E-commerce: “Strong visibility and maximum control for the client”
- Ilias Simpson is CEO Parcels & Logistics North America at bpost group and CEO at Radial. In his previous function, he was the man nationally responsible for Radial’s fulfillment centers, network optimization and engineering. Simpson has many years of experience in business development, Lean implementation and growth strategies.
- Pascal De Greef has been with bpost group for almost 10 years and is now Senior Vice-President Parcels Benelux, responsible for the Benelux parcels. He has an impressive track record in retail, logistics and supply industry.
- Greg Buzek is founder and President of the American IHL Group. IHL provides tailor-made business intelligence for retailers and retail technology suppliers. Buzek has 25 years of experience in retail market analysis and product development and is regularly quoted in the US press as an e-commerce analyst.
How will e-commerce evolve in the future?
Ilias Simpson: “In 2020 we experienced a huge boom. Companies were forced to go to extreme lengths during the corona crisis. And at the same time many consumers got the hang of it. So I expect growth to continue.”
Pascal De Greef: “If the experience is frictionless and the offer broadens, we foresee a strong evolution in e-commerce. The increase in parcels per capita will probably grow with double digits for another ten years.”
Greg Buzek: “It is all about how post-corona behaviour will look like. In 2020, it was a challenge for everyone to offer customers a good experience. Consumers fought over toilet paper, frozen food, pick-up and delivery times. That same year, in the US alone, 75 billion USD was lost in missed opportunities because products were out of stock. Retailers must commit to digital channels, analyse data better and, above all, manage their stocks well.”
Is there a difference between the American and the European market?
De Greef: “An example: we have to integrate our logistics flow with a growing variety of online products. In the US, that flow is fully integrated into the fulfillment flows. E-commerce also has a higher penetration rate: a larger number of parcels per capita. So there is still opportunity for growth in Europe. A third difference lies in the fact that there are far more web shop subscriptions in the United States. This trend is also starting to grow in Europe. Look at how successful Bol.com’s Select subscription is.”
What trends are to come in the near future?
De Greef: ‘We moeten bijvoorbeeld onze logistieke flow integreren met een groeiende variatie aan onlineproducten. In de VS is die flow volledig geïntegreerd in de fulfilmentstromen. E-commerce kent er ook een grotere penetratiegraad: een groter aantal pakketjes per capita. Er is dus nog groeimarge in Europa. Een derde verschil is dat er in de Verenigde Staten veel meer abonnementen zijn op webshops. Die trend begint in Europa ook te groeien. Kijk naar het succes van Bol.com met hun Select-formule.’
Customers expect a smooth buying experience, whether they are shopping online using a mobile device or a laptop, or they visit a brick-and-mortar store. How will this “omni-commerce” evolve?
Simpson: “More consumers will buy through different channels. All combinations are possible: to buy in the store, to order online and pick the goods up in the store, to have online purchases delivered to your home or to collect a purchase at a pick-up point. To extend the customer experience to all channels is a gigantic opportunity and at the same time a major challenge.”
De Greef: “That is true. A few years ago, people viewed products on their smartphones, but the threshold to buy mobile was too high. Today, that same threshold has completely disappeared: people order everywhere. In the near future, I can even see purchases happening in a virtual store through a PlayStation game. That too will become an additional channel in the omnichannel spectrum.”
Simpson: “We also see an evolution in voice commerce – ordering products with a voice command. Google will surely come up with a solution enabling you to buy products in almost every web shop via the Google Home speaker.”
“Physical stores remain necessary, but are evolving into showrooms with hardly any stock.”
What are the retailers’ major concerns?
Simpson: “They really need to master omni-channel. Because it will become a constantly increasing part of their business. That is why they have to invest heavily in the customer experience for each channel, ranging from a smooth buying experience on the website to a fast delivery and an optimal unboxing experience.”
Buzek: “An accurate stock, that is how you make the difference. First of all, you need to have what the customer wants to buy. And you must link your stock to all your channels. The first retailer with a completely correct inventory system has a gigantic lead. I know retailers who have reduced their stock by 20 percent because they have invested in accurate systems. 20 percent of inventory represents a huge amount of money that can no longer be tied up in inventory not needed but is there as safety stock..”
And for bpost group?
De Greef: “The customer must be given as much control as possible. If you look at our activities as a service provider – as a last mile carrier – we have to come up with solutions to provide that control for all our services. Then we are really working on achieving an optimal customer experience.”
Simpson: “Visibility is also important. Consumers want to know where their parcels are and when they will be delivered. As a service provider, we must offer optimal transparency and keep our promises. E-commerce must be completely frictionless.”
And what about sustainability in the omni-commerce?
Simpson: “Packaging materials and emissions are important elements. We try to reduce them to be as sustainable as possible, in line with bpost group’s goal to reduce CO2 emissions by 30% by 2030.”
De Greef: “Customers want the option to have their package delivered without emissions. But at the same time, they often – unjustly – think that goods can be delivered for free. This makes it difficult for consumers to choose between a normal delivery of 7 euros and a sustainable delivery that costs 10 euros. But in the long term, sustainability will become more important than price.”
“A few years ago, the threshold was still too high to buy via your mobile. Now people are ordering everywhere.”
So free delivery will disappear?
Buzek: “I am convinced of it or it will require a delivery or membership fee. Retailers cannot afford to keep delivery completely free. An average supermarket has a margin of 1 percent. With a click & collect programme, it loses 8 percent. That is impossible to maintain.”
Will the big ones get bigger, or is there still room for small players?
Simpson: “The huge market of e-commerce platforms and online channels offers huge opportunities for smaller players. In the past, they could only sell their products on the shelves of large retailers. Now they can sell directly to consumers.”
De Greef: “Brands see less and less added value in retail when they can use a smooth e-commerce environment. They also have immediate access to all data to get to know their target groups even more thoroughly – so they can better anticipate their needs.”
Buzek: “It is not a matter of big or small, but of mind-set. Today, long-term thinkers already invest heavily in e-commerce and digital solutions. They race past the others at a speed that makes it difficult to overtake. For those who are left behind – and there are certainly major players among them too – it will soon be game over.”
What should traditional retailers be concerned about?
Simpson: “The major retailers in the US are investing heavily in omni-commerce to stay relevant and competitive. The traditional retailer that does not innovate will become obsolete and disappear.”
De Greef: “That became painfully clear during the corona pandemic: those who invested flourished. Those who had not done it suffered heavy losses. Our intention to make Belgium a first-class omni-commerce country aims at helping SMEs.”
“An accurate stock, that is how you make the difference. First of all, you need to have what the customer wants to buy.”
As volumes are increasing, what are the major challenges for bpost group?
De Greef: “The retail business always has peak periods, such as the bargain season or at the end of the year. Today those peaks are even more numerous, because there are more commercial campaigns, just think of Black Friday or Singles Day. The need for instant gratification among consumers also means that we must complete the last mile as efficiently as possible. It means we have to be fast, flexible and scalable.”
Simpson: “Versatility and flexibility are also part of our software solution. You have to be flexible with your stock. It has to be maximally available to every buyer. Especially now that consumers expect more and more control. They want to receive their product as soon as possible in the way they prefer: at a pick-up point, in the store, at home or at work.”
Will the classic brick and mortar store disappear?
Simpson: “Not at all. Brick and mortar storesare still needed, although their footprint will be smaller. But, more and more, the real transactions will take place somewhere else. Stores are evolving into showrooms, with hardly any stock. Consumers still want to see, feel and experience products. But ordering and delivery often take place elsewhere.”
Buzek: “89 percent of all transactions in 2021 will be fulfilled from stores, while only 67 percent of the purchases will actually take place at that point of sale. E-commerce is growing, but the store rhemains the center of all retail due to the proximity of the consumer.”
De Greef: “Stores are evolving into fulfillment centers, where customers can pick up their order. And service points, where you can bring in damaged products, for example. The combination of showroom, service and fulfillment is, I think, the future of physical stores. “
Simpson: “Stores are becoming part of the marketing mix. Smart retailers do not want their customers to buy in-store only, they want them to use all the channels. The more channels the customer uses, the more money they spend.”