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Logistics, e-Commerce, and Traditional Commerce in the New Digital Era

We all know that the e-commerce industry has experienced huge growth globally during 2020 and 2021, as a result of the pandemic and restrictions faced by “brick and mortar” retailers. In many areas of the United States and Canada non-essential stores remain closed, and consumers look to e-commerce outlets due to the ease of use and their  advanced logistics operations.

According to a report by the United Nations Conference on Trade and Development (UNCTAD), in 2020 there was an increase in e-commerce with retail sales rising from 16% to 19%.

Although this new way of shopping has suddenly sprung upon us, it is important to ask whether it will continue to gain ground or whether it is a temporary trend. There is also the question of how physical commerce will fare in this new era; will both worlds be able to coexist or will this be the end of physical commerce as we knew it before the pandemic?

The Physical Retail Landscape Today

With the exception of supermarkets, pharmacies, and other stores considered to sell essential items, the principally affected parties during the lockdowns and restrictive measures were in the retail and retail supply chain spaces. Thousands of large chains of malls, stores, and their suppliers were forced to close their stores and make cuts all around the world.

With this in mind, Nicolás Kunstmann, Drivin’s Commercial Director points out that "without a doubt, the penetration of e-commerce into our everyday lives is one of the greatest changes brought about by the pandemic. Although this change in consumer behavior was forced, we saw that even though physical stores were closed from one day to the next, we had to continue shopping, we had to continue eating; our household appliances continued to break. Essentially, we had to keep on buying stuff. With e-commerce, we realized how convenient it is to buy from home and have things delivered straight to your door".

E-commerce Will Continue to Grow

According to Nicolás "e-commerce is here to stay and it will continue to grow, because we realized that there are many things that we can do from home. For example, if I have to buy a kettle I will just do it while sitting on my couch. Before I wanted to see it and touch it, whereas now just seeing a good picture is enough and I will buy it. I think that it’s a waste of time to go to a physical store to look for it".

In the same breath, he explains that having an online store does not only mean having a website. "An online business is so much more than a website. If I’m in the e-commerce space I must have a payment gateway, an inventory tracker, a shopping cart, and a logistics process, that ideally should all be connected. A nice page with pretty pictures is simply not enough".

Undoubtedly, those who do not yet have a remote sales channel should enable it, as it is clear that these are platforms that will continue to grow in the future, he adds.

Can Logistics Help Physical Commerce Survive?

Although e-commerce is here to stay, the truth is that physical commerce is far from dead. According to recent studies, both worlds will continue to coexist, as there are certain shopping experiences that will always be more interesting and pleasant to carry out in person than online.

"Physical retail will continue to exist because there are things that are more entertaining to buy, such as clothes or other fashion items, that you want to touch and see how it fits. It’s part of the experience. 

Applying this same logic, other experiences such as going to a restaurant or having a coffee with friends will not be replaced by food delivery," Kunstmann explains. 

Finally, he concludes that "society will be moving towards a different way of shopping. Those big supermarkets where you fill your cart with things will no longer be necessary. We are going to see more and more “app shoppers”. I think we will start to rethink the size and depth of the stores where one can go shopping".

Here, logistics managers will play a fundamental role as they will provide the vital operational support that will keep physical commerce competitive and on the same playing field as e-commerce, which by nature already has a great advantage.

What Role Does Logistics Play in this New Digital Era?

The world of logistics has not escaped from being affected by this new digital era. Logistics managers have also needed to change their operational processes, and their roles have become fundamental for all organizations in the e-commerce space; until the customer has the product in their hands, the sale is not finalized.

Logistics have been impacted by the ‘new normal’, as customers now demand flexible delivery schedules. The most powerful e-commerce companies offer express service at often low additional cost, for example. 

It is also worth analyzing how this digital boom boosted the implementation of complementary systems to regulate distribution, such as delivery notifications, cash collection, and payment to logistics providers.

Also, one cannot ignore the new reverse logistics process, which has had to be completely rethought and restructured in some cases, since service quality (including post-sales) is now just as important as a timely delivery

Understanding this, reverse logistics has become a game changer, since the feasibility or ease of making changes or returns for a customer becomes a big part of the purchasing decision.

Kunstmann points out that "clearly, by offering a high-quality service you can create a differentiation factor between a consumer buying from one store or yours".

He concludes that "offering this is a mega opportunity, because today I do not see many companies that are doing so. On top of this, there exists a huge need to coordinate deliveries and collections on the same routes to generate efficiency, which is only possible by implementing cutting-edge logistics technology, such as what we have developed at Drivin".