E-Commerce has been around for nearly as long as the internet but it really only has started to have an impact on major consumer goods companies in the last 10 years. The emergence of this new sales channel is running in parallel to another major change: digitalization. Supply Chain, traditionally limited to an enabling function and a cost center is becoming increasingly important for companies that want to prioritize the digital and e-commerce space. To better understand how Supply Chain can help drive this change we invited Nabil Malouli, VP of eCommerce at DHL Supply Chain.
- The impact of supply chain in a digital transformation
- How to leverage a 3PL
- The pivotal role of operations in e-commerce
- The acceleration of e-commerce in recent times
Daniel: Hi, I’m Daniel Torres Dwyer and welcome to LS International careers success podcast. Nabil Malouli is the VP of global e-commerce for DHL Supply Chain where he leads innovation strategy and product development of its e-commerce fulfillment and last-mile solutions. He was formerly the VP of customer solutions and innovation, but he oversaw the development of innovative logistics projects to support Fortune 500 companies doing business globally. Together with his team, he developed and implemented solutions related to digitalization, automation, big data, and robotics. He’s also passionate about innovation, e-commerce in general and entrepreneurship, and he’s a regular speaker on the conference circuit, and you may have seen him, also, on LinkedIn. I thought he was the perfect person to give us insight about how supply chain can help accelerate companies’ e-commerce journey.
Hi, Nabil. Thanks for joining us today!
Nabil: Hi, Daniel. How are you?
Daniel: I’m doing great. Hope you are as well.
Nabil: Yes, absolutely. Everything is great.
Daniel: And looking forward to discussing e-commerce, 3PL, how you helped, from DHL, different companies… First of all, and just to give the audience a bit of context, we know that e-commerce has been around for almost as long as the internet. But how has e-commerce evolved, like, since the 90’s? And why is everybody still talking about it? And is talking about it more and more now.
Nabil: Yes, I think that’s a great question, because, indeed, it has actually been around for a long time. What we’ve seen that really is the game changer as to why it’s becoming a hot topic is e-commerce is not now anymore just another sales channel. But, in certain industries and in certain brands it’s becoming an absolute must for companies, not only to survive, but also to thrive and to remain relevant in certain areas of business and in certain industries. And we can talk a bit about that. So, I think it’s changing from just an additional sales channel to a critical sales channel for any organization. So, I think that has raised, obviously, the profile around the interest, and around just all the companies looking at this and thinking about how they tackle this sales channel effectively – basically, to be able to continue to grow. I think the other element that is a key element is, when you look at the curve of growth of e-commerce sales, even though it existed since 95 more or less, we start to see really an acceleration of volume back in 2011. And then, from 2011, and that’s a combination of smart phone technology, mobile access, internet speed… so, multiple elements, but as of 2011, you start to see a huge acceleration of growth across the globe, across industries, obviously led by retail. But you start to see that volume accelerating and taking a significant part of certain industries. Even though it’s still at a very low percentage, if you look at the total, for example, sales, you know, even in macroeconomics, it’s still at a relatively low percentage between maybe 13 to 16% globally.
But I think these are the two major elements. It’s becoming a more relevant channel every day – and every year. We are at a stage where companies are realizing that this is an absolute must, they need to invest into this. And even if it’s a small portion of the business today, it is usually the portion that is growing the most – if not the only channel that is growing significantly. So that’s why companies now are all around the place with this topic.
Daniel: And why do you think supply chain is important to help companies in this journey towards e-commerce, digitalization?
Nabil: Well, actually supply chain is not only important. It’s, in my perspective, the critical aspect of success here. You know, it’s interesting because when companies think about digital transformation, often times they think about the web front. You know, the pure initial experience. But what we’ve seen in many stats and many consumer surveys, is that logistics delivers experiences, efficiency around the execution of logistics behind, or after that check-out experience, is becoming more and more important in the overall experience, return and satisfaction of customers. So, it’s not only an important part now, and when you look at key enablers of e-commerce success, payment and logistics are critical aspects of the overall experience.
Just think about this, think about yourself, look back, let’s say, 12 months. How many stories would you hear about, you know, someone that had had an experience with Amazon or with Zalando or with Asos or with any of the major leading companies on e-commerce? How many of these stories are related to the logistic aspect as to compare to the choice of product, the digital experience on the website…? To reality, people tend to remember a lot around their experiences, around delivery, around speed-to-consumer. And that’s what’s in the mind of the consumers of today.
Daniel: Yeah. No, that’s completely true actually. And particularly, in the consumer goods industry – FMCG in Europe, CPG in the US – what do you think these companies are missing when doing e-commerce?
Nabil: So, I think there are 2 elements. The first one is, if we look at the major trends, these large organizations, especially blue cheap organizations, usually look at the entire sales channel. And the reality is today e-commerce is still a very small percentage of that total revenue. One of the areas we see being a challenge is, some of the companies have underestimated the importance of that 3 or 4 or 5% sales, and that has given the chance to some companies digitally born, internet e-companies, to come into a space, and take, in certain cases, significant portion of the market share of a specific product, or specific line of product that they have. Think about in the shaving industry. Think about some of the cosmetic and skin care brands. I don’t need to mention it, I think, but, you know, the stories around Dollar Shave Club, for example, that ultimately got purchased back by some of the larger groups – like, in that case, Unilever –, but the reality is if you don’t focus on that small percentage, you might give the chance to a new player to come in and become dominant in that specific segment or specific category of product. So, I think that’s one of the challenges: the challenge of not giving, maybe, the importance to that in time.
And the second element is, when you look at the supply chain of large organizations, actually very successful organizations, they have been built, many organizations have built their models based on the models of the past. Which is traditional big box retailers, large distribution networks… They are not built for direct-to-consumers. And companies, sometimes, try to use what they have today to build the future, but it’s a really challenging thing to do, because you start to have competing priorities for significantly different operating models, and significantly different needs. You know, in e-commerce, fulfillment needs to be extremely fast, you have to fulfil the orders in that same day you get the order. There is no planning, I mean there is planning – there is intended planning and intended forecast–, but the reality is when you come to the execution, it’s very hard to predict what’s going to come from online sales with a high level of accuracy. So, when you compare that type of challenges with the traditional models that have been running for 40 years or 50 years, when you try to do what is happening in the new business model, or the new volumes that are coming from e-commerce, using a historic or more traditional logistic infrastructure, sometimes it doesn’t really work effectively. And I think, in FMCG and CPG companies, I think that’s probably the 2 major areas of opportunities. But many companies are, you know, we’re in conversation with so many of these large players, I’d say that now, 2019, this is in the radar of every large organization. They are working on it.
Daniel: Yeah. And I can see it too from the companies that we’re in touch with and our clients of course. Actually, a bit speaking about what you were hunting now from the work that you do in DHL, how can a company at 3PL, like DHL, how can you help accelerate an omni-channel strategy for your clients?
Nabil: Well, I think there are 2 or 3 elements that are the most important. When you look at 3PLs, and specially when you look at companies that have been insourced traditionally that manage their logistics themselves, what we see a lot and where we see we can bring a value to our clients, and also to other organizations that are pushing and that are growing in the e-commerce spaces, first one is the experience. We have the experience of managing large e-commerce and omni-channel businesses since 2005, and we do fulfilment of very large scale for leading organizations across the globe. So, that experience is very valuable, and specially when you talk about large-scale organizations and companies, experience in hiring people, in hiring large workforce, in retaining people that are working across different sides in execution, of all these critical time-sensitive KPIs effectively, the implementation of new technology through our technology groups… So, there are multiple dimensions where the experience we’ve been developing for multiple years working across different profiles of businesses, but also different challenges across the globe, I think it’s a very powerful one.
The second element is the network. We’re singular of movement towards more agile, more flexible supply chains, where people are not so much into the model of going and investing into, you know, a 200 hundred-million-dollar facility that is not going to change for the next 50 years. I think many people are looking at that and saying “well, we don’t really know how the business is going to evolve in the next 10 years” and the needs are evolving so fast now that we need to build networks that are more agile, more flexible. So there, a partner like DHL has also used network of facilities, of people, of technologies across the globe that you can go, and you can leverage.
And I think the last one which is extremely important is the implementation of technology that enable, actually, a successful e-commerce operation and an omni-channel operation. Think about all the management systems, think about all the aspects of technology to integrate to marketplaces, to integrate to all the sales channels that you will have social commerce. So, all the technology, not only within the warehouse and the warehouse system, but also all the technology upstream and all the technology downstream that supply chain in integration, you know, tracking and visibility. So there is a huge amount of technology that we have experienced, that we have already implemented, that we can go and we can past track to an organization that actually wants to learn, wants to implement, or wants to consider, evaluate, you know, any type of technology through the whole supply chain.
So, I think these 3 elements are extremely powerful: experience, network and technology.
Daniel: This is really interesting. It sounds like you’ll be very busy during the next few months, or even year
Nabil: Yes, yes! We are very busy actually. I’ve started in logistics 13 years ago. When I started I was not sure if I would stay in the industry for my entire life, but now with everything that is happening, I think logistics, supply chain and particularly working in e-commerce is one of the most exciting space, and we’re very excited, and we have, indeed, a lot of things going on in regard to our roadmap of development and working with our clients and future clients, so… yes, it’s a very exciting time.
Daniel: Yeah, indeed. Well, Nabil, it was a great pleasure to have you here, I think that the point that you raised were super interesting. So, thank so much for joining us today!
Nabil: Thank you very much! It’s a pleasure, and looking forward to continue pushing for the industry to the next level.
Daniel: Excellent, and thank you to our audience as well as always, and see you in the next edition of the career success podcast.