August 9, 2019
It’s nothing new that more retail sales are happening online every year; global ecommerce grew 18 percent year over year in 2018, and online’s share of total retail sales increased from 13.3 percent in 2017 to 15.2 percent last year. Consumers purchased a staggering $2.86 trillion online in 2018. But beyond sales, the lesser talked about story is how online sellers have quickly had to shift their focus to build out supply chain and logistics operations that can keep up with demand.
Primarily driven by retail giant Amazon, consumers today have high expectations for the level of service they receive when purchasing online, from an easy check out process to quick and reliable delivery. The trend we are seeing—one we identified when we launched ARTA almost five years ago—is that shipping and logistics is becoming one of the most important factors for success in the current ecommerce environment. Amazon’s recent announcement of 1-day delivery for Prime members left competitors scrambling to shorten their delivery timelines as well. It shows that the online retail giant has also recognized that faster, better fulfillment makes for happier customers, and their strategy of focusing on their supply chain has been a big part of their rise to own a substantial portion of online sales.
Beyond just selling the goods, Amazon getting into the business of logistics itself shows just how critical logistics is to the commerce realm. Controlling their own supply chain is a lucrative opportunity, though it was also necessitated by the fact that there weren’t enough supply partners that could support the rise of demand. In 2018, Amazon alone accounted for 43.1 percent of all online sales growth in the US. Much like they did with Amazon Web Services, Amazon is turning an investment required to support their business into an additional profit center. However, Amazon turning their focus on owning their supply chain helps the logistics world beyond just themselves, because other retailers are now also investing in building out their own operations, thus providing growing business opportunities for shippers and carriers around the world.
As Amazon has shown, to compete in today’s retail environment, sellers need to have more visibility into and control over their supply chain. We are seeing a rise of technology solutions that help automate time consuming tasks and drive efficiency—both for retailers’ internal operations teams as well as for shippers and carriers, which is becoming more necessary as they compete to be the vendor of choice for online sellers. In today’s market, shipping companies must invest in technology and automation or face going out of business.
And, with the advent of warp speed delivery timelines from giants like Amazon and Walmart for everyday items, consumers now have similar expectations for specialized goods: oversize, expensive, valuable or fragile items that these large retailers tend not to sell. Online buyers of specialized goods don’t want to wait to get a shipping quote for an item they are ready to buy; they want it in real time, which is a huge part of why ARTA created Instant Quote for sellers of these high-value items. Their customers are able to see how much it’s going to cost and how long it’s going to take to ship their goods instantly—a must in today’s landscape. While Amazon has set the bar for quick fulfillment for everyday goods, items that require specialized handling like fine art, furniture and decor still operate on slower time frames, and these are what ARTA tackles. We fill a market hole in streamlining supply chain for items that aren’t easy to procure, from sellers who sometimes have no way of getting things places more quickly due to the nature of their shipments.
Every year that passes, customers are also becoming more comfortable making an online purchase from another country. In China alone, online luxury goods sales grew 23.3 percent and overall online sales in rural areas of the country grew 39 percent in 2017. With cross-border ecommerce becoming a growing phenomenon, retailers now have the opportunity to tap into a much larger consumer base—but only if they have a global supply chain to support it. To move into the future, and compete with the likes of Amazon, retailers and shippers must make investing in global operations a priority.
Changes in today’s commerce world are not slowing down any time soon. Showing you can keep up is imperative not only for Amazon, but for all logistics providers who want to remain competitive on the global stage.
Adam Fields is Founder & CEO of ARTA, a contemporary logistics platform for shipping specialized items. He is a former vice president of Artspace.com, a fine art marketplace. Follow him on Twitter @afields and on LinkedIn.