It’s another packed day for Cataline Lloyd. As she arrives at Los Angeles International Airport from a business trip, she has myriad things to do before an evening engagement, so en route home her shopping is done online.

The busy director of sales and marketing, whose job frequently takes her across cities in the U.S. and beyond, has little time to browse the shops in L.A.’s sprawling metropolitan area. “My time at home is so limited that I prefer to shop online rather than fight L.A. traffic and deal with parking,” she comments. “However, sometimes delivery options can be restrictive and I can’t always be available during certain hours so it’s important to me that companies provide flexibility and actually deliver when they say they are going to.”

Lloyd is one of a growing breed of urban consumers living in one of the world’s ever-expanding ­mega-cities – in L.A’.s case, an expansive area that is home to some 15 million residents. These cities are important economic drivers. In its report “Urban world: Cities and the rise of the consuming class,” the McKinsey Global Institute projects that by 2025 the “City600,” the world’s fastest-growing megacities and middle weights, will be producing a GDP of $30 trillion, driving nearly 65 percent of global growth.

As megacities grow and prosper so does consumer demand. Like Lloyd, urban consumers typically lead busy, fast-paced lifestyles and have the cash to spend, and want simple, convenient solutions to match. For e-commerce businesses, this means applying smart logistics strategies to keep pace.

Peter Schulz-Rittich, Vice President Product Management Domestic Delivery, DHL eCommerce, says that expectations have grown significantly with the rise of the urban consumer. “We are talking about a great many urban professionals with little time. These are predominantly tech-savvy consumers, and most of them are mobile natives,” he comments, adding that same-day and on-demand delivery,  ever shorter time windows, dynamic rerouting, delivery visibility and multiple delivery options are becoming more than a nice-to-have for e-commerce businesses who want to win over those discerning groups of consumers.

Managing complexity

Expanding services in both established and emerging markets presents challenges, but the inexorable growth of the megacity demands it. MIT’s Megacity Logistics Lab notes that parallel to the rapid increase in the number of megacities with more than ten million inhabitants, e-commerce has triggered an increasing amount of direct shipments, with direct deliveries both increasing the complexity of last-mile urban transportation networks and leading to the fragmentation of shipments, higher complexity and a greater need for coordination to ensure goods are distributed efficiently.

In order to address both this complexity and rising expectations, new products and services are being developed. Schulz-Rittich points to DHL Parcel Metro as a solution that DHL eCommerce has developed to help e-tailers tackle the urban last mile. A fast and flexible service for online retailers, it meets the demand for instant, same-day and next-day delivery, utilizing a state-of-the-art technology platform that allows DHL eCommerce to create a virtual delivery network of local and regional delivery vendors and crowd-sourced providers. This ensures maximum flexibility and capacity over the last mile and enables a high-quality and affordable delivery service.

“Retailers can offer a seamless end-to-end e-commerce experience to their customers by customizing the mobile delivery interface with their logo, colors and fonts,” says Schulz-Rittich, “while for consumers, the service allows them to track shipments in real time, communicate special instructions to their courier, reschedule a delivery and rate their delivery experience.”

Opportunities in emerging markets

Deployed in Atlanta, Chicago, Dallas, L.A. and New York in the U.S, as well as in Bangkok, Ho Chi Minh City and Hanoi in Southeast Asia, Parcel Metro is able to combine the virtual network with available delivery assets and thus quickly expand to more megacities.

Naturally, there are also local and regional specificities, not just in terms of infrastructure but even down to how e-commerce is conducted. In China and other Asian countries, for example, pervasive social networks – notably not the same ones used in the West – have seen consumers move to a “social commerce” model, where shopping is assisted by user ratings, referrals, social advertising and even sales occurring within the social networks themselves.

“In Asia, social commerce is already big and growing strongly,” says Charles Brewer, CEO DHL eCommerce. “Depending on the country, it accounts for about 30 percent of all e-commerce, but today you won’t find a good user experience when it comes to fulfillment of such social commerce deliveries.”

It is also a different and emerging method of shopping – one that differs from traditional e-commerce in that it is even more reliant on relationships of trust built up between the retailer and consumer. Part of that trust depends on delivery. According to Accenture’s “Continuous Delivery” survey, 86 percent of consumers regard delivery as part of their total online shopping experience. Brewer comments: “Today’s e-tailers are increasingly realizing that the customer experience – and their ability to build customer loyalty – is won and lost by how well the orders are fulfilled and delivered.”

Differences in emerging market cities present an opportunity for growth, however, and with these cities increasingly becoming economic hotspots, that’s an opportunity e-commerce businesses can’t afford to miss.

“In emerging markets,” says Brewer, “alternative delivery options such as delivery to service point, locker, neighbor or other secure and convenient locations are still very nascent, presenting an opportunity for e-commerce businesses to get ahead of the curve and differentiate, if they ensure their delivery strategies are up to speed.”— Michelle Bach

 

Published: September 2018

Images: Marco2811/Adobe Stock; Mee Ting/Adobe Stock; nastazia/Adobe Stock; goir/Adobe Stock; Adobe Stock;  Zerbor/Adobe Stock; Thinkstock