This past year companies have shifted their focus from ecommerce to elogistics outsourcing, reports Romala Ravi, an analyst with International Data Corporation (IDC) in Framingham, Massachusetts.
Ravi specializes in elogistics outsourcing. She defines elogistics as an IT-enchanced and integrated function that stretches from the front-end online store all the way to the end customer. This process includes:
- Order management
- Warehousing and fulfillment
- Returns management
- Transport and delivery
- Customer service issues
“Hype about ecommerce” dominated the logistics world for the last 24 months. Ravi says corporations spent significant sums building their front end capabilities. But the real challenge surfaced when the order was placed. Delivery became a problem. Then the 1999 Christmas season arrived and volume soared. “Companies couldn’t deliver because of spikes in volume,” notes the analyst.
Chastened, these companies turned their attention to the back end of the sales process. Ravi reports there was “a heavy emphasis on elogistics” so companies would be ready for the 2000 holiday season. The goal is to be able to deliver goods “under battlefield conditions” like the Christmas rush. The analyst views this as a healthy move because she believes elogistics “is the bedrock of successful ecommerce.”
The Big Boys Follow the Pure Players
Many companies are turning to outsourcing to solve their elogistics dilemma, observes the analyst. The new solution is IT-driven. In the elogistics space, business processes have merged with IT offerings.
Ravi says there has been a “proliferation” of new companies offering IT-based outsourcing for elogistics. Pure play elogistics companies include Vcommerce, SubmitOrder.com and Cimetric Commerce.
However, the big delivery companies have kept their eyes on these pure play elogistics players. Now United Parcel Service, Fedex and the traditional catalogue fulfillment companies like Keystone Internet Services are building elogistics services as well, she observes.
Even though goods physically have to travel from one space to another, companies are finding a way to streamline the process using the Web. Ecommerce companies with goods to ship are lined up on one side of the playground. The carriers are lined up on the other. Etransportation companies are in essence providing the basketball court where both teams can play ball. Both shipper and carrier can visit these etransportation Web sites — IDC calls them “transportation Emarketplaces” — and arrange for transport. Ravi says this process makes the procurement of transportation “more efficient.”
This year Ravi expects to see consolidations and partnerships become the norm. In fact, she predicts this “urge to merge,” as Cole Porter said, will be the hallmark of 2001.
Here’s why. Ravi says all the new companies launched their Web sites, believing they would become the service provider of choice. However, today the venture capitals who wrote the initial checks now want to see a return on their investments. “There’s a lot of advantage in alliances,” says Ravi.
As elogistics matures, Ravi says vendors will begin developing international logistics capabilities. “There are no geographic boundaries to selling goods via the Internet,” notes the analyst. Buyers will pressure vendors to deal with international shipping situations.
Lessons from the Outsourcing Primer:
- Companies that have built Web sites are now focusing on elogistics so they can get their goods to their customers.
- Transportation eMarketplaces are facilitating transport by putting shippers and carriers together in the same space.
- Ecommerce companies are turning to outsourcing to solve their elogistics challenges.
- Elogistics vendors will have to learn to handle international orders.