Introduction: The E-Commerce Logistics Industry
Since the 1990s, there has been a rapid development in information and communication that has greatly changed and revolutionized the global business world. In particular, the rapid technological development has influenced and modified how organizations apply logistics and their supply chain operations as a business strategy to achieve competitive advantages. The emergence of the e-commerce context, a new business model with enormous impacts on logistics and supply chains for both business-to-business (B2B) and business-to-consumer (B2C) models. According to Kawa and Światowiec-Szczepańska (2021), e-commerce is the use of the Internet technology and the web to conduct business by enabling commercial transactions between different parties such as businesses and individuals. The business issue concerns the role that logistics plays in driving e-commerce growth. In this case, the key driving forces include the creation of value for consumers, the establishment of transportation, warehousing, and the value chain for the e-commerce business model. It is worth noting that the e-commerce business model cannot progress without the logistics industry. In essence, the two industries have become greatly intertwined, with the e-commerce sector heavily relying on integrated logistics for delivery and the creation of value for the customers.
The ultimate aim of a business transaction is to facilitate the exchange of products or services between the seller and the buyer. Taking the items from the seller to the hands of the buyer is a critical aspect of any business (Pal, 2017). In this case, the role of the logistics industry is to ensure that the buyers receive the products and services they purchase in their preferred conditions and location. In e-commerce, logistics involves taking the products and services ordered using the internet and web technologies to the buyer (Kaswengi and Lambey-Checchin, 2019). The e-commerce logistics industry involves planning and execution of the movement of goods and services ordered using online platforms from the point of origin to the point of consumption.
The Role of Integrated Logistics to the Growth of E-Commerce
With the rapid development in the e-commerce business approach in the last few years, e-commerce logistics is now a relatively new industry or market by itself. According to Gajewska, Zimon, Kaczor, and Madzík (2019), the global e-commerce logistics industry had a value of more than $235 billion in 2020 (Światowiec-Szczepańska, 2021). In addition, the sector is expected to experience continued rapid growth over the next decade, reaching about $1 trillion by 2030 (Kawa and Światowiec-Szczepańska, 2021). This enormous growth is influenced by the increasing growth of e-commerce transactions between different players. In particular, the COVID-19 pandemic forced consumers to purchase products online as a way of reducing the need for traveling. E-commerce websites have increased and experienced a ramification while the presence of low-cost cargo handlers has revolutionized the market.
In addition, there is a widespread prominence of customer-to-customer (C2C) and B2C e-commerce websites, which has, in turn, boosted the demand for e-commerce logistics. The e-commerce logistics industry exists in two types- service and operational areas. The service segment of the e-commerce logistics industry involves transportation and warehousing. On its part, the operational area involves both domestic and international services that ensure flawless exchange of products and services through online transactions (Światowiec-Szczepańska, 2021). Modes of transportation are particularly important components of the service segment of the e-commerce logistics industry. Such transportation modes as air/express delivery, trucking/over the road, freight, rail, and maritime facilitate the delivery of products from the sellers to the buyers, thus completing the final delivery of the products purchased through e-commerce platforms.
It is worth noting that integrated logistics is the largest enabler of e-commerce. Integrated logistics is the backbone of the e-commerce industry and helps players fulfill their needs. Since it is a service-oriented process, integrated logistics help to establish strong channels of communication in the e-commerce industry. With this concept, organizations in the e-commerce sector are able to optimize their resources and realize competitive advantages. First, integrated logistics increase collaboration as well as higher visibility (Nisar and Prabhakar, 2017). The system enables string collaboration that gives dealers in the online business operational control, cost reduction, enhanced customer response time, and a streamlined business process. Since functions are aligned and integrated, it is easy for each department to view the whole process and the aspects they require to fulfill their goals.
Secondly, integrated logistics has the advantage of anticipating and meeting the demands of the customers. Due to digitalization, the e-commerce logistics industry uses data and with an integrated logistics system, the process is technology-driven (Leung et al., 2020). Data is a necessary asset for businesses involved in e-commerce as it allows them to understand the market needs, customer expectations, and any potential limitations and challenges.
Third, integrated logistics is effective in reducing operational costs for companies and individuals involved in the e-commerce business. In any business transaction, every dealer wants to reduce operational costs while also maintaining customer satisfaction and the quality of the products or services (Giuffrida, Mangiaracina, Perego, and Tumino, 2019). Operational efficiencies help in achieving this objective. As the supply chain function of e-commerce helped deliver products, an integrated logistics system takes responsibility for the entire process. Efficiency in transportation, availability of warehouses, and sourcing help online dealers to reduce investment and costs of maintenance. In this way, integrated logistics helps e-commerce businesses to reduce operational costs. In turn, the dealers are able to reduce prices for their customers, which helps to create value and increase the growth of e-commerce.
Fourth, an integrated logistics system is strongly associated with high-profit margins. According to Janjevic and Winkenbach (2020), a well-integrated logistics system creates room for more profits. In particular, it improves sourcing better quality and cost-effective materials. In addition, it helps in finding efficient ways of storing and transporting both materials and products (Feng, 2018). Combined with the reduction of operational costs, these operational efficiencies make it possible for increased profitability.
Another advantage associated with an integrated logistics system is the reduction of waste, a major concern for companies. An integrated logistics system also allows dealers to balance inventory and with it with the expectations of their customers (Światowiec-Szczepańska, 2021). It is also worth noting that an integrated logistics system is strongly associated with flexibility. For businesses, the need for flexibility is a concern that they always wish to solve as they strive to achieve agility.
The Value Proposition of a Business-To-Consumer Logistics Company
A company that uses such approaches as mergers and acquisitions expects to gain value from the deal in some ways. For A.P. Moller – Maersk, acquiring Visible Supply Chain Management (VSCM) will create a value prosition in a number of ways. For instance, the logistics company will build a strong e-commerce logistics capability that will help extend and reinforce its existing supply chain (Bloomberg, 2021). The idea is to offer and create opportunities for further growth and expansion. For Maersk, customers depend on its approach to integrated logistics and services.
How Maersk’s Customers Will Perform Better After Acquisitions
With the acquisitions, the company will combine the approach with operating models and value proposition that the two companies have in the US and Europe. The idea is to improve the customers’ ability to develop e-commerce offerings, which will also extend the company’s scope and the potential for improved strategic partnerships (Bloomberg, 2021). Moreover, Maersk will achieve a strong platform for growth in the e-commerce field by creating significant synergies and enabling customers to sell products across multiple channels. Furthermore, the acquisitions are expected to address their customer trends and strengthen the e-commerce logistics products suite for Maersk in line with its business transformation.
Conclusion
This analysis demonstrates the strong link between e-commerce and logistics. Specifically, the two industries are intertwined, with the e-commerce model heavily relying on the existing integrated logistics to create value for the customers and meet their needs for timely and conditional delivery of products. The analysis reveals that integrated logistics play a crucial role in the growth of e-commerce as it is the biggest enabler. For companies in the e-commerce business, integrated logistics help reduce costs, enhance profitability, increase collaboration, reduce waste, and allow them to understand their customers’ needs and expectations. As the case study of Maersk demonstrates, the existence of an established integrated logistics will help the company create a value proposition while also helping its customers perform better by improving their e-commerce businesses.
Reference List
Bloomberg. (2021). A.P. Moller – Maersk to acquire e-commerce logistics companies in Europe and the US – Visible Supply Chain Management and B2C.
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Nisar, T. M., and Prabhakar, G. (2017). What factors determine e-satisfaction and consumer spending in e-commerce retailing? Journal of Retailing and Consumer Services, 39, pp. 135-144.
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