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E-Commerce Logistics Strategies for the Fashion Industry
Laurent Cochet
Independent Consultant
+86 139 1679 0471
YOUR DC PROJECT IN CHINA
SUPPLY CHAIN - LOGISTICS WAREHOUSE DESIGN
AUTOMATION
MHE - IT
ROI
ENERGY EFFICIENCY
Shanghai, June 11 2014
STORES
DROP POINTS
HOME
HOME
EC PLATFORM
and/or
PARTNER
NATIONAL
DCs
REGIONAL
DCs
X-
DOCKING
PLAFORMS
EC PLATFORM
and/or
PARTNER
OWN
EC PLATFORM
and/or
PARTNER
3PL 3PL
and/or
KUAIDI
NATIONAL
DCs
REGIONAL
DCs
X-
DOCKING
PLAFORMS
Challenges
Trends (mature brands)
Consolidation
Automation
Networks designed for
wholesales models
Limited proximity Coverage
Challenges
Trends Moving from liquidation
to selling New Styles
SKU Range
<2 Items / Order
Challenges
Trends Kuaidi & China
Post
Heterogeneous
coverage & costs
Challenges
Trends Regional or
“Zones” strategies
Size and diversity
of the country
NATIONAL
DCs
REGIONAL
DCs
X-
DOCKING
PLAFORMS
Trade-off between cost and service level
Use EC to reach areas with no stores
EC PLATFORM
and/or
PARTNER
OWN
Luxury Goods Online Share (including Fashion)
Luxury Goods: a “less likely” online segment … but growing
E-Clients expect bargains (30 to 60% discount)
Counterfeiting Risk remains the main barrier in China
High end luxury brands are not selling online (yet) * Global Trend
across categories
EC PLATFORM
and/or
PARTNER
Internet overall shopping growth in China*
66% in 2012
43% in 2013
Already online players expect 20/30% over next 2 years
Apparel accounts for 36% of online
Chinese consumer goods spending*
* Source: McKinsey Insight, 2013
Key Figures
Lack of real time visibility on Own Customers Habits
Brand Loyalty and deep understanding of customer’s
taste are key to EC business
Lack of real time visibility on daily sales, affecting
replenishment reactivity
Besides lead times, smart replenishment and real time
inventory visibility are key to EC business
Challenges
*(2013, average from multiple sources)
HOME
HOME
EC PLATFORM
and/or
PARTNER
NATIONAL
DCs
REGIONAL
DCs
X-
DOCKING
PLAFORMS
EC PLATFORM
and/or
PARTNER
EC PLATFORM
and/or
PARTNER
3PL 3PL
and/or
KUAIDI
1 - Pure Platforms (Tmall, Taobao)*
Vendors operate their e-store and own the products
No in-house logistics, relying on third-party players to fulfil orders, though
delivery and tracking is integrated
2 - Open Platform (Jingdong)*
Vendors own the products but only partially operate the e-store
In-house logistics capabilities, option to use a third party and pay a service fee
3 - B2C pure players (51buy)
Platform Operate the e-store and fully own the products
In-house logistics
* Most players have now diversified their strategies
EC PLATFORMS: 3 main (original) Business Models
HOME
HOME
EC PLATFORM
and/or
PARTNER
NATIONAL
DCs
REGIONAL
DCs
X-
DOCKING
PLAFORMS
EC PLATFORM
and/or
PARTNER
EC PLATFORM
and/or
PARTNER
3PL 3PL
and/or
KUAIDI
Require to manage multiple
business models across Regions,
Brands and Product Categories,
hence making it difficult to align the
organization with the EC Strategy
Real Time Replenishment
Delivery Tracking
Returns Management
Limited Online SKU Range
3PL historical set up
WH space rental contract
Challenges
Brand need to cope with
heterogeneous set up for now
Both EC Platforms and Vendors are
preparing the next move:
EC Platforms are massively
investing into in-house logistics
capabilities, but likely also
aiming to sell their own
products
Brands are ramping up their
emphasis on their own e-store
operations
Trends
STORES
DROP POINTS
HOME
NATIONAL
Cs
REGIONAL
DCs
X-
DOCKING
PLAFORMS
OWN
Many brands have a limited
geographical coverage (Tier 1, 2…)
Achieve short home delivery times
in a wide geographical area
Develop IT capabilities to ensure full
line real time Sales & Inventory
visibility across a diverse fulfillment
network
Widen Online SKU Range
Challenges
Consolidate the network so as to
concentrate picking in less locations
Leverage existing assets
Improve operational efficiency
through modern warehousing:
Advanced Process Design
WMS
Automation when justifiable
Trends
Laurent Cochet
+86 139 1679 0471
Logistics Centers Projects – Independent Consultant
SUPPLY CHAIN - LOGISTICS WAREHOUSE DESIGN
AUTOMATION
MHE - IT
ROI
ENERGY EFFICIENCY