It’s Time to Capitalize on E-CommerceOctober 14, 2021
The Dubai Air Show is coming up in a few weeks, and on November 16th, I will be moderating an exciting panel entitled “How to Capitalize on E-Commerce.” Panelists featured are Mohsen Ahmad, the CEO of Logistics for Dubai South; Abhishek Shah, Co-Founder and CEO of RSA National; and Marc Houalla, Executive Director, Paris-Charles de Gaulle Airport Managing Director, Groupe ADP. SmartKargo has been at the forefront of helping airlines figure out how to capitalize on the impressive e-commerce surge over the past few years. We know this panel will undoubtedly provide informative insights into how innovative approaches to air cargo can change the face of e-commerce delivery.
From our experience at SmartKargo, the explosive e-commerce growth we’ve seen over the past two years is both global and organic, and its spike came from the most unusual and unfortunate of sources: the global pandemic. It goes without saying that COVID-19 has impacted the entire world, and it has changed the way people view commerce transactions and engage with retailers.
The pandemic has driven a dramatic change in consumer behavior with respect to e-commerce. More than ever before, early 2020 prompted a stark need for consumers to get products into their homes and workplaces more safely—which almost always translated to much less use of brick-and-mortar retail stores. Despite more retailers re-opening their physical stores in 2021, the rise of e-commerce continues, and the opportunity for airlines to ship e-commerce packages has never been better. Here is a fact we like to share often: e-commerce growth sales are projected to grow globally at a CAGR of 6.4%, from an estimated $5 trillion this year to a projected $6.4 trillion by 2025.
We know that for airlines to capitalize on this impressive CAGR, they will have to think differently about their passenger-to-cargo relationships. With passenger revenue still underperforming relative to 2019 pre-pandemic levels, airlines need to create additional revenue. The profitability of e-commerce packages is a significant component of not only offsetting but increasing revenue. On a per-kilogram basis, e-commerce air cargo is by far the most profitable type of air cargo. By increasing air cargo through e-commerce package delivery (averaging between 2-4 kilograms each package), airlines can increase revenue now, when it’s needed the most.
Right now, as we start the fourth quarter, we need to think differently about the future. We need to think of air cargo as a demand-pull to get the most out of organic growth. Airlines already have a great deal of information about their passengers. Passenger information is rich in data points, and it will inform an airline’s foray into e-commerce. Here’s our message to our airline partners: your passengers are also e-commerce buyers. You already know their behaviors in one area in which you specialize. E-Commerce air cargo is simply a fantastic extension of that body of knowledge.
I am looking forward to our panel with these three industry experts as we discuss these and other opportunities in the exciting world of e-commerce. We will update our readers after the event to share highlights to partners and supporters who cannot attend the Dubai AirShow event. In the meantime, we hope that these exciting trends help you to consider breaking with the norm. There is much innovation happening right now in our space, and the time to act is now.