immediately, reducing downtime. Collating data on consumer purchasing behavior and applying the information in practice will be the key to keeping up with the competition.
Moving forward, the key to e-commerce success will primarily be driven through manufacturers and retailers collaborating with logistics partners, as that will assist in ensuring continuous improvement. Technology continues to be at the center of this discussion; and by utilizing these continuous advancements in software and automation, the whole industry will see a substantial boost in efficiency. The last-mile, sustainability and other key aspects of the process will all continue to progress, allowing the e-commerce market to match the demand increase that we are sure to see this year.