What is the necessity for collaboration of online shopping and logistics industries?

- M&A, alignment, and realignment (referred to as MAAR in the rest) in e-commerce period.

The Internet transfers information in a second. But we need a logistics system to transfer commodities. Leading e-commerce companies construct their own logistics system and strategy so they expand their share of market. 

However, small-to-medium-sized e-commerce enterprises have a situation in which reserving logistics centers and constructing efficient logistics systems are almost impossible financially and technically. And it is especially difficult to secure complex logistics routes.

So companies which have their own logistics route are becoming important. MAAR which is accelerating between online shopping and logistics companies is essential for enterprise survivals.

“SCM” which is essential for e-commerce company’s development.

According to “Logistics Deregulation Policies” in the U.S. in 1980’s, the truck industry, which had been protected by a strong regulation, increased their feel of danger and had to construct new logistics system. 

The logistics system which was made in 1990’s was administrative system which shared with business partners the information such as ordering, selling, and distribution. And it was for optimizing the market flow of commodities. 

It originated from the logistical support system of U.S. Armed Forces, which was administrative method to organize complex in and out bound routes systematically. This system is what we call “Supply Chain Management” or “SCM”.

SCM is, nowadays, essential for the success and the progress of e-commerce. Small online shop companies don’t have a lot of partners. Therefore, it’s not very difficult for them to do ordering/order reception process or administration of distribution in their own companies. 

However, if the partners will be exceeded over hundreds or thousands range, it’s going to be almost impossible to do below like a small company does:

-  order receptions from users;

-  merchandise orders to companies;

-  administrations of distribution;

-  accounting processes concerning above.

Therefore, implementation of SCM will be assential.

Logistics strategy of “Kenko.com” and “Senshukai”

The online shop company “Kenko.com” (selling healthy food, medical supplies, cosmetics, etc.) does the logistics collaborating with the SCM service of Rakuten (The biggest E-commerce enterprise in Japan) “Rakuten Super Logistics”.

They rend their owned logistics center in Fukuoka (far west part of Japan) to Rakuten, and located their ichikawa logistics center, which is in Kanto (middle part of Japan) area, in Rakuten Super Logistics Center. So they became to be able to manage real time inventory of goods.

On the other hand, the leading online shop company “Senshukai” made a business tie-up with “Plus Logistics” (Pluslogi) which is a subsidiary of leading office supply vendor “Plus” in the logistics field.

The SCM system for consumers of Senshukai has already existed. This time in addition, they aimed to expand their business through the market flow system for business as their B2B business model which Pluslogi has.

MAAR strategy between in different type of industries.

These 2 cases are considered as a kind of MAAR.

Until Now, MAAR of companies has been mainly to aim to expand the market share in the same industry sort or type.

However, MAAR between in different industries have been accelerating these days. Especially the collaboration between e-commerce and logistics companies have been increasing. The reason is because it’s difficult for an online shop company to construct their own SCM system by themselves.

As we mentioned above, originally SCM has the logistics system basis to launch the logistical support strategy of U.S. Armed Force smoothly. That means, it is the market flow system created with the condition of which the distribution route is secured and is maintained in advance.

The e-commerce company needs enormous fund, various authorization, and complex market flow control, to create the market flow system on their side. It has much more benefit to construct their own SCM by collaborating with a company who already has its own market flow route, instead of making from the beginning.

We can say that MAAR which were done by Kenko.com and Senshukai had the meaning of that kind.

What is original SCM that Amazon and Rakuten have?

In other cases, some online shop companies maintain their own logistics functions. What represent that are Amazon and Rakuten.

The feature of the logistics system of Amazon U.S. is like the one following:

1.  Completely automated at logistics center. (Robotization)

2.  Maintained market flow route to the hub located in all over U.S.

3.  Efficient route construction of distribution based in the hub.

To make definite executions of above, they achieve “same-day delivery”, “free delivery”, “Scheduled Delivery”. And this system is also adopted by Amazon in Japan.

The logistics strategy executed in Rakuten is based on delivering all the items at once to the users who have bought them at plural shops in the main platform “Rakuten”. So they are motivating to make their logistics centers (hubs) to beat Amazon’s by expanding nationwide.

The system administrating complex delivery of small items will take the lead.

Nowadays when all kinds of trade have become possible, the issue which the most companies face are to secure the routes of commodity market flow, and to construct the efficient logistics system.

The Internet can deal with information but can’t transfer commodities. A lot of companies have started to notice and struggle about that the reality of this general sense is the problem to affect the companies’ development and growth as well as expanding their scale.

E-commerce is the field which will continue to achieve a big growth. 

But what support this improvement is to construct the efficient system “SCM” - “Supply Chain Management” which manages and realize small item delivery.

The role of logistics company with its own route is big. Regardless of the scale, what e-commerce company needs is logistics company’s hand.

Even though it’s not as big MAAR as the one like “Konko.com and Rakuten” or “Senshukai and Pluslogi”, the small MAAR will be occurred on a daily basis.

For either the development or the growth of logistics companies as with the e-commerce side, isn’t it becoming a keyword, depending on whether or not it’s possible to construct the efficient SCM system which manages small item deliveries?