IoT in e-commerce logistics: Where's the money? Part 3
In my previous post, the top three “where’s the money” opportunities mentioned using IoT in logistics were e-commerce, the food chain and third-party information logistics. I addressed opportunities in agri-food supply chains that benefit a large global population. This post addresses the opportunities for IoT in e-commerce.
Global growth markets
Retail e-commerce global sales are estimated to reach $4.5 trillion by 2021. We just witnessed another record-breaking season of e-commerce with Amazon making headlines in the U.S. and Alibaba in China. Alibaba set a new single-day sales record of $25.3 billion, a 40% increase from last year.
If you are an enterprise thinking of what’s included in the scope of e-commerce, it may be easier to think of what cannot be included in e-commerce. Nothing prevents e-commerce technologies and concepts from being extended to B2B commerce.
What’s IoT got to do with e-commerce?
Ninety percent of the $25 billion order value on Alibaba’s single-day sales was done using mobile devices. Smartphones play an essential role in the success of e-commerce. As an IoT device, it has transformed how humans search and buy products from anywhere in the world at any time. The ease of ordering a product is setting new expectations on delivery of product. The delivery time expectations are reaching “read my mind” speed, or with IoT devices like Alexa, “are you listening?” While the ordering process moves at digital speed, the physical goods delivery logistics processes are limited by humans. IoT devices that don’t require human interaction will soon digitize and transform the supply chain. Digitizing the collection and flow of data without human intervention using IoT will be critical to improving the speed of delivery logistics.
Supporting $25 billion in sales in a day is an example of digital technology, people and processes working without breaking down. The Alibaba digital infrastructure at its peak supported 325,000 orders per second, from 225 countries/regions. The next challenge is in order fulfillment logistics to ensure that deliveries are made to keep the customers coming back to order more the next time. To build technologies that will sustain your business into the future, you have to think different from the current practices.
Is delivery logistics a supply chain function or customer service? Delivery of goods ordered is taken for granted. But, customer satisfaction is a self-service digital experience of knowing and seeing order fulfillment meeting the customer’s expectations. Intervention because of exceptions, if any, needs to be proactive, preferably before the customer is aware of an exception that could result in cancellations, returns, support costs and additional avoidable costs. To be proactive, actionable information (not data) and intelligence is critical.
Digital transformation does not mean waiting for robots to replace humans. IoT provides a clean, new source of accurate and real-time data and events to generate intelligence to expose the inefficiencies in your existing systems, processes and KPI/metrics used to make decisions. If you are considering blockchain for a more trusted source of data, IoT-based data and events are a new, clean source for recording in blockchain that is not corrupted by existing systems.
The ‘big squeeze’ is coming
Investors have poured billions into e-commerce. Now, investors want a return on their investments. As e-commerce growth stabilizes, fulfillment cost reduction will be targeted. The squeeze will be felt by the ecosystem of suppliers and supply chain logistics services providers to become more cost efficient and competitive. The pressure on lowering total costs across the entire e-commerce business will force changes. This is the opportunity for innovative technologies to break though legacy thinking and practices. Every aspect of the supply chain management process, including procurement, first mile, last mile and everything in between, is an opportunity for improvement.
Live case study
India is a live case study of e-commerce in evolution with no dominant market leader. A billion potential customers and a growing economy with an appetite for smartphones is an obvious target.
Amazon, Alibaba, Walmart and investors such as Softbank have their sights set on Flipkart and India. Billions of dollars are being invested. The Indian government has its own initiatives to support digitization, including “Made In India” for manufacturing; regulatory changes, such as the Goods and Services Tax Bill; e-payments; e-waybills; modernization of ports, road and rail transportation; and cold chains are just a few of many initiatives in progress. The recognition of supply chain logistics as key to the success of the Indian economy by the government is a perfect opportunity for IoT to make a big difference. What works in the U.S. or China does not directly transfer to India; ethical digital transformation of supply chains with Indian “jugaad” can make a big difference to millions of people.
Similar thinking is taking place on the African continent. What works in India will be easier to transfer to Africa.
Opportunities for using IoT in e-commerce logistics
IoT bridges information technology with supply chain operations to make supply chains faster, better and cheaper. Digitization of data enables automation to scale operations. A few operational areas where IoT can make a big difference immediately, in addition to the obvious last mile, are:
- Ocean ports: Inbound/outbound container/reefer logistics and operations
- Airports: Inbound/outbound cargo logistics and operations
- Intermodal transportation: Road-rail-road-port/distribution centers
- Inland container depots: Container, chassis, truck, yard logistics
- Central customs and excise: Compliance, verification, monitoring
- Cold chain: End-to-end management
- Food chain: Agriculture lifecycle logistics
- Pharma chain: End-to-end management
- Security: Product integrity, quality, leakage/diversion
- Procurement: Multi-tiered supply chain network management
Can you see the opportunities that Amazon, Alibaba, Walmart and Softbank see in e-commerce? Do you think they will be using inefficient processes and legacy technologies? Doing nothing or cutting costs are not viable options for survival. Working smarter using IoT-based technology with intelligence is an option worth considering. Smart and ethical use of IoT-based technologies can differentiate, mitigate and overcome competitive barriers. Eliminate your implementation risk with technologies that deliver the measurable value you want on first use.
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