Logistics is a Team effort

In the e-commerce delivery logistics chain, collaboration and partnering are just as important as technology. The focus on the end customer is the primary focus and their satisfaction is really what should drive the relationships. If we take a step back and acknowledge the collaboration that has to occur to make a customer happy – it is amazing. And, all of the parts of the eco-system need to work together to make sure the customer journey does not end with a Christmas gift getting there on December 26th.

E-commerce retailers always worry about their brand. They worry about their brand because they know a late delivery will be blamed on them, not the other partners. This has tremendous importance for them in two ways – as repeat customers are the most profitable ones and in a very outspoken social media world, bad reviews hurt your brand immediately. And in a world where the customer expects their packages to arrive fast – fast can mean two days, the next day, and in some cases, the same day.

So, think about the last leg of the customer journey. Assuming that the product is not returned, the last leg is the delivery segment. Making sure that the e-commerce package gets there at the time it was promised is paramount. A delighted customer will shop again at the site. This important process requires collaboration and agreement by all partners – from the retailer to the first-mile delivery company, the airline and last-mile delivery company, to the customers’ door. All are foundational to getting the delivery right. This seamless collaboration requires an advanced, but simple, technology solution.

The piece that solidifies the chain of foundational partnerships, from the online site to the customer’s door, is seamless technology. It is the adhesive that allows for the successful collaboration of partners. Think about your own e-commerce experiences. I am sure you like to see where the package is in its journey, from origination with the retailer through to the delivery, with a picture of it at your front door. This can happen with the automated processes established between partners. And will full transparency, instant data via mobile applications, and established agreements and SLA’s driving processes behind the scenes, it can be managed by all partners quite efficiently.

By focusing on the promise to the end customer, the technology drives the processes and the partnerships become easy, driven by technology integrations with APIs and EDI messaging. The growth of e-commerce has created great opportunities for airlines and ground logistics to drive more revenue. And that revenue is generated via a great e-commerce logistics value chain.

Has covid permanently affected airlines?

Has covid permanently affected airlines? 

It is a very scary question and one that will not be answered completely for a few years. In the short term as countries enact their vaccination programs and enable their economies to open there will be a “sugar high” for domestic leisure and even some business air travel. Many believe that we will recover by 2024, but will air travel in 2024 get back to 2019 levels? 

We, business people, are far more optimistic than pessimistic. We all believed that travel in 2022 would be closer to 2019 levels than 2020. However, that has not been the case. International travel will be delayed in getting back to “normal” and many countries like Japan, due to covid variants, will be struggling over the next year. 

There are several other factors that airlines will be facing over the next few years. 

The first is the debt levels. Many of the airlines are burdened with a debt load that will substantially affect new investments and innovations. According to McKinsey, debt could be as large as $1.1 trillion by 2024. Another factor will be future government regulation. If governments make it too onerous to travel, many travelers will choose other options. Moreover, are travelers fearful of traveling on planes, for fears of new infections? As we have seen here in the United States there have been many instances of “issues” on flights around the requirement for masks.  

We have seen that in many of the countries doing better with the pandemic, there has been a bounce-back in air travel. That has certainly been the case with leisure travel but will it also be the case with business travelers? Airlines are hoping that there will soon be widespread fatigue with video conferencing. Again, there is fatigue, and we will see a tremendous rebound domestically for business travel. Will 2024 snap back to 2019 levels? – That question will remain open. Many companies will get their teams on the road to see their customers and prospects in person, but many organizations will not likely go back to 100% business travel, since it means adding far more to the cost of sales. 

Not all is negative, as there are tailwinds for us all to get out there and see the world again. Delta just announced a profit, the first since the pandemic started, and saw a rebound in business travel as well. As airlines get their planes back in the air, there is a fantastic opportunity that has resulted from the pandemic. The remarkable growth in e-commerce, as a result of the pandemic, has created an astonishing opportunity for airlines to generate additional revenue with low investment and tremendous ROI. By utilizing the belly space for e-commerce packages, airlines have a new way to grow revenues, be innovative and reduce debt through e-commerce package shipping.

There are many open questions as the airline industry deals with the pandemic. And not many of us believe it will be like it was in 2019 soon. Hope always springs eternal but we business people not only need to be optimistic but data-driven. Changes are coming, and with any change comes opportunities. It will be the airlines that are adaptable to change that will thrive and survive.  

A Catalyst for Change

The term “catalyst” is thrown around in business almost as much as “transformation.” In case you forgot from early chemistry classes, a catalyst is “an agent that provokes or speeds significant change or action.” Now, I know what you are going to say; the pandemic has been something of a catalyst for the Airline cargo industry. Well, actually, it simply sped up the global growth of e-commerce. As a result, e-commerce grew across all regions of the globe at over 20% last year and looks like there is no going back.

E-commerce growth has become a catalyst for growth and transformation, and those airlines that embrace this opportunity will flourish. That sounds like a hyperbolic statement but it may hold the truth that is key to the world’s airlines over the next 5 years. Global e-commerce is projected to grow 28% over the next three years from $5 trillion to $6.4 trillion by 2024. That sounds like a market that should get airlines’ attention. What is even more amazing is that most of the e-commerce packages are 2 kilos-to-4 kilos and can sit easily in existing belly space on airlines, regardless of size or aircraft type. While many organizations fail at transformations, a focus on e-commerce can address many of the issues that often lead to failure in business transformations. 

According to a McKinsey article about why so many transformations fail, there are 10 common weaknesses that emerge as culprits that hinder success. Now, I do not want to address all of them here, but utilizing e-commerce as your catalyst for change can be an easy antidote to transformation failure. All 10 are important to address, but if we look at a few of them you can see how airlines focusing on e-commerce are changing their company and generating a robust new source of revenue. 

The first and most important of these skills is alignment. Focusing on e-commerce forces alignment throughout your organization as well as in relationships with ground crews and logistics partners. Skill sets are another issue that often arises because workers do not have the new skills that are often required for transformative ways of doing things. This is an overriding reason to use a company that has the developed skills and experience required to build new processes and practices that create success, working alongside your teams. At SmartKargo, not only are we a complete e-commerce logistics platform but also have dedicated subject matter experts in all facets of e-commerce logistics. Finally, focusing on growth is key to being successful. There are tremendous growth opportunities globally for e-commerce as stated earlier. Moreover, many e-commerce sellers are competing with Amazon, at the glass. The option of using Amazon fulfillment services (FBA) to achieve speedy shipping of their products does not sit well with them. These shippers are looking for good alternatives that will differentiate their brand.     

For an airline looking to kick-start a transformation and kindle more revenue, e-commerce can provide an easy start, with a partner like SmartKargo. By providing a platform and expertise for change, your airline can connect with the e-commerce ecosystem. Your airline provides the differentiation needed for e-commerce companies to compete with Amazon. And it indisputably aligns your organization and the KPIs to meet aggressive revenue projections. In the process, airlines create a robust new revenue engine that can efficiently transform their organization. Many airlines are using this catalyst now to drive new revenue. After taking off on the e-commerce journey, they find that delivering on the promise of new revenues can happen quickly.