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Revolution of e commerce delivery services

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Presentation by Peep Kuld in Global E-commerce Summit in Barcelona June 2012

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Revolution of e commerce delivery services

  1. 1. REVOLUTION OFE-COMMERCELOGISTICSSERVICESCASE STUDY OF ESTONIAPeep KuldBarcelona 06.2012
  2. 2. My background Founder / shareholder of the e-retailer (Furniture and home appliances) ON24.ee in Estonia and ON24.fi in Finland. Member of the Supervisory Board of E- commerce Association of Estonia
  3. 3. E-commerce in Estonia Small country with 1,3 million inhabitants Member of EU Very good internet availability and high usage of internet Wide selection of services (state and private) available and used in internet Relatively low level of e-retailing (3% of total retail sales)
  4. 4. Reasons for historically low e-commerce level Weak supply side  Small market and not interesting for big players Low quality level of e-commerce logistics  State-owned Post has been dominating  Low speed  Inconvenient receiving the orders  High level of uncertainties  Relatively high price
  5. 5. Situation on e-commerce logistics market in 2008 100% of the e-commerce deliveries were made by traditional services Delivery to post offices.  Estonian post had the only network. Delivery to home by couriers.  5% share of competitors of Estonian Post Estonian Post had 95% market share.  Nearly monopolistic position had negative impact on the quality and price of the service.
  6. 6. Problems of e-commerce delivery usingpost-offices. Post offices are located inconveniently  Poor parking possibilities  Not on the everyday routes  Inconvenient opening hours Time waste  Additional trip  Standing in the queue  Filling the papers  Time waste up to 40 min in peak-hours Unpleasant customer service experience Making a return is a headache
  7. 7. Problems in e-commerce delivery usingcouriers (home-delivery) Relatively high price  For every delivery a person has to make a trip Giving up some freedom and wasting time  Need to wait in home for courier  uncertainty about the exact time of the courier visit.
  8. 8. Problems with traditional e-commercedelivery from E-retailers point of view Prices are increasing  Nearly monopolistic position in price-negotiations Slow or not existing innovation and quality improvements.  Need to adapt the fast developing e-commerce processes to slowly developing delivery services. Many delayed or damaged parcels  Need for additional customer-service workLow quality and high prices of delivery serviceswere among the most important barriers forgrowth of e-commerce.
  9. 9. Recent changes of e-commerce inEstonia In last 2-3 years the growth of e-commerce Estonia, has become very rapid  25-35% annual turnover growth  The number of e-commerce companies grows ca. 20% annuallyMain reason for the rapid growth of e-commercein recent years is the drastic improvement ofquality- and rapid decrease of price of e-commerce delivery services. There is a newformat of delivery services implemented.
  10. 10. New format of e-commerce delivery services40-50% of e-commerce deliveries are made by using anew delivery service – Automated Parcel Terminals (APT-s)
  11. 11. How the automated parcel terminal service works? 1. Ordering online 2. Delivery to APT 3. Text message notification ..
  12. 12. How the automated parcel terminal service works?... 4. Inserting the PIN + 5. Collecting the parcel payment 6. The customer is happy 
  13. 13. What is a network of automated parcel terminals? Parcel terminals Software solutions Business processes and business model
  14. 14. Pricing of e-commerce delivery today Prices of delivery have fallen sharply.  Operation costs are lower.  Traditional E- commerce delivery services have to compete with APT- s, and the prices have been reduced
  15. 15. Quality of e-commerce logistics services today No queues for receiving parcels  Pick-up from APT takes only 15 sec. Convenient locations  Very close to everyday routes of consumers. In supermarkets. No paperwork  Notifications move through e-mail and text message. No need to fill any papers. No need to wait at home for the courier
  16. 16. Quality of e-commerce logistics services today Access freedom.  The delivery point can be chosen from all possible locations, not only home- or work address  Receiving the parcel goes by using PIN-code, which is received by text message. So the PIN-code can be forwarded and somebody else can pick-up the parcel. Speed of delivery is high  The text message goes immediately after inserting the parcel into locker. So it’s possible to pick up the parcel immediately. The price for the service is lowerFeedback from users: „I will never use courier or postoffice again“
  17. 17. Impact of the new delivery service to traditional delivery services Post-offices started to move to more customer-friendly locations. Staff of post-offices has become more customer- friendly. Couriers have become more accurate and faster Text message notifications are implemented also for courier- and post-office deliveries
  18. 18. Impact of the new delivery service to traditional delivery services Courier- and post-office deliveries have become remarkably cheaper Traditional service providers have started to care more about the e-commerce needs.Despite the quality improvements of traditionalservices, the loss of customers continued. A competing network of APT-s has been implemented by Estonian Post in 2011 in order to try to stop losing the market.
  19. 19. Situation on e-commerce logistics market todayTwo networks of automated parcel terminals, covering the wholecountry, are competing on the market.The winners are e-retailers and their customers. Itella SmartPOST Estonian Post since since 2009 2011
  20. 20. Future of e-commerce logistics The concept of automated parcel terminals has been proved.  Desirable for final consumers.  Profitable for service providers The changes in broader scale are coming  In many countries logistics companies are building and starting to implement APT networks.  Amazon started to test their own Amazon locker in USA network of APT-s called „Amazon Locker“ It’s evident that automated parcel terminals are the future of E-commerce logistics.
  21. 21. Opportunity on the market We know that the new delivery service can have very positive impact on the e-retailing in every country where it will be implemented. What to do to make the service available as soon as possible?  Demand the service from existing service providers  To be the implementer of the service (like Amazon) You can find more info about the business model and technology on the web page of the technology- and business model developer Cleveron Ltd. www.cleveron.eu
  22. 22. Thank you, questions?Peep Kuldpeep.kuld@on24.ee+372 5123337

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