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2015 Innovations in logistics sector

Deepak Goyal
January12/ 2015

E-tailers will now have to work towards building success in the physical world as well as the digital world, according to accounting agency, KPMG. In order to create a successful supply chain, it’s critical that retailers strive to cooperate more effectively with logistics companies, in order to stave off a repeat of this year’s chaos with delivery companies.

The surge in demand during the last quarter of 2014, following the much hyped Black Friday spending spree, created a bottleneck in the delivery networks and lead to major delays. Discounts and sales saw shoppers storm the retailing world and spend around 50 per cent more than forecast, creating a pile up of parcels and causing courier firms to frantically attempt to keep up with the backlog of deliveries.

Online stores will have to prepare ahead of the festive spending period and think about paying a little extra to ensure their delivery network is hardy enough to keep up with the spending sprees.

“The challenge is to create robust networks that have flexible cost bases and capacity that can be enhanced to manage varying loads,” said Justin Zatouroff, KPMG’s global head of post and express.

“Those that haven’t developed relationships and are only after lowest cost solutions may face opportunist pricing or even find that they can’t access any additional capacity as they try to manage during peak periods,” he added.

He even predicts that new technology could herald the coming of automated couriers. Delivery drones, nicknamed ‘parcelcopters’ have already been tested by Amazon in the US for over a year now. UK residents may start to get driverless deliveries as early as 2016 with UK manufacturers receiving the go ahead to test driverless cars early next year.

“Self-driving vehicles will have the ability not just to transport goods but also to combine other process steps such as loading and unloading in order to increase efficiency of processes. In addition to providing efficiency gains, self-driving vehicles can also significantly increase safety in transport and loading processes,” said Mr Zatouroff.

Technology will be key and we may see small innovative tech solutions shake up the established logistics industry. Retailers will look into money-saving technologies to help them manage their costs while driving the innovation in order to stay competitive.

E-tailers specialise in finding their stock and knowing how to advertise and position their products to the correct audience. Often they do not focus on their own “back office” and fulfillment. One part of this is delivering the products to the customers, but equally important is paying suppliers and receiving payments from the customers. Easy enough, one would think, but when it involves foreign currency it become more complicated.

The report correctly points out that e-tailers need to create robust networks with flexible cost bases; we believe that this is just as important for the financial elements of the customer value chain and supply chain as for the physical logistics.

At Currencies Direct we work with online retailers to help them with international transfers, especially when it comes to selling worldwide on international marketplaces.

Here are some simple savings ideas to help your budget:

  • Use a specialist FX dealer and not your bank to make sure you get the best rates and minimise fees and commission
  • A good FX dealer will review your business and help you identify areas where you could be exposed to rate moves
  • Make sure you use a platform that lets you adjust rates and keep abreast of your income and outgoings
  • Make sure you protect yourself against your exposure. Tools like top-loss orders and limit orders, which let you ring fence the upper and lower rates you’re happy with
  • When buying stock from overseas, moving exchange rates can cause the input price to vary which can lead to uncertain profit (even move into loss) – consider using forward contracts to create certainty

The cost of buying the currency can be up to 3% of the value of the transfer, which is often quite expensive. A solution is to try to access wholesale business rates of exchange.

To find out more about e-tailer Collection Accounts, visit www.currenciesdirect.com/etailers

Deepak Goyal

Deepak is head of E-commerce at Currencies Direct and has been helping online retailers manage their international currency needs since 2007. With a background in international trade promotion and heavy focus on practical innovation within global cash management, he has created a specialised service for online retailers that helps them reduce cost on overseas stock purchases and enhance profit and international marketplace sales.