Increased Market Place and the consequences for Logistics

Last week, when they released the results for the first quarter of 2017, Lojas Americanas and B2W announced that they intend to change the business model in operation in Brazil. Until then, B2W's strategy was to buy and resell most of the products, which meant a greater need for cash, storage space and sophisticated transport management that involves dozens of logistics partners with fractional delivery capacity in different parts of the country. .

One of the reasons that drove the change was the rise of the Market Place, where smaller companies “lodge” on the website of an online retailer with greater visibility to sell their products. This change was already foreseen by the market, given that large retail players, such as Amazon (in the United States) and Mercado Livre (in Brazil), operate in this way.

According to information released by B2W itself, today, around 5 companies sell their products through its website, a number 43% higher than in the first quarter of 2016. And what is the impact of this on logistics?

Well, the logistics change a lot. With fewer SKUs in stock, the company offering the Market Place service can focus on buying and selling items with higher turnover or higher margins, depending on the strategy each company wants to follow. For some retailers, there is still the possibility of reducing the storage area and increasing cash.

Another important movement that has been taking place is the sale of logistics services. If before logistics was just a cost center, now it is possible to earn revenue from the sale of transport services and, in some cases, storage. In this way, now, in addition to delivering their own products, the large online retailers offer the logistical service to the site's partner companies. Remembering that, in the case of B2W, there are, at first, 5 thousand companies as potential customers for the sale of the logistics service.

This potential is not small and it is worth remembering that most of the companies that use Market Place are medium and small companies, which do not have their own logistics and need to guarantee a level of service equivalent to that of the big players. No wonder that some of the largest retailers have acquired, in recent years, carriers with expertise in fractional delivery.

The question that remains is whether your company is prepared for these changes?

Most likely, your company currently sells to retail in large batches, and transport is closed cargo. In this model, inventory management and fractional distribution are the responsibility of retailers. Tomorrow, with the Market Place getting stronger and stronger, the tendency is for the stock and the responsibility for contracting fractional freight to be with your company and no longer with retailers.

Now it is online retail that is “pulling” this movement, tomorrow it may be traditional retail. In this case, is your company's logistics prepared for this?