Summary: We joined an array of posts, carriers and technology businesses to hear the latest insights in last-mile delivery.
Doddle joined an array of posts, carriers and technology businesses in Dubai for the EMEA edition of the World Mail & Express conference last week. The team spent several sunny days hearing the latest from industry figures on topics from last-mile to cross-border to rapid grocery delivery, and much more besides. As usual, we’ve compiled a list of what we saw as the most important insights from across the presentations.
eCommerce shrinks back towards pre-COVID norm
The explosive growth of ecommerce in 2020 and 2021 is unwinding in early 2022. Whether this is truly a re-adjustment after the effects of the pandemic have receded, or a response to global economic challenges with supply chains and inflation, it’s clearly having an impact on posts, carriers, and retailers. PostNL and bpost have issued profit warnings and Zalando and Amazon have filed losses in Q1 ’22. In the UK, IMRG estimates the ecommerce market shrank 12% in April 2022, mirroring its 12% growth in April 2021.
‘Qcommerce’ sets new expectations
Venture capital-backed startups offering rapid delivery were a key part of Peter Somers’ presentation, where he noted that the ‘Quick-commerce’ market is forecast to be worth $47bn in the MENA region by 2030, driven by massive expansion in online grocery from 2% of grocery shopping to 30% by 2030.
There are a few questions worth asking here.
Are consumer expectations being changed, and do those expectations apply to more than grocery and food orders?
Will the Qcommerce startups find a route to profitability (or more VC backing willing to burn shedloads of cash) to survive in a market with inflationary pressures and interest rates in positive digits again?
Will the changes in consumer expectations survive if the businesses pushing superfast deliveries do not?
The presentation cited survey figures indicating that 40% of shoppers feel faster delivery is important, that 61% of shoppers expect delivery in 3 hours, and that 30 minutes is the Q-delivery norm in Dubai. What’s not yet clear is how those figures translate into ecommerce more broadly, and whether consumer behaviour will be permanently changed as a result.
Escher’s presentation also emphasised a shift towards flexibility and speed as key last-mile factors for consumers, with Brody Buhler noting that 68% of consumers say fast shipping would lead them to place an order, and that the combined share of consumers for whom price or quality are the primary delivery factors has dropped from 51% to 40% since the pandemic began.
While this does suggest that some consumers’ preferences are changing, asking them to pick only one most important delivery factor obscures the reality that consumers are almost always balancing a variety of factors in their decision making – and price will always be one of those factors.
Posts are becoming true ecommerce businesses beyond the last mile
At Leaders in Logistics in March we heard from Andre Pharand, Global MD of Accenture, who noted that posts were being squeezed out of crossborder ecommerce with vertically integrated businesses like Amazon taking more share in the space.
However, in Dubai it appeared that posts were moving with intent to go beyond the last mile and fight harder for market share of crossborder ecommerce. We learned that Correos are getting a fleet of planes to bring in goods from China to Spain, and that 40% of Jersey Post’s volume is international and never touches Jersey itself.
However, cautionary notes were sounded from Hurricane and Emirates Sky Cargo on the topic of regulation, with new requirements for US and EU crossborder trade, and the UK and EU removing (and several other nations considering removing) Value Added Tax/General Sales Tax exemptions for low-value goods. However, at the same time, new UPU tariffs have enabled Western carriers to compete more effectively with Chinese carriers on crossborder prices.
Pitney Bowes highlighted crossborder consumer habits shifting in the context of high inflation, with Australian, UK and US consumers less likely to have purchased crossborder in 2022 vs 2021. Chinese consumers, on the other hand, were a net 12% more likely to have purchased crossborder in 2022 than 2021.
Sustainability is becoming a prerequisite to win retail clients
In the panel discussion, it was clear that retailers were emphasising sustainability credentials as key purchasing criteria when it came to partnering with posts and carriers. Several speakers noted that retail customers are increasingly asking about the carrier’s sustainability programme before as a pre-requisite to doing business, and this was echoed in Hurricane’s presentation, which mentioned the need for traceability of products through their supply chain via a digital ‘product passport’.
It’s interesting to note that there are two major trends that appear contradictory and highlight the polarising nature of consumer behaviour in today’s world: the emphasis on speed and ‘Qcommerce’-style deliveries is incompatible with increasing the sustainability of delivery and the last-mile, as these deliveries almost all happen on mopeds with little or no consolidation, in order to delivery within the 15- or 30-minute time window.
Freight prices rising and supply chains staying tight forces a shift towards more local fulfilment options
Many retail businesses are looking increasingly to localised fulfilment with products stored nearer their customer, as a response to both the rise of ‘Qcommerce’ and the continued challenges with supply chains. Emirates Post are growing a network for hyper-local delivery and Escher pointed to Blackstone’s sale of Mileway (a provider of small-scale urban warehousing) for $24bn as evidence of the increased demand for micro-fulfilment.
Those supply chain challenges are not going away either, having been driven by the ecommerce boom in the pandemic, lockdowns in key Chinese ports and cities, and many other factors besides. With demand still far outstripping supply, prices remain far higher than pre-COVID. As a result, posts are turning to build their own international capacity – for example, Emirates Post are investing $1bn converting passenger aircraft into cargo planes to expand capacity, and as mentioned previously, Correos are purchasing aircraft to fly Chinese goods into Spain.
Overall, it’s clear that while posts and carriers have enjoyed their deserved success and growth in the past two years, there are challenges to face in both short- and longer-term outlooks, whether it’s the fierce competition over crossborder, heightened customer expectations based on heavily loss-making delivery operations, or the contraction of the ecommerce market. However, everyone at WMX was keen to emphasise their focus on innovating and adapting – as Royal Mail’s Kevin Swindin made clear, posts are having to change their business models almost annually these days.
To learn how Doddle can help posts and carriers navigate these ongoing challenges in last-mile delivery and returns, get in touch today.
Head of Customer Strategy
Simon joined Doddle in 2020, following 10 years as a management consultant. He leads our Strategy & GTM team, working closely with customers and ensuring that our products are launched effectively in market and adopted. Simon has broad knowledge of first and last mile strategy but has particular expertise in Doddle's Digital Returns Kiosk
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