The impact of technology on the booming business of e-commerce

The huge expansion of e-commerce has ensured that the “fishing pond” of international consumers is within reach for retailers. It almost seems like a given fact that the 3PL market will experience a rapid growth the coming years. Especially when looking at the increasing demands of lowering shipping costs, timely product delivery, customer satisfaction and the need for an efficient advanced technological supply chain network. But are 3PL service providers in the position to meet these requirements in order to be able to support the high demands of the market?

Only the past 5 years, e-commerce has made leap thanks to the “power injection” of new technologies. Technologies that are expected to have a major impact on the 3PL industry. Amazon, for example, is expanding its logistics sector, followed by Alibaba, its Chinese counterpart, and is getting closer to the playing field of 3PL logistics service providers.

And “getting closer” might be an understatement… Because by improving the delivery time of their products and consolidating the supply chain, Amazon has already entered the 3PL market. The American e-commerce giant is even already planning to start delivering its products themselves to reduce shipping costs and to use advanced technology to integrate deliveries. They expect by penetrating the 3PL market, they can save up to $ 1 billion annually.

What are the opportunities for the logistics sector?

Of course, a positive development for consumers and Amazon. But at the same time, it will have a huge impact on the logistics service providers that work together with Amazon. The revenue of DHL and UPS appears to be 4% and 5% respectively only from Amazon’s merchandise. Sounds threatening? So, how can the sector give a positive spin to the rapidly growing e-commerce sector? The answer seems simple: full focus on the possibilities of new technology.

Because not only the tech giants, such as Amazon and Alibaba, have access to the latest technology. Tools around IoT and Big Data analyzes are within reach and already have a huge impact on the dynamics of the 3PL sector. In addition, many 3PL players already use tools for data analysis and web portals – in addition to or integrated within their software for warehousing and/or transport activities.

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For example, large shipping companies and 3PL suppliers already use new technologies to maximize their profits. 70% of the shipping companies said that real-time data analysis from 3PL service providers helped them to get a better picture of shipping alternatives. The extent of the role that technology will play in the development of the 3PL market can therefore certainly not be contested. In facts, it could offer the insight to strengthen the industry in its position.

And while Amazon’s “membership” of the logistics sector may be a challenge for existing service providers, it will simultaneously enable the sector to scale up the services portfolio and offer a more diversified range of services. This service upgrade – supported by technological innovations – will only have a positive contribution to the growth and the strength of the 3PL market.

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