Enabling e-commerce: the good, the bad and the possible
In 2021, 2.1 billion shoppers will order online. They will contribute to an incredible boom in e-commerce, growing from $3.5 trillion in 2019, to $6.5 trillion in 2023; that’s 22% of all anticipated retail sales the world over, according to Statista.com. But this seismic shift in consumer behavior brings with it ever-increasing demands on the logistics sector – immense pressure on efficiency where fractions of a dollar saved on parcels, pallets and even containers can add up to game-changing competitive advantage for shippers. Where order-to-fulfillment timelines are shrinking to next-day or even same-day on an exponentially wider variety of items, a simple swipe on a smart phone will collectively have profound knock on effects for how truckloads move, warehouses function, shipping lanes and ports are managed.
In this emerging landscape, trillions will be invested in the coming decades to keep pace with shifting consumer behaviors and re-shape the face of logistics at large. And as with any generational shift, there will be good and bad as we move collectively towards an incredible future of possibilities.
To look at the good, we must recognize we didn’t get to our incredibly interconnected and “on-time” world by accident. The global logistics sector we have now represents one of the foremost benchmarks of collective human accomplishment. In the past decade alone, our ability to process vast amounts of freight has gotten orders of magnitude better as technology integration allows for improved tracking across complex global supply chains in real time.
This level of visibility and integration is laying the groundwork for a new generation of automation. Systems like smart order routing allow better management of fulfillment across geographies, as warehouses utilize increasingly sophisticated robotics to pick and pack packages, and move pallets, at vastly increased speed and lower cost. In the near future, increasingly sophisticated AI systems will sit over these operations. These systems will integrate human and machine through augmented reality realizing efficiencies in fractions of a second that can collectively add up to thousands of hours, and millions of dollars, each year.
Arguably the worst aspect of all this progress is the underlying carbon footprint of increased freight movement on the planet. Freight is anticipated to grow from 2108 metric tons of CO2 emissions in 2010, to 8132 in 2050, according to the International Transportation Forum. Such a carbon impact is also bad for business, undercutting demand by increasingly eco-conscious consumers, and driving up costs.
But the bad here also speaks to a broader opportunity. Advancements like smart order routing and multi-location inventory can combine with lighter, reusable packaging to lessen the carbon impact of moving freight – while additive manufacturing of key components can, in certain cases, remove it altogether.
While the near-term potential for efficiencies are significant, and absolutely critical to competing in an increasingly unforgiving e-commerce ecosystem, the potential to drive continued efficiency over the long term is nearly limitless. Within our lifetimes, expect seismic shifts in how freight moves including evacuated tunnels connecting directly to ports, whizzing containers at near the speed of sound across continents, directly to last mile drone delivery points – all controlled by AI.
As AR, smart speakers and a wave of new technologies continue to find new ways to engage consumer buying and drive the growth of e-commerce, the efficiencies needed for brands to compete and win will be found in logistics - and the possibilities are limitless.