WCA eCommerce London 2018 Rick Hernandez - Pitney Bowes

1. WWW.WCAECOMMERCE.COM #WCAECOMMERCE
keynote speakers
eCommerce Disrupting Traditional
Global Logistics
Presented by:
Rick Hernandez
Vice President, Pitney Bowes

2. WWW.WCAECOMMERCE.COM
eCommerce Disrupting
Traditional Logistics
Name, Title & Company
Rick Hernandez
Pitney Bowes

3. How do you thrive in an age of accelerations?
WWW.WCAECOMMERCE.COM #WCAECOMMERCE
“We go to school for twelve or more years during our childhoods
and early adulthoods, and then we’re done. But when the pace of
change gets this fast, the only way to retain a lifelong working
capacity is to engage in lifelong learning.”
- Thomas L. Friedman, Thank you for Being Late: An Optimists Guide to Thriving in the Age of Accelerations

4. A Business At Scale
WWW.WCAECOMMERCE.COM #WCAECOMMERCE
4
15+ BillionMail Pieces
165+ MillionFlats
115+ Million Parcels physically handled
350+ Million Parcels enabled through digital technology
$50+ Billion Global commerce our network supports

5. Our Vision: Anywhere to Everywhere™ at Scale
WWW.WCAECOMMERCE.COM #WCAECOMMERCE

6. It’s no longer enough to be a technology provider or a logistics company. You
really have to do both to win business and help retailers and brands remain
relevant.
Consumers are pushing for faster,
free(er), and more convenient service
Retailers are struggling vs Amazon and
other marketplaces
Increasingly, Amazon and private
carriers divert high margin parcels and
freight to their own logistics & delivery
networks

7. Global Ecommerce is growing...
WWW.WCAECOMMERCE.COM #WCAECOMMERCE
Global parcel shipping spend
~ $178B
48% is US alone
78%
of global consumers are shopping
online at least once a month
Global cross-border ecommerce
is expected to reach
$1 trillion by 2020
5 Days
Free Amazon Prime from China to US
Delivery
2-4 Days
Ebay Guaranteed Delivery in the US
1-2 Days
Amazon Prime in the US
…and going faster

8. 8
Product quality 59%
High shipping cost 51%
Inconvenient returns 36%
Slow delivery 35%
Transaction security 30%
WWW.WCAECOMMERCE.COM
Top 5 Frustrations of US Cross Border Consumers
#WCAECOMMERCE

9. 75% globally
9
WWW.WCAECOMMERCE.COM #WCAECOMMERCE
If They Had to Choose: US Consumers Prefer ‘Free’

10. Average 6 tracking requests
for every parcel shipped
Source: Pitney Bowes shipping network data, 2017
Post-Purchase, Pre-Delivery
WWW.WCAECOMMERCE.COM #WCAECOMMERCE
Waiting is the hardest part!

11. Source: OSM, 2017
11
WWW.WCAECOMMERCE.COM #WCAECOMMERCE
US Consumers Want Real-Time Parcel Visibility

12. 53%
US shoppers who don’t
return orders because it’s
confusing or inconvenient
67%
US shoppers who review
the returns policy before
purchasing
66%
US shoppers who believe
free return shipping is
key to great returns
experience
Source: eMarketer 2017
12
WWW.WCAECOMMERCE.COM #WCAECOMMERCE
Returns are Key to Returning Customers

13. The Amazon Effect: 2 Day “Free” Shipping
WWW.WCAECOMMERCE.COM #WCAECOMMERCE
"No single company has had as great of an impact in the marketplace as Amazon. They
have changed the behavior of both buyers and sellers and also how shipping and logistics
providers deliver.”
—Mark Schoeman, CEO, The Colography Group.
• Amazon tells you when the package will arrive and it’s free for Prime Members
• Amazon and most Prime sellers use regional Amazon fulfillment centers
• Most Amazon Prime orders are delivered within 2 days
Who is the their primary parcel delivery carrier?
The United States Postal Service

14. Market Share by Total Parcel Volume USPS Ecommerce Parcels
WWW.WCAECOMMERCE.COM
Parcel Delivery in the US Market

15. Sortation Center
SuperCenter
SmartCenter®
A national network purpose-built
to help retailers sell more goods
and satisfy consumers through every
touch point, channel and device.
A National Network – It Starts with Good Bones
WWW.WCAECOMMERCE.COM #WCAECOMMERCE

16. Flexibility through Network and Program Design
WWW.WCAECOMMERCE.COM #WCAECOMMERCE
• International shipments consolidated in UK, shipped to US, cleared by US
Customs, and injected into Newgistics network
• Optimal network design combining leading ground post office injection (at DDU
level) with reliable service
• End-to-end track and trace shipment visibility
• Multiple US injection points scenarios including
• LAX, JFK
• LAX, JFK, LCK
• Ability to add US injection points (ATL, CVG, DFW, IND or ORD) as volume
grows
• Expedited opportunity with USPS air network to achieve best balance of
minimized transit and cost

17. Inbound
Airport
JFK LAX
Full
Network
%Tot Pkgs 67% 33% 100%
Day 1 20% 12% 17%
Day 2 53% 37% 47%
Day 3 88% 63% 79%
Day 4 97% 91% 95%
Day 5 99% 97% 98%
Avg cycle
time
2.4 3 2.6
LAX & JFK Entry with Estimated Cycle Times
Based on Sample Client Actuals post Customs clearance, in business days
WWW.WCAECOMMERCE.COM #WCAECOMMERCE

18. Express Clearance
• Subject to $800 de minimus
threshold per person per day
• Goods cleared while in air transit
• Flagged item will not delay
whole shipment
• Goods scanned (primary LAX &
JFK)
• Customs charges a fee for
express processing
• Best suited for fast fashion,
higher AOVs
CFS Clearance
• Subject to $800 de minimus
threshold per person per day
• 2-6 day clearance, shorter hours
and no weekends
• Flagged item will cause
inspection which can be off-site
• No US Customs fee
• Multiple gateways (LAX, CVG,
ORD, DFW, JFK)
• Best suited for low AOV goods
WWW.WCAECOMMERCE.COM #WCAECOMMERCE
Section 321 Customs Clearance Options

19. CLEARANCE AGENT
AIR CARGO
CARRIER
FOREIGN
ORIGIN DC
FOREIGN
GROUND CARRIER
PICK UP
FROM
ORIGIN
DELIVER TO
DEPART
AIRPORT
SHIP FROM
SCAN
RECEIPT
SCAN
ENTER
CUSTOMS AT
ARRIVAL
AIRPORT
MASTER
AIR WAYBILL
CREATED
AIRPORT
COURIER
USPS DDUNEWGISTICS
END CUSTOMER
CLEAR
CUSTOMS /
AIRPORT
RECOVERY
DELIVER TO
NGS ENTRY
FACILITY
DELIVER TO
USPS
NGS INTERFACILITY
SCANS
NGS INDUCTION
SCAN
AIR CARGO
RECEIPT SCAN
ARRVIAL
SCAN
DEPARTURE SCAN
USPS ENTRY
SCAN
USPS DELIVERY
CONFIRMATION
SCAN
PACKAGE
LABEL
CREATED
INITIAL
MANIFEST
FREIGHT
FORWARDER
AIRPORT
RECOVERY
SCAN
*PACKAGE
RELEASE
*PACKAGE HELD
AT CUSTOMS
US CUSTOMS
PRE-ALERT
MASTER AIR
WAYBILL
Operational Flow with Tracking Events
WWW.WCAECOMMERCE.COM #WCAECOMMERCE

20. Overall Benefits: Case Study Clients
WWW.WCAECOMMERCE.COM #WCAECOMMERCE
• Increased Revenue
• Reduced Expenses
• Better Visibility

21. Thank you
WWW.WCAECOMMERCE.COM #WCAECOMMERCE
▪ Rick Hernandez rick.hernandez@pb.com text: +1 (650) 520-4528
▪ Tom Finnen tom.finnen@pb.com text: +1 (973) 330-2613