Database definition

A greater focus on B2C costs will bring a new definition of “free shipping”

© Amy Walters

Logistics giants Maersk and DB Schenker are poised to grab bigger shares of the B2C market at a time when costs are skyrocketing and margins are under pressure.

Maersk targets US e-commerce market; Yesterday it announced that its new E-Commerce Logistics business unit would lead its “foray into the $600 billion US e-commerce market”.

He pointed out that he has a network of nine online treatment centers that can reach 75% of the US population within 24 hours and 95% within 48 hours.

“By making e-commerce supply chains simpler and more robust, we can provide service from the factory to the couch,” said Casey Adams, Head of Maersk E-Commerce Logistics in North America.

The announcement follows the rebranding of Visible Supply Chain Management, the Utah-based e-commerce fulfillment company acquired last summer, to Maersk E-Commerce Logistics on March 18. The logistics giant also acquired two e-commerce companies in Europe – B2C Europe and HUUB – and LF Logistics in Asia last year to strengthen its presence in this segment.

Meanwhile, DB Schenker is tackling e-commerce traffic in Europe by expanding its groupage system freight network to include standardized B2C shipping across the continent.

Its new service, DB Schenkersystem home, is aimed at companies that deliver to individuals, in particular household appliances and technical products and interior fittings.

“By expanding delivery from 22 million businesses to 195 million private households, we are now taking another step in harnessing the full potential of our European groupage network,” said Helmut Schweighofer, CEO of DB Schenker Europe.

These incursions come as the growth of e-commerce looks less rosy than a year ago. Recent results from major operators have been killer: JD Logistics saw revenue jump 44.7% last year and 23% in the fourth quarter to Rmb275.9 billion ($43.3 billion), but operating profit in the last quarter fell to Rmb 392.0 million ($61.5 million). ), resulting in a net loss of Rmb 5.2 billion ($816.3 million).

Amazon posted operating losses of $206 million in the United States and an operating deficit of $1.63 billion internationally for its core e-commerce business in the fourth quarter, while its online stores recorded a decline of 1%. By its own estimates, before the peak season, the company expected to spend about $4 billion more in the fourth quarter than expected, to offset rising shipping costs, supply chain challenges and labor shortages.

Amazon’s global shipping costs rose 10% last year, to $23.6 billion.

The exorbitant costs are a headache, but e-commerce operators are also struggling with a loss of momentum. Statistics released by the UK government indicate that online retail sales in the UK fell 4.5% in January compared to December, and 20.8% in January 2021. Not surprisingly, as in-store sales increased again. Additionally, the removal of Covid-related restrictions is expected to tip the balance of purchases towards increased spending on services, entertainment and travel.

ParcelHero described the drop in online sales as a reflection of “a natural rebalancing, as people return to the high streets”. He argued that online sales still account for 25.3% of all total retail sales, up from 19.8% in February 2020.

Its management expects online sales to continue to lose ground throughout the year, but said it is confident they will remain at around 25% of the retail market.

Either way, the choppy times of rampant growth, with merchants jostling for the ability to execute at all costs, seem to be giving way to an increasing focus on cost. Cathy Morrow-Roberson, founder and chief analyst of Logistics Trends & Insights, sees stores playing a bigger role in the fulfillment equation as merchants try to get their costs under control. Increasingly, free delivery will mean pickup in stores, while faster delivery options will incur additional costs, she believes.

This scenario favors merchants who have omnichannel fulfillment capabilities in place, as they can leverage their array of options. Pure online merchants will likely partner with brick-and-mortar stores or integrative outlets like UPS Stores to establish pickup options, she said.

“I think the whole definition of free shipping is going to change,” she added.