Brought to you byLONGITUDES
Malcom McLean, a trucker from North Carolina, isn’t a household name – but you have certainly benefited from his innovation. Today’s global economy would not be possible without the intermodal shipping container, or the box, pioneered by McLean.
This box helped standardize ocean shipping, shrunk the world of commerce and enabled global trade by reducing labor and dock servicing time. The box also paved the way for e-commerce.
“This is the greatest time in history to be a consumer.”
Regulators published international standards for containers between 1968 and 1970, and global trade mushroomed from $232 billion in 1968 to $6.5 trillion by the year 2000.
In the same way the box transformed the global economy, e-commerce is now driving growth and change, creating new superpowers and increasing total spending – but at an even faster pace. In other words, this is the greatest time in history to be a consumer.
The following four factors are driving this age of the consumer:
In 2017, more than half of all people will buy a retail product online. That means 1.6 billion people will buy more than $2.4 trillion of merchandise online, according to estimates.
All that merchandise travels far and wide around the globe, with e-commerce shaping the future of logistics. This results in higher quality products, delivered faster and more affordably than ever before.
“1.6 billion people will buy more than $2.4 trillion of merchandise online, according to estimates.”
Customer expectations have never been higher – until tomorrow. With a bit of help from your smartphone, nothing is out of reach.
You can order nearly anything from almost anywhere in the world and have it delivered to your doorstep in less than two days.
If you are willing to pay a little more, you can have your item in as little as two hours.
Consider the online search results for a fidget cube: hundreds of options across multiple sites – and ratings, too.
How about something a little more obscure like an old-school 45 Record Player?
I found dozens of options. This is easily a wider selection of options than back in the late 70s at the local electronics store.
A world of instant gratification is shaping both customer expectations and every part of the supply chain from ordering and payments to packaging and delivery. Let's take a closer look at payments.
With the dramatic growth in e-commerce, companies are looking to simplify the payment process. Apple Pay, Samsung Pay, Google Wallet, PayPal, Venmo, Cash and countless other options remove friction from transactions.
Many of these simply link to other payment options like your bank account or your credit card, but there are others out there charting new territory. For example, PoshMark enables its clients to earn money by selling used designer clothing and accessories. They allow their clients to keep their currency in the app to spend with PoshMark but also offer the ability to cash out at any time.
And then there is Bitcoin. With Bitcoin came Blockchain, the distributed ledger. It's the first decentralized currency with no central administrator.
This is basically a spreadsheet copied thousands of times across a network of computers. It's decentralized and without a point of failure, so in effect, it is incorruptible. In a landscape where information security is increasingly important, the distributed ledger offers unmatched, unhackable protection.
You've probably heard this popular saying: "Nothing happens until something gets sold." Whether you attribute this quote to Henry Ford, Peter Drucker or countless others, traditional wisdom dictates that companies drive business.
However, thanks to e-commerce, we've made a modern adjustment: "Nothing happens until someone wants something." Expectations around e-commerce and online shopping have now spread into all aspects of life.
So what does that have to do with logistics? Well, everything.
Case study after case study tells us that reducing logistics costs bolsters a company's profit margin. That's why companies of all sizes today are looking to squeeze every ounce of efficiency out of their supply chains.
The magic happens through logistics providers like UPS and other last mile delivery companies. Sure, UPS is a household name, but what about all of the companies looking to unbundle the value they create?
More than $6.2 billion was invested in the transportation sector in 2016, according to Crunchbase data. Complacency is not an option – even for the most established companies.
We're all familiar with buyer's remorse. But thanks to e-commerce and friendly return policies, remorse is no longer part of the shopping experience.
It is estimated that up to 9 percent of purchased items are returned. However,
in the e-commerce world, the number is north of 30 percent. So, what happens to the $729 billion in goods that need to be returned?
Getting those goods to the right place with the right disposition can really impact cycle times and inventory turns. This is why companies like mine are investing in returns services like UPS Returns Manager to help build out a world-class returns process.
It is also why UPS has partnerships with companies like Optoro that offer end-to-end reverse logistics solutions to help retailers process, manage and sell their returned and excess inventory.
According to the 2017 UPS Pulse of the Online Shopper study, three-fourths of avid online shoppers have shipped something back to an e-tailer, and two-thirds of online shoppers look at a return policy before making a purchase. The takeaway? You can't leave returns to chance.
Social commerce is another important factor shaping the age of the consumer. Yahoo first introduced the term in 2005 as a way to describe a set of online collaboration tools that helped potential buyers get information and advice.
It now describes the use of social networks to drive e-commerce. When most people think about social commerce, they think about ads for whatever their friends are selling or promoting. But that's just the tip of the iceberg. When an e-tailer recommends items frequently bought together, for example, that is also social commerce.
“Social commerce has paved the way for participatory commerce.”
Social commerce has paved the way for participatory commerce: Consumers are directly involved in the financing of a product or service through Kickstarter, Indiegogo or a similar service.
So why should you care? Social commerce will shape the way we buy nearly everything in the future. Pair social commerce with artificial intelligence that learns as you consume, and you have a totally new shopping experience.
In the age of the consumer, buyer's remorse is no longer a given. Convenience is king, and choices are seemingly infinite.
It's up to forward-looking companies to push the limits of e-commerce. That's because the next Malcom McLean, the pioneer behind the box, is already creating the next great disruption.
Longitudes explores and navigates the trends reshaping the global economy and the way we’ll live in the world of tomorrow: logistics, technology, e-commerce, trade and sustainability. Which path will you take?