KEN LEE ON INVESTING TO BOLSTER E-COMMERCE GROWTH
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E-commerce’s trajectory will continue to rise as the way we work and live continues to change. What investments are needed in the logistics sphere?
It is plain as day that e-commerce has been bolstered during Covid-19 by the strong demand for medical devices, such as personal protective equipment from Asia to other regions, as well as a boom in online shopping with shops shuttered during shutdowns.
According to a recently released white paper by DHL Express entitled The Ultimate B2B E-commerce Guide: Tradition is out. Digital is in, the company recorded an increase in B2C e‑commerce in 2020 by approximately 40 percent, compared to 2019.
What is predicted for the future of the B2C sector, has already been visible in the significant consumer e-commerce rise over the last years, with high growth rates during the holiday peak seasons (e.g. Easter, Christmas) and mega shopping days (e. g. Black Friday, Cyber Monday).
However, it is not only B2C e-commerce that has flourished from ongoing digitalization and changing consumer shopping behavior. In 2019, before the pandemic, global sales on B2B e-commerce sites and marketplaces had already increased by 18.2 percent to reach USD 12.2tn (€10.26tn), outpacing the market size of the B2C sector.
Ken Lee, CEO, DHL Express Asia Pacific Excl. China said, “2020 has seen significant shifts in the way we work and live. This has translated into growing demand for capacity and efficiency in logistics as the world migrates online and becomes more connected with increased trade flows.
“DHL Express has experienced a surge in e-commerce shipments across Asia Pacific. And we are expecting peak shipment volumes to maintain an upward trend.”
The white paper also predicts that by 2025, all B2B sales interactions between suppliers and professional buyers will take place in digital channels, and online B2B trade will increase by more than 70 percent by 2027 to USD$20.9tn (€17.58tn), compared to USD$12.2tn in 2019(€10.26tn).
MILLENNIALS TO THE FORE
Other factors to consider are the impact of the Covid-19 pandemic on the pace of digitalization, and the purchasing behavior of technology-savvy millennials, who are now of an age to be both B2C consumers personally, and B2B decision-makers professionally.
Already, millennials account for 73 percent of all professional B2B purchasing decisions, according to the white paper.
As digital natives, their experiences in their daily purchases translate to high expectations when making B2B transactions, pushing companies to invest in digital solutions, such as selling platforms, while offering great growth potential.
GREATER INVESTMENTS NEEDED
This has led to express delivery service providers taking a closer look at the industry’s long-term trajectory and bolster their infrastructure to meet its anticipated momentum.
To meet the changing needs in this region, DHL Express is investing close to €690m in infrastructure across key markets.
It also announced placing orders for eight additional new Boeing 777 freighters, to meet customer demand in fast-growing international express shipping markets, with first deliveries of the new aircraft scheduled for 2022.
The aim? To help the company manage future growth in shipment volumes, and address an ever-growing demand for time-definite express deliveries.
Lee believes these plans and investments will ensure that DHL Express remains well-positioned in the long run to keep global trade running, as e-commerce and cross-border trade grow.
He elaborated: “Amongst these includes our €377m expansion of our DHL Central Asia Hub in Hong Kong. We have also invested €80m to build the largest distribution facility in Osaka, Japan and €131m in a gateway facility in Incheon, South Korea.
Investments in Australia include a new service center in Sydney, and plans for new and expanded facilities in Brisbane, Melbourne and Adelaide.”
But that is not all.
“We already have 23 dedicated aircraft serving the region, and invested more than €60m in boosting network coverage. We have plans to introduce more flight routes and increase the frequency for existing flight routes.
DHL Express will continue to modernize its regional and intercontinental air fleet, to maintain a highly efficient and reliable aviation network,” Lee said.
This article was originally published on DHL’s Logistics of Things and was republished with permission.