On line e-commerce is driving international parcel volume at unprecedented rates.
While Amazon dominates, the market growth is widespread across retailers and business sectors. Analyst predict the US delivery market will over 100 million pieces per day within the next decade.
The growth of e-commerce parcel delivery is across a broad range and beyond the market leader, Amazon.
Historical Growth of parcel delivery
Outside of Amazon, the projected compound annual growth rate of e-commerce is 12%: Driving incredible growth for existing - and new -carriers. In the US alone, there are over 30 million small businesses who are innovating around online transactions.
FedEx and UPS are making headlines by reducing - or not renewing - their contractual commitments with Amazon. As e-commerce parcel volumes grow, domestic and international shippers are seeking more direct connections with the major carriers. See our blog on USPS selling direct to shippers and their Global Direct Entry and USPS Retail Ground.
The four pillars of e-commerce parcel growth in the US:
- Large Retailers
- Brand manufacturers
- Small business
- International cross border
Large Retailers: Brick and Order
Retailers are moving beyond the cliché "brick and mortar" to using their stores for orders. The division between digital online and physical retail are a thing of the past. Stores are being repositioned and repurposed as local outlets serving their online customers.
Leading consumer brands, especially in the area of fashion and electronics, are increasingly focused on serving customers directly. Studies show that consumers prefer purchasing directly from a brand. Dedicated online "direct from manufacturer/ brand" shops also will be a major contributor to online purchases.
Dedicated brand online selling sites afford the opportunity to offer greater selection, customization and faster reaction to customer demand.
Often overlooked in the Amazon dominated news cycle is the strength of small business. As mentioned above, there are over 30 million small businesses in the US and hundreds of millions globally.
International businesses can develop efficient parcel clearance processes and seeking direct air freight connection to their US customers via duty free section 321 processes.
Small business are innovating around on-line selling opportunities.
US-based Small and Medium-sized Businesses, or SMBs, sell products through Amazon. Globally, SMBs sold half of all the stuff bought on the platform last year. Third party sales on Amazon's platform exceed $150 billion per year (which exceeds even ebay).
The USPS, FedEx and UPS are actively pursuing small business emphasizing the benefit of being their delivery partner, not a competitor. Amazon's platform (Fulfillment by Amazon) for independent small business is being challenged as more small companies see Amazon more as a competitor than partner.
International online order sent direct to the US
Contrary to the recent nationalist sentiments, the US remains the world's most open market for "direct order, cross border" e-commerce. International brands, manufacturers and retailers are developing direct airfreight processes including duty free clearance for most of online orders to the US.
Jet Worldwide advises international brands, manufacturers and retailers to establish efficient duty free clearance processes to the USA via Section 321 Express Consignment Clearance Processes (ECCF) and Container freight stations.
Domestic e-commerce: Shortening the drive distances
While e-commerce growth is net positive, major carries are having to adapt their processes to meet the challenge of lower revenue per parcel. Major carriers are having to adapt their hub/ spoke distribution systems to localize their distribution process.
Large retailers are using using "in-store ship from" and/or local DC's (distribution centres) allowing for lower cost "short drive distances." Retailers are investing in processes that move inventory closer to their customers.
The decrease in revenue-per-shipment, will be offset by the decreased cost-per-shipment of local - versus national - line haul. Carries are doing all they can to ensure lower price doesn't mean lower margin.
International cross border e-commerce: Multiple gateways
To reduce a shippers cost-per-shipment, international e-commerce shippers are deploying multiple ports of entry. Rather than sending all the volume to the west coast, for example, shippers are building air freight consolidations to multiple ports of entry.
Jet works with international shippers to lower final mile delivery cost of USPS global direct entry and other ground options via multiple ports of entry.
E-commerce beyond B to C
A point UPS and FedEx like to point out is that B to B sectors such as automotive, high tech and healthcare continue to dominate global logistics. However, e-commerce volumes and direct order cross border parcels serve to complement existing processes for best in class global sourcing and e-commerce solutions.
B to C, B to B.. B to whoever!
The distinction of business to consumer versus to a business is misleading. Businesses order as much - or more online - than individuals. And many individuals are actually small business.
At Jet Worldwide, we see great opportunity to enhance supply chains and procurement efficiencies through air freight individual direct parcel clearance.