Fulfillment - a catalyst for the growth of regional online sales
Due to the specifics of the business, I have been watching the e-commerce market for a long time and never cease to be amazed - every year various forums and conferences are held, the most acute issues of the industry are raised, but some of these questions pass from year to year. They are hotly debated, but in fact nothing changes.
Everyone understands that television as a communication channel is losing its leading position in favor of a new media internet. The Ministry of Communications vigorously reports that more than half of the country's inhabitants use the Internet, and 80% of our vast country’s territory will be covered by broadband by 2018. The Internet is becoming more commonplace and everyday, and Russians are more and more willing to master this communication environment as applied to various aspects of their life, in particular, to purchases.
It is also no secret that the farther away the settlement is from Moscow and the smaller its population, the smaller the range of goods available to the consumer. Traditional retail is often unable to convey to the consumer all the richness of the range of products, reducing it for small settlements up to essential goods. And it is exactly e-commerce that is the most effective way to level this assortment discrimination of regions. But is the young online trading market ready for the increasing demand from consumers?
As for Moscow and St. Petersburg, in these e-commerce strongholds with a commodity and logistics infrastructure, consumer demand is quite successfully met. And it should be noted, the quality of service is growing from year to year. But for a regional consumer, theses about the convenience of ordering via the Internet, at best, are in doubt. Local online stores or not at all, or they offer a fairly narrow range of products. Metropolitan online stores, they are only trying to work with the regions - because with seeming simplicity, this step requires them to reconsider existing business processes.
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The online store, which works for federal coverage, has the opportunity to feel for yourself how great our country really is and how great is the need to modernize the transport infrastructure. Long delivery times are, first of all, the need for a large working capital and this often becomes the main obstacle to the ambitious plans for the regional expansion of many players in the e-commerce market. Therefore, there is so much talk about the need to open regional hubs that would serve the region of presence. The benefits are obvious - reducing the delivery time, which is pleasant to the client, and the growth of capital turnover, which is nice to the seller. But there are also disadvantages.
A small number of online stores in the regions is not a consequence of a lack of entrepreneurs or lack of demand from consumers, on the contrary, this is all right. The obstacle to the creation of local online storefronts is what makes at this stage meaningless the opening of hubs for metropolitan online stores - the underdevelopment of the commodity and logistics infrastructure. There are no warehouses, there is no sufficient customs capacity, there are no wholesale companies. Goods, one way or another have to be purchased in Moscow. The longer the transport arm to the supplier, the greater the costs associated primarily with demand forecasting. The lack of goods in place or the accumulation of unsold stock "eats" profits. And these costs need to be multiplied by the number of hubs that are planned to open.
Of course, over time, when the number of shipments will increase, the construction of regional distribution centers will become economically justified, but at this stage, it seems to me, the best way is to accumulate a statistical base and order traffic, working from Moscow. At this stage, online shopping is important to focus on building an assortment matrix. It is necessary to get away from the paradigm of competition with offline retailers, you need to target your offer for the regions, taking into account the “holes” in their assortment. That is, it is necessary to develop its core competency - sales. Moreover, the distance trading infrastructure in Russia is becoming more accessible.
More than ten years ago, in America and Europe, at the junction of e-commerce and logistics, a new business line was formed - complete business. In the Russian business vocabulary, “complete filment” is a relatively new term, still cutting ears. However, this is anchored throughout the world the designation of distance-selling business processes aimed at fulfilling an order. This term refers to the processes associated with the physical movement of goods from the supplier to the final customer: taking goods to the warehouse, storage, order processing, picking goods in the order, packing the order, controlling the delivery, managing returns. Behind these processes - technology, warehouses, equipment, people - all the main costs of a distance merchant.
Not everyone can complete the puzzle - the cost of all this infrastructure is more expensive than the profit that many players manage to extract from the current sales volume. Therefore, the fulvilment of the majority of players on the e-commerce market is a compromise. In Western countries, this problem is removed by specialized companies - complete centers, which allow small and medium-sized companies to use this complex together.
In the Russian market, this is still a new, promising and practically unoccupied niche. E-merchants can “pave the way” to regions as large full-service centers focused on online retailers with a large turnover, as well as small “garage” centers that provide services to those who are not yet so big, but there is something to offer to the regional to the buyer.
The development of this industry is the future of online commerce. After all, experts already now note the increasing activity of our compatriots on foreign websites. It is often faster for a regional buyer to receive an order from Germany or China than from a Moscow online store, which has problems in its own complete file. It is important not to miss the market, which is increasingly attracting foreign online merchants, as happened in Australia, where until recently the absolute majority of orders were delivered from abroad.
Everyone understands that television as a communication channel is losing its leading position in favor of a new media internet. The Ministry of Communications vigorously reports that more than half of the country's inhabitants use the Internet, and 80% of our vast country’s territory will be covered by broadband by 2018. The Internet is becoming more commonplace and everyday, and Russians are more and more willing to master this communication environment as applied to various aspects of their life, in particular, to purchases.
It is also no secret that the farther away the settlement is from Moscow and the smaller its population, the smaller the range of goods available to the consumer. Traditional retail is often unable to convey to the consumer all the richness of the range of products, reducing it for small settlements up to essential goods. And it is exactly e-commerce that is the most effective way to level this assortment discrimination of regions. But is the young online trading market ready for the increasing demand from consumers?
As for Moscow and St. Petersburg, in these e-commerce strongholds with a commodity and logistics infrastructure, consumer demand is quite successfully met. And it should be noted, the quality of service is growing from year to year. But for a regional consumer, theses about the convenience of ordering via the Internet, at best, are in doubt. Local online stores or not at all, or they offer a fairly narrow range of products. Metropolitan online stores, they are only trying to work with the regions - because with seeming simplicity, this step requires them to reconsider existing business processes.
')
The online store, which works for federal coverage, has the opportunity to feel for yourself how great our country really is and how great is the need to modernize the transport infrastructure. Long delivery times are, first of all, the need for a large working capital and this often becomes the main obstacle to the ambitious plans for the regional expansion of many players in the e-commerce market. Therefore, there is so much talk about the need to open regional hubs that would serve the region of presence. The benefits are obvious - reducing the delivery time, which is pleasant to the client, and the growth of capital turnover, which is nice to the seller. But there are also disadvantages.
A small number of online stores in the regions is not a consequence of a lack of entrepreneurs or lack of demand from consumers, on the contrary, this is all right. The obstacle to the creation of local online storefronts is what makes at this stage meaningless the opening of hubs for metropolitan online stores - the underdevelopment of the commodity and logistics infrastructure. There are no warehouses, there is no sufficient customs capacity, there are no wholesale companies. Goods, one way or another have to be purchased in Moscow. The longer the transport arm to the supplier, the greater the costs associated primarily with demand forecasting. The lack of goods in place or the accumulation of unsold stock "eats" profits. And these costs need to be multiplied by the number of hubs that are planned to open.
Of course, over time, when the number of shipments will increase, the construction of regional distribution centers will become economically justified, but at this stage, it seems to me, the best way is to accumulate a statistical base and order traffic, working from Moscow. At this stage, online shopping is important to focus on building an assortment matrix. It is necessary to get away from the paradigm of competition with offline retailers, you need to target your offer for the regions, taking into account the “holes” in their assortment. That is, it is necessary to develop its core competency - sales. Moreover, the distance trading infrastructure in Russia is becoming more accessible.
More than ten years ago, in America and Europe, at the junction of e-commerce and logistics, a new business line was formed - complete business. In the Russian business vocabulary, “complete filment” is a relatively new term, still cutting ears. However, this is anchored throughout the world the designation of distance-selling business processes aimed at fulfilling an order. This term refers to the processes associated with the physical movement of goods from the supplier to the final customer: taking goods to the warehouse, storage, order processing, picking goods in the order, packing the order, controlling the delivery, managing returns. Behind these processes - technology, warehouses, equipment, people - all the main costs of a distance merchant.
Not everyone can complete the puzzle - the cost of all this infrastructure is more expensive than the profit that many players manage to extract from the current sales volume. Therefore, the fulvilment of the majority of players on the e-commerce market is a compromise. In Western countries, this problem is removed by specialized companies - complete centers, which allow small and medium-sized companies to use this complex together.
In the Russian market, this is still a new, promising and practically unoccupied niche. E-merchants can “pave the way” to regions as large full-service centers focused on online retailers with a large turnover, as well as small “garage” centers that provide services to those who are not yet so big, but there is something to offer to the regional to the buyer.
The development of this industry is the future of online commerce. After all, experts already now note the increasing activity of our compatriots on foreign websites. It is often faster for a regional buyer to receive an order from Germany or China than from a Moscow online store, which has problems in its own complete file. It is important not to miss the market, which is increasingly attracting foreign online merchants, as happened in Australia, where until recently the absolute majority of orders were delivered from abroad.
Source: https://habr.com/ru/post/147493/
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