E-commerce is big business. European sales of internet sales to consumers is in absolute terms greater than that in the United States: € 350 billion in 2013 versus € 320 billion in the US Obviously the European market cannot be compared with North America since Europe consists of many Member States each with its own rules and regulation, different languages, cultures and markets. Organizing web logistics on a European scale is a serious challenge. In the Netherlands, e-commerce is growing by about 10%. Sales amounted to € 10.6 billion in 2013. This is one of the few sectors which has shown strong growth figures in recent years. Brabant (the province Carpenter is active in) has a large concentration of logistics activities and holds therefore also multiple companies active in the field of internet logistics. Both large logistics providers as true specialists have offices in Brabant. Internet Logistics offers opportunities for more traditional SMEs in logistics. E.g. Timmermans transport & logistics (part of the Carpenter Group).
Timmermans transport & logistics
Timmermans transport & logistics is a medium-sized logistics service provider from mid-Brabant with offices in Diessen and Etten-Leur. The Carpenter Group includes a subsidiary in Poland, an employment agency Axell in the Netherlands and Poland, and Financial services. The company wants to grow especially in the area of value-added activities. We speak with Ton van den Oetelaar, international business development manager at Carpenter Europe. Ton has long worked as a business developer in the field of logistics and has extensive experience with internet logistics. About 1.5 years ago Timmermans got in contact with an English shop in the area of veterinary products (medicines for animals) and other pet related products: MedicAnimal. Like many web shops MedicAnimal experiences a rapid growth. Ton van den Oetelaar: “We started with a cross-dock operation in Diessen of about 300 orders per day and 500m2. A year later we have in Etten-Leur an operation that is three times as big and next cross docking we also provide warehousing, packaging, labeling and returns, where every day an average of about 1,400 orders are processed and shipped.”
The sales of veterinary products will be liberalized in Europe. In some European member states MedicAnimal can sell directly to consumers instead of using the veterinarian. Per individual country a service permit needs to be obtained. This means, among other things, that the orders must be reviewed and approved by a pharmacist before shipping the goods. In the United Kingdom and the Netherlands MedicAnimal has such a permit and they are working on adding more countries to the list. With this, the company expects to achieve considerable growth. The other products such as pet food, toys, etc. in are sold all over Europe.
Knowledge and experience
According to Ton, it does take the necessary knowledge and skills for a smaller logistics service provider to serve an e-commerce customer well. There are important differences with the customers who sell through traditional channels. One of them is the flexibility to cope with peaks in the week which is of great importance, “the peak at Internet sales is often just after the weekend. Then you should be able to quickly and significantly upscale in the number of employees. We often begin on Sunday to start processing orders, “says Ton. “Besides this, you need people who understand the operation and customer requirements well. At e-commerce customers it is more about the production process than storage.”
Knowledge and stills:
“The peak in Internet sales is often just after the weekend. There you should be able to quickly and significantly can upscale in the number of employees”
In other words, a large amount of smaller orders (one or a few order lines) which need rapid picking, packing and shipment. In addition, returns are an important underrated activity. E-commerce almost automatically means a large number of returns. These products all need to be checked, identified, labeled and reported. Moreover, the role of the logistics service provider to an internet customer is different from a traditional customer. There is often shipped directly to consumers with small orders. Counseling is important to use the right packaging. Smaller webshops can according to Ton profit the most from outsourcing their activities on transportation costs and speed of delivery. “Obviously, a logistic service provider can provide efficiency through flexible warehouse staffing and because the use of square meters can be deployed flexibly (pay in terms of usage). Yet the most profit is often to be gained in the transportation tariffs and integration with carriers. Smaller webshops often face difficulties in negotiations and gain full integration at the parcel carriers. The logistics service provider can often provide a better solution by combining the volumes of different customer.”
Moreover, in the e-commerce business often involves small margins. Small online shops can obviously not purchase as cheap as large retailers. In addition, costs include internet marketing, customer service, returns, etc. are often high. Rapid growth is therefore of great importance, this also applies to the operation of the logistics service provider. The logistic service provider needs to invest in the startup of an operation where rates are based on certain sales volumes and growth projections. These investments should of course be recouped at a later stage.
The Netherlands has been known as a distribution hub or gateway to Europe. Does the same account for internet logistics? Ton van den Oetelaar: ‘This is not necessarily true for in field of e-commerce. For example, a customer in Italy is expecting (like a Dutch customer) that his order will be delivered tomorrow or in a few days. This is not always possible to organize from the Netherlands attractive cost. Next to this, consumers instinctively prefer to be supplied with a product from their own country or region. You will also see that large online shops such as Amazon look at national rather than European logistics operations. “In addition, American or Asian webshops often look to a country with a large domestic market such as Germany or England for their first European settlement.
(source. Bedrijvig Brabant 2014)