CROSS BORDER THE DISRUPTIVE FRONTIER - Accenture Post and Parcel Industry Research 2019
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CROSS BORDER THE DISRUPTIVE FRONTIER Accenture Post and Parcel Industry Research 2019
THE CROSS-BORDER STORY Cross-border growth is 2x the rate of domestic eCommerce, but the ability to control market share is declining. New technology-driven start-ups, pricing and innovative supply chains are stealing a march on postal players’ competitive edge. Customers expect cross-border delivery to match domestic services: fast, free, trackable, and easy returns. To compete, new business models and capabilities are required. Five actions can help postal organizations win in the cross-border delivery race. Copyright © 2019 Accenture. All rights reserved. 2
GROWTH GAINS MOMENTUM
CROSS-BORDER ECOMMERCE IS THE NEW NORMAL
Cross border represents 20% of global eCommerce
29% CAGR Cross border is growing at 2X
the rate of domestic eCommerce
75% 63% 83% 62% 84%
of UK online of Dutch of Nordic of German of Irish consumers buy
shoppers buy from eCommerce eCommerce eCommerce from abroad; the
overseas retailers consumers buy consumers buy consumers buy highest number of
and marketplaces from abroad from abroad from abroad international online
shoppers in the world
Copyright © 2019 Accenture. All rights reserved. 3
SMALL SHIPMENTS RULE
CROSS BORDER IS MAINLY LIGHTWEIGHT ITEMS
72% of cross-border
purchases weigh 1kg or less
Weight of most recent cross-border purchase
[Kg; % of respondents]
12%
20% < 0.2 kg
31% 0.2 - 0.5 kg
21% 0.6 - 1.0 kg
12% 1.1 - 2.0 kg
Decline in package weight per shipment
7% 2.1 - 5.0 kg
between 2015 and 2017, a likely result of
4% > 5.0 kg the impact of eCommerce growth. This
decline contrasts with a rapid increase
6% Don’t know
in air express trends.
Source: “Cross Border e-Commerce Shopper Survey 2017”, IPC; Accenture analysis Source: Accenture analysis
Copyright © 2019 Accenture. All rights reserved. 4POSTAL PLAYERS DOMINATE
MOST CROSS-BORDER DELIVERIES
ARE ON POSTAL NETWORKS
Delivery provider for most recent cross-border
eCommerce order [% of respondents]
Postal organizations
make 14%
70%
Don’t know
16%
of cross-border Others
deliveries* 70%
Posts
*Source: “Cross Border e-Commerce Shopper Survey 2017”, IPC; Global Express and Small Parcels Report 2017,
Transport Intelligence; Accenture analysis
Copyright © 2019 Accenture. All rights reserved. 5CHINA DRIVES CROSS-
BORDER GROWTH
CHINA SENDS TO THE WORLD
China is a front runner and is China outbound express
expected to continue to lead is mainly on the rise
cross-border growth
US$1,525B
China’s anticipated B2C
9%-19%
Range of Increase
China to United States
China to Canada
China to Australia
eCommerce transaction
value in 2020
41%
China’s anticipated
cross-border share in 2021
-2%-6% China to European
Union
Range of Decline
Copyright © 2019 Accenture. All rights reserved. Source: Accenture analysis 6SUBSIDIZED DELIVERY
DISTORTS THE MARKET
LOW CHINA-TO-DEVELOPING COUNTRY RATES
The fees charged for international post are much lower in transitional countries, like China. Delivery
costs from China (up to a certain weight) are cheaper compared with in-country delivery costs.
Estimated Cost for Postal Delivery Comparison – Estimated Cost for Postal Delivery Comparison –
China to US vs Within US [USD] China to France vs Within France [USD]
Destination post subsidizing delivery Destination post
cost at behest of volume subsidizing
delivery cost at
20 20
behest of volume
15 15
10 10
5 5
0 0
0.5 lb 1 lb 2 lb 3 lb 4 lb 4.4 lb 0.5 lb 1 lb 2 lb 3 lb 4 lb 4.4 lb
(~0.23 kg) (~0.45 kg) (~0.91 kg) (~1.36 kg) (~1.81 kg) (~2.0 kg) (~0.23 kg) (~0.45 kg) (~0.91 kg) (~1.36 kg) (~1.81 kg) (~2.0 kg)
China to US – China Post New York to Miami – Miami to Miami – China to France – China Post Within Metropolitan
Registration (Shenzhen) USPS Retail Ground USPS Retail Ground Registration (Shenzhen) France – La Poste
Copyright © 2019 Accenture. All rights reserved. Source: Accenture analysis 7SHIFTING POSITION
IN VALUE CHAIN
POSTS ARE MOVING TO COMMODITIZED ROLES
As postal organizations move away from the customer, this creates risk from more middlemen
Post Customer
Leg 1 Leg 2 Leg 3 Revenue Cost
Traditional
Acceptance Line Haul Processing Customs Int’l Trans Customs Last Mile As consolidators expand, Posts
have a smaller role in the value
chain, and no role sometimes.
Industry Models
Post Mail Post
$48 $48
Consolidator Post Mail Post
$25 $34
USPS FEDEX AMAZON UPS Consolidator Freight Alt. Delivery/Post $8 $20
Shipper/Retailer
$0 $16
Consolidator Freight Alt. Delivery/Post
Disruptive
Shipping Value Chain
Note: Transaction scenario rates based on 2016 published rates for PMI and FedEx for 2.2lb package from New York to London. Contracted
Consolidator rates from The Colography Group, February 2016; Source: Accenture Analysis. 8WHAT’S HAPPENING— AND WHY? THE STORY SO FAR Copyright © 2019 Accenture. All rights reserved. 9
PREFERENCES ARE EVOLVING
CUSTOMER EXPECTATIONS FOR CROSS BORDER
AND DOMESTIC DELIVERY ARE MORE ALIGNED
Overall Expectations
[% of respondents]
70% Clear information about delivery charges before purchase
57% Simple and reliable returns process
57% Free returns
1.1 - 2.0 kg 54% Free delivery on purchases over particular value
51% Landed cost calculator at check-out
Source: “Cross Border e-Commerce Shopper Survey 2017”, IPC; eCommerce logistics
In the United States, April 2018, Armstrong & Associates; Accenture analysis
Copyright © 2019 Accenture. All rights reserved. 10RETAILER EXPECTATIONS RISE
RETAILERS ARE DEMANDING MORE
Most problematic pain points in cross-border Biggest game-changer for cross-border
eCommerce(1) eCommerce(1)
Online marketplaces
Logistics and delivery 43% continuing to dominate 23%
Compliance with local Internet of things
regulations 39% 12%
Offering exchange Rise in alternative
and returns 32% payment methods 12%
Cross-border payments
28% m-Commerce 9%
/multicurrency
Data protection 50% of retailers offering
25% international delivery 9%
Pricing/costs of Easier entry to
products & services 23% emerging markets 7%
Ease of integration Greater knowledge of how to
22% do business internationally 6%
China’s "One Belt One
ROI 16% 4%
Road" scheme
Profitability is challenging cross-border eCommerce retailers—they must compete with domestic retailers on speed and delivery prices
Note: (1) According to Retail Professionals Worldwide, August 2017; Source: “Key Business Drivers and Opportunities in Cross-border Ecommerce 2017”, Payvision, October 2017;
http://www.supplychainbrain.com/content/logisticstransportation/reverse-logistics/single-article-page/article/target-stores-relies-on-genco-to-manage-its-returns-program/; Global eCommerce Logistics
2018, Transport Intelligence; Accenture analysis 11ENTRANTS OFFER NEW ECOSYSTEMS OF SERVICE START-UPS SIMPLIFY WITH TARGETED INNOVATION New asset-lite entrants are serving customers with what they want, when and how they want it B2C EUROPE EASYSHIP ALLSOME One-stop, full-service Offers a single end-to-end Offers cross-border fulfillment cross-border eCommerce solution for pick-up, packing, and logistics solutions that enable logistics handling more labelling, shipping, and merchants to start selling fast, than 26M cross-border mail tracking. It claims it can cut specifically from China to Malaysia. and parcel items per year to shipping costs by up to 60%. It reduces returns, enables more than 220 destinations On average, overall sales exchanges and delivers 40% worldwide. have increased by 40%. faster and up to 50% cheaper. Copyright © 2019 Accenture. All rights reserved. 12
COST-EFFECTIVE
DELIVERY MODELS
DOMESTIC ADDRESS MEANS NEW DELIVERY OPTIONS
Example: A Singapore-based business orders an item from the United States using
a domestic address in a United States warehouse. Local delivery at the start and end
of the item’s international journey reduces cost.
Where is it working? Order placed online in Singapore
Terminal 49 is converting cross-
border transactions to domestic Free domestic shipping to United States warehouse
delivery in its role as a digital
freight forwarding service. It
helps small- and medium-sized Item is repackaged and shipped internationally
companies to transport their
products globally across borders
with less friction, at a lower price
point, and with greater control. Same day delivery by local carrier to Singapore
Copyright © 2019 Accenture. All rights reserved. 13PLATFORMS SEIZE POWER
A DO-IT-YOURSELF MENTALITY IS EMERGING
Build-your-own supply chain Build-your-own shipping and
logistics capabilities
$550M $15B
Amazon is investing in building its
own network to reduce cost and
Investment in JD.com by dependency on postal organizations
Alibaba’s committed
Google to develop retail and integrators. It wants to drive down
investment in China
solutions in Southeast costs and maximize asset utilization.
logistics over 5 years.
Asia, the United States
and Europe.
Alibaba Group Holding Ltd has signed
an agreement with the Belgium
government to launch an eCommerce
trade hub, which will include
Sources: https://www.reuters.com/article/us-alibaba-logistics/alibaba-signs-agreement-with-belgium-for-e-commerce-trade-hub-
idUSKBN1O410T
investments in logistics infrastructure.
https://www.reuters.com/article/us-alibaba-cainiao-investment/alibaba-takes-control-of-logistics-business-pledges-15-billion-
to-expand-network-idUSKCN1C10C2
https://ir.jd.com/node/7876/pdf
Copyright © 2019 Accenture. All rights reserved. 14WHERE NEXT? DISRUPT TO DELIVER Copyright © 2019 Accenture. All rights reserved. 15
RELIABILITY IS KEY POSTAL PLAYERS MUST COMPETE MORE EFFECTIVELY Increasing volumes—cross border deliveries are growing exponentially and cannot be ignored. Technology has come of age—technology is now an essential enabler, not a “nice to have.” Leading in the new—alternatives exist for those post and parcel players that want to reinvent their business models. How can your postal organization get the most from the cross-border opportunity? Copyright © 2019 Accenture. All rights reserved.
CAPABILITIES NEED UPDATING
PREMIUM SERVICES CAN ONLY BE ACHIEVED THROUGH…
MEETING ADAPTING TO EMBRACING NEW
CONSUMER THE COMPETITIVE TECHNOLOGIES
DEMAND LANDSCAPE Real-time customs risk
Customers want end-to-end Traditional, democratic assessments and fast-track
tracking, fast, low cost/free practices are slow, inflexible packages need to take
deliveries and control. and disassociated from advantage of the latest
commercial outcomes— technologies.
inappropriate for a
dynamic digital world.
Copyright © 2019 Accenture. All rights reserved. 17FIVE ACTIONS FOR THE FUTURE
NEW PRODUCT
PORTFOLIOS + SERVICES = CROSS-BORDER
SUCCESS
• Enable new business models outside of the UPU, e.g., Extraterritorial
Office of Exchange (ETOEs), third-party delivery agents
• Evaluate a framework to enable delivery duty paid (DDP)
• Improve commercial clearance for high-value goods
• Employ Advanced Electronic Data (AED) to seamlessly,
quickly move goods through destination countries
• Introduce smarter, more integrated returns
Copyright © 2019 Accenture. All rights reserved.FOR MORE INFORMATION ABOUT ACCENTURE
BRODY BUHLER Accenture is a leading global professional
Global Managing Director, services company, providing a broad range of
Accenture Post & Parcel Industry services and solutions in strategy, consulting,
digital, technology and operations. Combining
robert.b.buhler@accenture.com
unmatched experience and specialized skills
/in/brodybuhler across more than 40 industries and all
business functions—underpinned by the
@brodybuhler
world’s largest delivery network—Accenture
works at the intersection of business and
technology to help clients improve their
ANDRE PHARAND performance and create sustainable value
Senior Executive – Global Consulting
for their stakeholders. With 477,000 people
Lead – Postal & Parcel Industry
serving clients in more than 120 countries,
andre.pharand@accenture.com Accenture drives innovation to improve the
way the world works and lives. Visit us
/in/andre-pharand at www.accenture.com.
@andre_pharand
Copyright © 2019 Accenture. All rights reserved.
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