Private courier companies have grown almost exponentially recently, and the parcel boom is directly tied to the number of e-tail and e-commerce businesses now operating in the UK.
In fact, 2013 saw 1.83 billion packages sent via courier from the UK (and most delivered within the UK). There are just under 64,000,000 people in the UK, and that means that every man, woman and child in the UK got 29 packages last year on average. 2014 is set to be an even bigger year for ecommerce, seeing more than 2 billion packages, and more than £7 billion worth of business to the courier industry.
E-commerce is the driving force here, as UK demand for consumer goods continues to expandIn 2009, for example, only 23% of the total goods delivered were of a retail, consumer nature. By last year that has all but doubled to 39%. The UK’s online retail market has nearly doubled as well, growing 86% between 2009 and 2013.
One incongruity, though, is that business volume has risen much faster than total revenues, especially in ecommerce. That means that while business is growing, profit margins are shrinking. The increased levels of competition are making this the classic ‘buyer’s market’, and more sellers enter the online market every day.
So what does this mean for the e-tailer?How can they compete with every new stall at the internet’s global bazaar? The answer is the third party logistics industry. Many of the most successful of these new SMEs use fulfilment houses, such as Fairway Fulfilment & Logistics, to handle almost all of their logistics and order fulfilment functions, and those fulfilment houses use the resulting economies of scale to make order fulfilment and delivery as inexpensive as possible. The improved performance these 3PLs offer, in terms of speed, order accuracy, and customer responsiveness make their ecommerce partners more profitable, and more popular with customers.
As a result, smaller and smaller businesses are seeking logistics partners to ensure their profitability in years to come. The best 3PLs for small and sole trader ecommerce concerns offer full, multi-channel software integration with the seller’s online stores, reducing the manpower and time that must be dedicated to order processing, and allowing very small operations to take advantage of their services efficiently.
Experts predict ecommerce deliveries to drive parcel volume another 38% higher by 2018, so expect competition to get even tighter, and for successful ecommerce sellers to become even more reliant on 3PLs for their order fulfilment function.