Saturday, October 22, 2016

Courier companies such as DHL, Ecom Express, UPS, TNT Express, etc., are actually in a strong position to challenge online retail companies such as Amazon [COMPACTIDEA]

  • Very roughly speaking, online commerce/retail involved two major portions - the "digital" or "online" part [marketing activities to get sellers who display their goods and prices, and a website plus a mobile application to display the available inventory and take orders and process payments], and the "physical" part [warehouse to store inventory of goods, and a full-fledged delivery system to deliver goods and maybe collect cash on delivery].
  • Large courier/package delivery companies such as FedEx, Blue Dart, etc., already have extensive physical infrastructure in place [though they likely do not have warehouses to stock goods]. They've already covered a significant part of what constitutes an online retail service.
  • The incremental cost to them of entering online retail is much lower than it is for someone who isn't already into the courier business. These companies simply need to "open up" [i.e., display online on a website] the inventory inside their warehouses and the rest they already know how to do efficiently and at scale.
  • There should be significant synergies realized by these companies if/when they enter the online retail business [a lot of existing infrastructure will be reused].

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