Impacts of e-commerce facility management strategies on the logistics industry

The e-commerce industry is revolutionising the way people are making purchases today. Traditionally, customers must travel to a physical store to purchase a product. However, with the help of the Internet and an e-commerce platform, that same product can be delivered to customers’ doorsteps with a simple click on a smart device. As the e-commerce landscape continues to grow in sales volume and competition, customers are demanding for faster and cheaper order fulfilment. This places a strain on the capabilities of logistics providers to deliver efficient services at a low cost. Gradually, the boundaries between e-commerce and logistics began to blur as e-tailers felt the need to improve quality of order fulfilment and take control of the logistics involved in e-commerce. Facility-related logistics such as order picking, packing, and sorting are just as important as the delivery in order fulfilment. Two methods of controlling facility-related logistics by e-tailers are insourcing, where e-tailers fulfil their orders using in-house logistics capabilities, and outsourcing, where the facility-related logistics are outsourced to logistic providers. Through analysing the opportunities and threats of these strategies, this paper has identified two possible reasons for how logistics providers lost their competitive advantage in order fulfilment to e-tailers. These include the dependence on e-commerce and the lack of innovation which caused logistics providers to adopt a reactive approach. A SWOT analysis for logistics providers was carried out and a three-step solution was recommended to regain their competitive advantage in e-commerce fulfilment: (1) Optimise distribution network with big data analytics, (2) Determine the level of involvement in e-commerce to reduce risks and (3) Determine the extent of investment in warehouse automation to ensure profitability of investment.Bachelor of Science (Maritime Studies