CSCMP's Supply Chain Quarterly
March 31, 2020
Forward Thinking

Retailers to delve deeper into supply chain challenges in 2020

With e-commerce revenue forecast to grow by 19%, retailers will invest more in delivery and logistics in the year ahead, research shows.

Retailers will invest in faster, more convenient ways to tackle finale-mile delivery in 2020, driven by anticipated double-digit growth in e-commerce revenue, according to a study from ABI Research, released this month.

The Oyster Bay, N.Y.-based researcher released the results as part of a white paper titled "54 Technology Trends to Watch in 2020." The paper identifies 35 trends that will shape the technology market in the year ahead along with 19 others the researchers say are attracting considerable attention but are "less likely to move the needle over the next 12 months." 

Which trends will happen and which will not happen in 2020? ABI offers the top two, which revolve around logistics and delivery: 

What will happen, according to ABI: Retailers will trade profits to continue investments in the e-commerce explosion, the study shows.  

ABI Research forecasts total e-commerce revenue of $3.52 trillion in 2020, growing year-over-year (YoY) at nearly 19%. 

"This growth depends on ever faster and more convenient modes to reach the final mile and yard in suburban and urban markets, as well as share in rural areas," according to Susan Beardslee, freight transportation and logistics principal analyst at ABI Research. 

This includes the increase of one-day delivery and seven-days-a-week delivery in 2020 to reduce "click-to-door" time and combat the Amazon effect, she said. There is increasing convergence of online and in-store businesses, with brick and mortar positioned as hubs closer to the customer, as well as e-commerce sites directing package delivery to retail outlets. Additive investment will grow in Buy Online Pay in Store (BOPIS) options as well, the research shows.

As a result, Beardslee and her colleagues say retailers will need to address their increasing costs and consumer expectations through new business models and optimized transportation and logistics methods. 

"Amazon already felt the financial pressure in 2019, with North American margin compression, as it grew investments in its next-day Prime delivery, expected to impact Walmart as well. Other retailers have been pushed into offering expanded shipping options and reverse logistics in order to compete," Beardslee says.

What won't happen, according to ABI:  Self-driving trucks

"Despite numerous headlines declaring the arrival of driverless, self-driving, or robot vehicles, very little, if any, driver-free commercial usage is underway beyond closed-course operations in the United States," Beardslee said, noting that Alphabet's Waymo has been in testing mode since 2016, and its latest vehicles are still manually operated by trained drivers, as one example.

"Despite the successful primarily manned testing and early revenue operations, there are no known regulatory approvals or fully autonomous methods to address the first and last mile for heavy-duty big rigs through challenging urban and suburban locations," Beardslee also said, adding that cultural acceptance is another factor and that successful revenue-generating routes "will remain highway-only for the foreseeable future."

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