As Poslovni Dnevnik/Darko Bicak writes, the growth of e-commerce over recent years hasn’t particularly surprised anyone, but there are almost no analysts or companies operating in this sector who could have predicted the sheer volume of growth in this segment of trade due to the global COVID-19 pandemic and the speed of change in the entire sales and delivery chain, which completely altered in just a few months.
This was the general conclusion at the world’s largest e-commerce show and its accompanying logistics, Deliver 2021, which was held last week in the Dutch city of Amsterdam.
Customer expectations have grown
The coronavirus crisis which has turned the world on its head over the last year and a half has completely flipped global society and the economy upside down as well. While it has brought to problems to the doors of some from which could take years to recover from, to others it has brought double-digit growth and changes and modernisation that would otherwise require several years to occur. The e-commerce sector and related logistics services are just one of those sectors that has grown by more than 100 percent on the wings of the problems caused by the coronavirus pandemic.
How we can deal with such unexpected and rapid growth, adapt to new social and economic circumstances, and especially meet the changed and increased expectations of customers in terms of quality and security of delivery, prices and especially deadlines, was the central theme of Deliver.
The fair had been takin place in a digital edition from October the 4th to the 15th, and culminated in its classic form late last week in Amsterdam. Amazon, Alibaba, Microsoft, Nike, Unilever, Samsung, Ikea, DPD, GLS, DHL, Overseas and the largest European post offices were just some of about 1,000 companies that found themselves involved with Deliver.
Along with many other great giants of this sector, the small Croatian Modepack company, which in recent years has grown into one of the global players in the production of delivery and safety packaging, was also present. The Croatian Modepack company’s products are purchased by customers in 32 countries around the world.
Jure Siric, the director and owner of Modepack, which exports 92 percent of its sales, pointed out that this is their first appearance at the Deliver fair, and their impressions and expectations are optimistic. “Over recent years, we’ve achieved great growth, especially in terms of exports, and last year we recognizsd the need to be present at events like this.
Unfortunately, last year, COVID-19 stopped all activities and this fair was also postponed, so now we definitely wanted to perform. The registration fee is quite high for Croatian wallets, but if you want to be in the company of the big names, then you have to invest,” Siric stated while in Amsterdam.
He added that although he has the impression that the fair will bring them a lot in terms of new contracts and revenue growth, it’s difficult to quantify for now. “According to the programme, we had about 20 official and pre-arranged B2B meetings, kind of like dates, where we were limited to 25 minutes per conversation. Significantly, we asked for a meeting with half of the companies, and half of them then chose us.
The conversations were interesting, some of them detailed, but of course in such places contracts aren’t signed, only information is collected. We expect that in the coming period, after the evaluation of data in specific companies, there will be concrete offers and talks about contracts,” explained Siric, whose team in Amsterdam included the Croatian Modepack company’s head of marketing and web sales, Nemanja Suka.
The duo from Modepack pointed out that there were no big surprises for them in terms of the focus of experts and entrepreneurs at Deliver’s event, nor were there any shocks in terms of the topics of conversation with potential partners because the trends and challenges are similar for all participants working within the e-commerce and delivery chain.
The COVID-19 pandemic, and the closures and lockdowns that followed in many countries, including the one last spring in Croatia, had a major impact on changing consumer habits, and thus on the entire supply chain.
In addition to the enormous growth in the volume of e-commerce, a lot of emphasis has been placed on security, ie the fear of being infected by the virus and the sheer speed of its spread, meaning that many customers had been looking for delivery on the same day. Although this model existed in some form even before the pandemic, Last Mile Delivery, ie the fast delivery of smaller quantities of goods and at a shorter distance within a time frame measured in just hours, became an entire e-commerce sector with its own rules and principles.
As Mick Jone, Zancargo’s strategic supply chain consultant, pointed out in Amsterdam, after more than a year of growth that was accelerated by COVID-19, e-commerce itself is evolving rapidly.
“At a time when consumer expectations, habits and priorities have changed, there’s a stronger argument for supply chain redesign than ever before. Because of all this, it is very important to make a decision on how to adapt the incoming logistics to service users in this new, hypercompetitive retail environment,” explained Jone.
Jennifer Nelen, a partner at the Dutch subsidiary of consulting firm PwC, stressed that our new world, now more than ever, requires collaboration within the retail, e-commerce and logistics industries to successfully respond to market shifts and disruption caused by the coronavirus pandemic.
Statistics say that in Europe alone, the number of customers in the e-commerce channel increased by an incredible 15 million last year, and the growth trend at a rate between 15 and 20 percent is expected to continue in the coming period. In concrete figures, this means that last year the e-commerce segment generated 8.3 billion euros more than the year before.
It is expected that by 2025, this segment should generate growth of 15.7 billion euros more than last year. It is still a significant problem that most customers, especially those over the age of 55, even if they have the basic IT skills to do e-commerce, still insist on “feeling and seeing” the product before buying it. The coronavirus pandemic has partially reduced this trend, but it’s still present.
The British giant Tesco presented its experiences with large European retail chains at Deliver, and its representatives pointed out that the opening of physical stores has greatly reduced their demand in the e-commerce channel because the same customers have adapted to the situation in accordance with the United Kingdom’s epidemiological regulations.
In addition to the above-mentioned customer requirements and the focus of the entire e-commerce system, there is an increasingly strong focus on ecology. This specifically means that recycled, or recyclable, packaging has become something that every retailer must offer today.
The Croatian Modepack company itself, which has Amazon, H&M, Vans, Adidas, DHL, DPD, Loomis, numerous European financial institutions as well as the diamond exchange in Antwerp (Antwerpen World Diamond Center) and a number of others in its customer portfolio, is also very much on the wings of e-volume growth. Its stores recorded a steady increase in revenue, which amounted to 50 million kuna last year, which is a growth of 60 percent compared to the year before when they grew by 30 percent.
For this year, they expect an additional growth of 20 percent and revenue of about 60 million kuna. Therefore, they decided to invest 50 million kuna in their new plant in Velika Gorica near Zagreb, which should be completed in the middle of next year, and which will allow them to double their capacity, which currently stands at around 200 million pieces of various packaging.
With the new plant and the expansion of the range, they expect that in 2025, their revenue should reach 150 million kuna, with a tendency for further growth.
“Global e-commerce is growing unstoppably, and even before the pandemic, back in 2019, global growth was 21 percent. Data for last year shows that countries with more developed e-commerce systems achieved significant, but still lower growth, while others, like Croatia, measured growth in the hundreds of percent.
The statistics we have show that e-commerce at the EU level increased by 31 percent last year, and if we look at some of the most important countries then we see that in Germany it is 22 percent, in the United Kingdom 31 percent, and in Spain 75 percent. Estimates for Croatia are over 200 percent,” stated Jure Siric.
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