Distribution outsourcing surges amid e-commerce boom

Rapid changes to longstanding delivery models have been one of many changes the COVID crisis has wrought on online businesses.

Online merchants across the country were, in response to driving growth and escalating customer demand, outsourcing distribution and logistics at unprecedented rates.

According to figures reported on by Australia Post nearly nine million families purchased a product online between 1 July 2020–30 June 2021.

With more than four in five households at a 5.4 per cent year-on-year growth, that adds up to 14.6 per cent more households shopping online than the previous fiscal year.

In 2020 e-commerce was calculated at almost 2 per cent of Australia’s GDP.

Online sales grew by as much as 31.8 per cent during the 2020/21 financial year as businesses had little choice but to capitalise on sales growth.

Book retailer Dymocks, who saw significant increases in sales as consumers during lockdown rediscovered reading, was one of them.

Driven by a diminished scope of leisure activities, hard copy book sales boomed during COVID, so much so that Dymocks, had to scale up its fulfilment operations with the assistance of a third-party logistics provider, B dynamic.

B dynamic, who distributes over 100 local and international brands to customers across Australia, already has established contracts in place with the likes of ALDI, Costco and Procter & Gamble.

In the new e-commerce environment, many retailers have had to outsource their warehousing, pick-and-pack, assembly and fulfilment work to third party logistics (3PL) businesses especially during the pandemic in order to handle increases in sales according to Jam Pathirana, B dynamic CEO and Founder.

“When businesses like Dymocks are quick thinking and flexible, they respond to changes as they happen,” he said.

“This rapid response is the key to their success. This is why brands such as Dymocks have boomed during COVID as they have moved quickly to harness the opportunity to meet the changing needs of the community during the pandemic,” said Pathirana.

Increases in sales of self-help, motivation and cooking-type books as well as games and puzzles skyrocketed as people looked for something to do.

Adult fiction, according to Dymocks, was its fastest growing category.

“In 2021, book sales increased by double digits, despite foot traffic to stores clearly being impacted by lockdowns and restrictions,” said Mark Newman, Dymocks Managing Director.

“In addition, our online business also saw substantial growth, as those who were shopping online at Dymocks were shopping with a purpose.”

One of the key challenges for B dynamic was not only its ability to respond to the massive demand but how it adapted in meeting customer expectations.

“Our Warehouse management systems didn’t have the ability to scale for the demand and it was set-up to support Business-to-business(B2B) clients and moving to support the Business to consumer(B2C) model was a whole new ball game,” said Pathirana.

“Over the past 18 months we have developed an intermediate platform to provide us with the flexibility and scalability to expand, regardless of the work, health and safety platform we use,” he said.

“This helped us connect to multiple e-commerce platforms using API integrations and several other file transfer formats, providing our business with a competitive advantage.”

B dynamic manages order processing with over 50 customer e-commerce stores.

Order dispatch, as a result, has been reduced from within 48 hours to within two hours of receiving an order.

The biggest changes in the market have been speed of delivery, a major differentiator between winning a sale or losing a sale says Pathirana who is looking to enable his retail partners to win sales based on delivery.

This way repeat sales can better ensue through customer retention.

With a blow out in the increase of eCommerce trade, transport activities increased by 300 per cent over the past 18 months for the business.

It uses 3rd party transport partners for its last mile delivery including Direct Freight Express, TNT, Hunter Express, DSE and Australia Post for smaller parcels, nationally.

In the 4PL freight services space, Pathirana foresees the trend of third party logistics companies using specialised transport companies for freight continuing due to the inherent dynamics of the transport requirements.

“We manage the fulfilment of ALDI online business,” he said. “No one transport company can deliver all their products as the products vary in type and size from books to TVs and fridges. They need them delivered to metro, regional and country areas.”

Large businesses have often struggled to adapt to changes swiftly, which can significantly impact their business as their existing supply chain often lacks the agility they need to solve these challenges.

The pandemic, according to Pathirana, has changed all of that.

“B dynamic is working with medium and large organisations in Australia such as Universal Music and Dymocks to deliver supply chain logistic solutions, specialising in e-commerce distribution,” he explained.

Dettol distribution, as an example, became problematic in response to the COVID crisis as Reckitt Benckiser’s existing supply chain did not have the flexibility required of it to cope with soaring demand at such short notice.

“They reached out to us for support and we successfully delivered that solution for Reckitt Benckiser with distribution of Dettol to many non-traditional channels such as Cricket Australia, Air BnB, Mirvac shopping centres,” recalled Pathirana.

“We are focusing on providing flexibility to our customers enabling them to take on new opportunities in the market place and we work innovatively to solve challenges and achieve success for our customers.”

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