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5 Keys to be able to manage the logistics of e-commerce

By: Gustavo Zapata Talledo, Business Unit Manager

Although the beginnings of electronic commerce in Peru date back to the nineties with experiences such as Rosatel or the extinct Mallperu, to give some examples; Online sales have only started to gain momentum in recent years. Thus, according to estimates from the Foreign Trade Society (Comex Peru), these transactions would reach US $ 2,500 million in 2018, which would represent a growth of 47% from 2013 to the present year. The Lima Chamber of Commerce is a bit more optimistic and estimates revenues of US $ 3 billion for this year, explained by purchases made by six million people. From the government, the Minister of Production, Raúl Pérez-Reyes estimates that electronic commerce already represents 7% of total sales in Peru, when its share was practically close to zero three years ago. And it is that, according to Cash Payment estimates, about 1,000 companies are added annually to electronic commerce in the country. Of these, many players come from physical retail and another important part are pure ventures. In that sense, this online wave no longer only includes large brands, but also medium and small businesses that have decided to enter this market.

With figures as of September 2018, Kantar Wolrdpanel found that 38% of Peruvian families have searched for or bought an item online in recent years. Considering the online purchases made in the so-called Cyber ​​Days, the Linio company points out that the Peruvian consumer mainly demands cell phones (smartphones, portable batteries, smartwatch and headphones), computer products (hard drives and laptops), as well as consoles, video games and fashion (shoes and watches). For its part, for Visanet, some additional factors that have contributed to this phenomenon have been the hiring of taxis, as well as the hiring of music or video services, through mobile applications using credit or debit cards.

Key strategies

This is how the expansion of online sales is one of the two phenomena that are changing the national logistics market (the other is the aggressive expansion of convenience stores). Well, we are moving to small volumes, a large number of deliveries and much faster, which implies that logistics operators must transform their practices in the warehouse and distribution areas. In the same way, there are many retail companies with an online presence that have a large number of products (SKUs, Stock-Keeping Unit, for its acronym in English) and that have a large number of probable delivery destinations. Therefore, to manage efficient logistics it is important to take into account 5 keys:

1.- Migrate the warehouse infrastructure from bay racks or complete pallets to having increasingly smaller warehouse locations, such as half pallets, shelves or bins because all customers are migrating to omnichannel: sell in the retail channel, to wholesalers and in a virtual store.

2.- Transform the typical batch supply thinking for an order splitting to a continuous process by event, where as soon as the order arrives at the system, it is immediately processed by the staff.

3.- Having a competitive cost in the transfer, for this it is important to plan more efficiently the capacity of the transport units through adequate calculations of the volumetry of the SKUs and orders.

4.- Achieve a sequencing and scheduling of the routes to have a delivery in a time window, because now customers are not willing to wait 8 hours, but an hour or a maximum of 2 hours in order to receive the order; being key the GPS location and implement a router.

5.- Visibility and information in real time. Customers need information and status of their loads at all times, for this it is only important to have websites and apps, but that the information shown is 100% reliable. Thus, this effervescence of electronic commerce must have an adequate logistics strategy if bad customer experiences are not to wreck the online adventure that various Peruvian companies are undertaking. And logistics operators are a perfect ally due to the experience, scale, infrastructure and technologies they handle.

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