The Impact of E-commerce Growth On the Shipping Industry

Supply Chain
April 15, 2024

The rise of e-commerce has been revolutionary in the modern commerce industry. The same holds for the shipping industry which has seen a massive increase in volume of orders and growth in revenue in the recent times.

The continuous growth in e-commerce has led to a significant shift in how goods are sold, bought, and transported across the globe and redefined consumer behaviour. It has led to the remoulding of traditional practices and continuously evolving new and innovative solutions to deal with the market’s demands.

In this article, we will discuss in detail the impact of e-commerce on the shipping industry.

We will also look at the traditional commerce and the rise of e-commerce in India.

Traditional commerce and its difficulties

People across the world are involved in selling and buying products daily. This used to take place in an offline mode earlier where people would bargain and choose from the limited options available at their nearby stores, face to face. It is still prevalent in various places from hypermarkets, to local stores and high-end stores in malls.

But this had various drawbacks including the:

availability of limited stores
limited choices and options
fixed timings
stock-outs and the increased costs.

The rise of E-commerce in India

E-commerce” or “electronic commerce” is the trading of goods and services on the Internet.

E-commerce has rapidly expanded and is booming in the Indian market, revolutionizing consumer purchasing behaviours and the retail market. With the launch of government schemes like Digital India, the presence of internet access and the adoption of smartphones have increased drastically, thus catalysing the growth trends in the e-commerce industry.

As more and more Indians use the internet, revenues of e-commerce companies could triple over the next 3 years to 504 Billion Rupees.

Besides Amazon or Flipkart, the e-commerce industry has now expanded to multiple sectors of retail, including the shipping and logistics industry, presenting great opportunities for innovation, expansion and investment in the coming years.

According to stats, India’s e-commerce market is projected to reach $99 billion by 2024, growing at a compound annual growth rate (CAGR) of 27.6% from 2020.

This transition from traditional brick-and-mortar stores to e-commerce online sales models, and integration with the online sales model has led to a complete re-imagination in the retail industry, impacting not only the commercial strategies but the overall social and economic landscape of the country.

Impact of e-commerce on the shipping industry

Millions of people are placing online orders every minute, around the globe, and the main role to fulfill the transportation of these orders timely lies with the shipping industry.

E-commerce sites are dependent on the shipping and logistics industry to carry out the transportation tasks, cargo handling and meet supply chain demands timely.

Let us see some impacts of e-commerce on the shipping industry:

Increased Parcel Volumes and Revenue:

With online sales increasing drastically, the need for transportation of goods from warehouses to consumers is also increasing. This has led to an increase in the volume of goods being managed and has directly contributed to the growth in the shipping industry’s revenue. This has also led to the increased need for investing in infrastructure, technologies and manpower to fulfil the demands.

Supply chain optimisation:

To fulfill the increasing demands of the customers, it is now necessary for shipping companies to optimize their supply chains effectively to fulfilling all the orders on time efficiently.
The warehouse management system, tracking of inventory and the automation of order processing have to be integrated and made to work in proper coordination.
Also, the necessity of enhancing the shipping networks and expanding reach makes it crucial for companies to establish strategic collaborations and partnerships.

Increased Consumer base

With the products being ordered at one click from their homes now, the convenience and accessibility of online shopping have increased to the masses.
This has led to a huge increase in online shopping and orders, leading to a drastic increase in the customer base for the shipping industry.

Innovation opportunities

The various technologies including artificial intelligence, data analytics and blockchain are being leveraged continuously to improve the visibility of the supply chain, increasing operational efficiency, and optimising the delivery routes.

Investment in technology

To meet the increasing demands of the consumers and stay ahead of the competitors, shipping companies are investing in automated systems, logistics software, digital twin technology, IoT and other technologies to improve efficiency, reduce operational costs and therefore increase all profits.

Challenges of E-commerce growth in the shipping industry

With the various benefits that e-commerce has on the shipping industry, certain challenges also have to be dealt with. As e-commerce continues to grow, last-minute delivery challenges and logistical bottlenecks arise significantly and the costs for shipping have also risen due to the added expenses. Further, the increased transportation and packaging wastes are continuously increasing carbon emissions, thus compromising the environmental sustainability goals.

Therefore, with the multiple benefits, it is also important to acknowledge the problems that come with the rise in the e-commerce industry and look for innovative solutions to deal with the same.

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Conclusion:

The rise in E-commerce has led to a transformation in the shipping industry, reshaping operations and transforming customer expectations.

From increasing the customer base and revenue, and supply optimisation to technological innovations, there are various benefits of e-commerce in the shipping industry.

Some problems like the last mile delivery and environmental sustainability challenges also come with the rise of e-commerce.

But the shipping industry is embracing the changes by investing in technology, infrastructure etc. to fulfill the customer’s needs and paving the way for a better and sustainable future.

FAQ:

The growth of e-commerce has revolutionized the shipping industry by increasing parcel volumes and revenue, optimizing supply chains, and expanding the consumer base. With the rise in online shopping, shipping companies are investing in technology and infrastructure to meet customer demands efficiently and stay ahead of competitors. Additionally, strategic partnerships and innovative solutions are being leveraged to address logistical challenges and ensure timely delivery of goods to a broader audience.

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