South America: The Pain Of Logistics In E-Commerce Industry

Fast growing South America

The market is facing a huge bottleneck.

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Brazil, Mexico and other South American countries have relatively backward infrastructure and high logistics costs.

For example, the logistics cost in Brazil accounts for 18% of GDP, while the logistics cost in the US accounts for only 8.5% of GDP.

High logistics costs overwhelm the electricity providers in South America.

In order to reduce costs, many websites have slowed down the delivery speed, which has aroused strong dissatisfaction among customers. Complaints caused by delivery problems account for 80% of the total complaints.

Brazil's e-commerce sites have built their own warehouses and outsourced distribution services to professional logistics companies to increase delivery speed and customer satisfaction.

The main reason for slow delivery of online shopping complaints

EMarketer predicts that the growth rate of e-commerce market in South America will reach 19.8% this year, and sales will exceed 57 billion 690 million dollars.

Meanwhile, the number of online shoppers in South America will reach 90 million 300 thousand.

As the electricity market is booming, MercadoLivre, Dafiti and other Brazil e-commerce platforms are striving to seize the opportunity to expand their market share.

Hoffman, co-founder of Dafiti, said in an interview recently: "distribution and logistics is a huge challenge facing e-commerce companies, especially in South America, because the development of e-commerce in South America is fast, but the infrastructure such as roads will not keep pace with the development of e-commerce."

Dafiti is a well-known e-commerce website in Brazil, and its supporting force behind is the German business incubator Rocket Internet.

Lack of outlets, slow delivery and poor service are the great disadvantages of Brazil's logistics.

Brazil's main logistics operator is Brazil post and its subordinate Sedex, FedEx, UPS and other foreign express companies are also involved in the Brazil market, but their business coverage is mainly confined to cities, and in remote areas they also rely on Brazil post.

Letting customers experience satisfied service is the best way for an electric company to turn its initial customers into loyal old customers.

However, the South American electricity supplier company now seems to be getting more and more difficult to satisfy customers' needs.

Stephen ROM, the founder of Intelipost, a SaaS logistics solutions company in Brazil, said that 70% to 80% of complaints related to online shopping were related to slow delivery and poor after-sales service.

Compared with the e-commerce companies in South America, it is very difficult for them to provide the same distribution and after-sales service to customers as those in North America.

Take Brazil as an example, Brazil has vast territory and relatively backward infrastructure.

According to the world bank's statistics, its logistics cost accounted for 15%-18% of GDP (2011).

This shows that the logistics cost of operating e-commerce in Brazil is high.

At the same time, in contrast, logistics costs in the US account for only 8.5% of GDP.

E-commerce sites have built their own warehouses and outsourced delivery services.

In the context of high logistics costs, South American e-commerce companies continue to make a lot of money in logistics, offering free returns, free delivery and service on the same day.

In addition, large South American electricity supplier companies began to set up their own warehouses to optimize inventory management level.

For example, Baby.com.br, an electronic platform for baby products, has already set up its own warehouse. However, because of bureaucratic Procrastination of government officials, the process of warehousing is facing obstacles.

"Our warehouse has been vacant for two months, because we haven't received the storage permit issued by the government department.

You know, our warehouse rental is $75000 per month. "

The company co founder said in an interview earlier.

However, these obstacles can not hinder the progress of e-commerce companies.

Argentina electronic website Avenida set up its own warehouse in Buenos Aires and entrusted its third party logistics company OCA to its parcel delivery service.

Avenida has received a huge amount of financing and strong financial strength. Even so, it has to outsource distribution services to third party service companies.

This may prove a trend. When dealing with a part of its logistics business, the e-commerce website has better find a partner.

The demand for logistics services in South America's e-commerce website stimulated the development of the entire logistics market.

In addition to the Intelipost logistics company, there are also Axado, Loggi and other professional logistics companies in the field of e-commerce.

Axado provides services to integrate fragmented logistics markets, and is currently working with 150 logistics companies to provide a package of logistics solutions for business customers.

Loggi is headquartered in St Paul and its main business is in urban areas.

It also developed a APP, which can be used by any consumer who uses pport services.

In addition, its API (Application Programming Interface) can seamlessly link with the e-commerce website.

The e-commerce website can even enjoy some functions of the front-end interface of Loggi website, such as SMS notification, electronic receipt and implementation tracking, even with API.

The company's founder, Loggi, says its company is far superior to those of motorcycle distribution companies. The company arranges a series of complex algorithms to schedule the package delivery time, route, volume allocation, packaging and other plans.

"For e-commerce companies, if they want to deliver high quality services on the same day,"

Logistics outsourcing is the only way to save costs.

At present, our company's customers include flower business website Flores Online and so on.

We need to know that the demand for logistics is very high. "