- Jose Larr
“E, M, L”, whatever letter before commerce is just commerce
If we think about the origin of the concept “commerce”, we see it dates back to 1530-1540 and it comes from a combination of Middle French and Latin languages in the form of “commercium” meaning “to trade together”. This concept stayed almost unaltered for centuries and it was only recently, in the last decades, that it suffered a mutation when a new “channel” was created for commerce to take place, we are, no doubt, talking about the digital world.
From start, the new channel was discovered, tried out, conquered and failed by large companies, young start-ups, you name it, and it is still chased today in the various forms that technology allows it.
This type of electronic commerce educated the customer in a way that it eased and removed a large amount of friction from the trading process, allowing catalog viewing, product detailing, and purchase processes from the comfort from remote locations. Not only that but also product delivery and returns in a reasonable time frame (2-5 days).
If we focus for a bit on Brazil, we see that digital commerce is a growing trend with an expected 15% growth in 2017 despite the economic crisis, taxation, logistics and whatever other challenges that the country may pose before its, both, companies and customers.
Understanding the challenges of the country, public entities such as Postal Services (Correios) in the effort to propel countries trading, it created and promoted a type of service (e-Sedex) with reduced pricing to incentivize e-commerce. However, in late 2016, this service was terminated, creating a big hurdle for online traders when organizing logistics and financing such product delivery processes. So what does this mean for e-commerce if freight will be much more aggressive for both customers and companies?
If we now look far far east, as far as China, we see the rise of Same-Day-Delivery (SDD) commerce, the trading that includes groceries, food, pharmacies, and many other categories is growing at an incredible pace. Not only trading products but also services. The velocity of it is huge in compare to “traditional e-commerce”, same day or even hours after purchase.
There is disruption starting to take place in Brazil that will reformulate logistics from a macro to a last-mile approach and some local and international players such as iFood or even UBER are taking this opportunity very seriously when it comes to food delivery which in Brazil represented in 2015 a total of 9 billion Brazilian reais according to data released by ABRASEL (http://www.foodservicenews.com.br/o-que-2017-nos-reserva/). These numbers can feel very strong to the eye, but when compared to the whole power of the SMB market in Brazil which accounts for almost 30% of Brazilian GDP give a taste of the potential for growth when these products and services can be captured, sold and delivered more efficiently.
But make no mistake, it is not all sun shines and rainbows. We understand that the confines of the market are huge, but many of the products that compose that hefty value present MANY logistical challenges, such as, for instance, how to delivery a freezer, or a TV, or even a washing machine on the same day it was purchased in a country where dimensions are continental? Retailers, SMBs and the whole consortium of players, regional or local will have to face and conquer certain obstacles and leverage of the gains of technology and planning.
In any case, it is clear and tangible that the relevance of local commerce and parcel delivery will be, and it already is put in the spot light to a magnitude that will become a strong (if not the strongest trait) of the value chain of commerce. If before we mentioned that mutation of a channel, we are talking about the layers on top of it now that are clearly the evolution as a whole not only from an industry stand point but also as the expectations of customers who are pursuing not only friction less processes and quality but also extremely fast expedition of the goods and services they are acquiring.
(Portuguese version @ ecommercebrasil.com.br)