LOGISTICS AND BUSINESS
TO CONSUMER COMMERCE
Jean-François THONIN
Cardiff
February 2003
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The development of e-commerce 4 years ago:
Except for the Post Office, there were no players in the business
to consumer logistics market.
Market in France : between 1 and 1.5 billion euros.
Companies realized that if the Post Office was alone, it was
because it’s very difficult to earn money in this market.
Thought it was very interesting to anticipate which players would
be able to compete with the Post Office.
Today in France, there are around twenty organizations
each with their strengths and weaknesses.
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PRIVATE BUSINESS INTELLIGENCE AGENCY
References :
Leading companies : La Poste, Geodis,
VediorBis, Vivendi…
Local authorities : Conseil Régional de Lorraine,
CCI des Deux Sèvres, CCI de Lille…
Web Site:
www.data-deliver.com
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PRIVATE BUSINESS INTELLIGENCE AGENCY
Launch of a logistics marketplace for one of the global leaders in
professional publishing :
Our strength: Using first the telephone then the internet.
For example, 10 years ago, their company launched a service on the
Minitel (a sort of French Internet) which, today, generates an annual
turnover of more than forty five million euros.
In this company, the transfer of information from the Minitel to the
internet hasn’t been easy; Minitel can be found in every warehouse but
computers connected to the net are rare.
Today, the so-called “pure players” have largely disappeared.
However Internet sales complement traditional companies, and are not
their competitor.
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PRESENTATION OF THE SURVEY
RESULTS CALLED ‘E-LOGISTIC’
The subject : the impact of e-commerce
on logistics especially in ‘b to c’.
The study highlighted the mistakes made by
companies that launched e-commerce projects.
How can logistics cause the failure of an
e-commerce project ?
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A FEW KEY NUMBERS
ON BUSINESS WEB SITES
50 % are global.
50 % provide delivery within one week.
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A FEW KEY NUMBERS
ON BUSINESS WEB SITES
The TV commercial was divided in 3 parts :
First, you see the CEO of a large company
surrounded by his colleagues.
Second, you see the CEO of a small company
surrounded by his colleagues.
E-commerce gives companies the opportunity
of contacting potential clients worldwide.
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A FEW KEY NUMBERS
ON BUSINESS WEB SITES
What can we draw from this ?
If the Internet is effectively global, it is first and
foremost a local tool.
One can go to the moon but they can’t deliver to
consumers at home within one day at an
acceptable market price.
Consequence: the best lead time they can offer
is over a week.
Our advice: start with the local market.
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LIST OF FORESEEABLE LOGISTIC
CONSTRAINTS
5 major constraints encountered by companies
implementing a “B to C” project :
Logistics supply constraints;
Constraints in relation to the nature of goods sold;
Consignee constraints;
Consumer habit constraints;
Stock constraints in relation to lead times.
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LIST OF FORESEEABLE LOGISTIC
CONSTRAINTS
Most companies without any logistics experience that
implements an e-commerce project in ‘b to c’ forgets logistics.
They encounter this problem on receipt of their first orders.
But the fact is that if you do not make companies aware of
logistical problems then you take a risk of seeing them fail and
abandoning the Internet for good.
For those of you who accompany the development of small and
medium-sized businesses in your own regions, please do not
forget to make them aware of logistics.
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LOGISTICS SUPPLY CONSTRAINTS
No player, not even the Post Office, is capable of offering
delivery directly to consumers in accordance with market expectations.
Why this shortage?
1/ Clients do not want to pay a high price for delivery.
2/ Delivery to the consumer’s home costs twice as much as to a
company.
3/ Current volumes do not yet allow for significant economies of
scale. This would allow for a reduction in home delivery costs to
approach that of business delivery for the consumer throughout
France.
4/ They failed, in particular, because they often had opposite them,
clients who launched an e-commerce project who were completely
ignorant of the logistics constraints.
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LIST OF FORESEEABLE LOGISTIC
CONSTRAINTS
Consequence: Companies fell back
on the “b-to-b” sector.
Our advice:
We therefore advise any company wanting to start an
e-commerce project to go and meet the logistics
experts who are able to deliver their goods.
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CONSTRAINTS IN RELATION
TO THE NATURE OF GOODS SOLD
We are far from being in a free market world.
Try selling (French) cheese to the United States
and you will soon see what is known as customs
constraints.
When you market products, you are often obliged
to rely on several transport companies according
to their area of expertise.
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CONSIGNEE CONSTRAINTS
Contrary to a company:
they value their peace and quiet,
they are not always accessible,
they are not always there.
Solutions currently in use:
Delivery by appointment,
Delivery to predetermined pick-up points.
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CONSUMER HABIT CONSTRAINTS
The Internet has dramatically changed consumption habits.
Bergère de France, the French leader in knitting yarn, analyzed
orders made on the Internet and surprisingly, noticed that people
made orders at around 3 o’ clock in the morning…
Indicating the lead time on the website isn’t enough. It’s
important to specify the exact collection time.
Example: If you tell a customer that the product will be delivered
the following morning and if a customer orders at five to
midnight, he will be disappointed if he doesn’t receive his
package the following morning.
The client will esteem that you haven’t respected your end of the
deal.
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STOCK CONSTRAINTS IN RELATION
TO LEAD TIMES.
An error frequently made by companies, as
they embark in their first e-commerce
project, is to underestimate the cost of
offering shortened lead times.
The adopted solution consists in offering a
limited number of articles for the shortest
delivery times (same-day or 24-hour
delivery).
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CONCLUSION
“Man knows how to go to the moon, but French
logistics companies are still unable to offer a
full range of worldwide delivery services (from
small packages to bulky shipments - not to
forget goods needing to be shipped under
controlled temperatures) destined to private
individuals and covering all of France.”
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