Outsourcing Is the Key to Successful eLogistics, IDC Australia Reports

NORTH SYDNEY – FEBRUARY 21, 2001 – The explosion in B2C eCommerce in Australia, which is expected to rise from over US$1.5 billion in 2000 to more than US$11.7 billion in 2004, is fueling the need for an IT-enhanced and integrated function that stretches from the front-end online store all the way to the end customer. This function is called eLogistics.


"Today's online retailers face new complexities and challenges in establishing their online retail channel," said Lisa Shishido, senior analyst for IDC's Internet and eCommerce program. "Companies that have spent time and resources building sophisticated front-end activities have been confronted with the harsh reality that the real complexity lies in the implementation of an effective and integrated back-end eLogistics process through which goods ordered online can be delivered to the consumer in a timely and efficient manner."

As a result of the inherent complexity and huge resource commitment involved in building and maintaining an efficient and integrated eLogistics system, Shishido believes that a growing number of online retailers will choose to outsource some or all of their eLogistics functions.

"Outsourcing eLogistics requirements allows companies to focus on their core competencies and take advantage of the economies of scale offered by third-party eLogistics providers," she said. "Other potential benefits include increased efficiency, cost savings, reduced inventory, a wider delivery network, and improvements in delivery schedules – all of which lead directly or indirectly to improved customer satisfaction and loyalty" Shishido continued. "Meanwhile, as Australian online retailers expand into overseas markets, a valuable selling point for established eLogistics service providers such as TNT is their extensive international network and experience in dealing with export compliance laws and regulations".

According to IDC, the challenges facing eCommerce companies in quickly consolidating eLogistics capabilities are opening up tremendous opportunities for providers of third-party eLogistics services. "By integrating the public-facingbusiness functions with the back-end elogistics operations and managing order fulfilment, third-party elogistics providers can play a crucial role in the success of an online retailer," Shishido said.

IDC recently published "eLogistics and Australian eCommerce: What's happening behind the order button?" (doc. # AU40004H). The report examines the process of what happens behind the scenes when a customer places an order online, making recommendations for improvement and highlighting successful eLogistics strategies.

About IDC

IDC is the foremost global market intelligence and advisory firm helping clients gain insight into technology and eBusiness trends to develop sound business strategies. Using a combination of rigorous primary research, in-depth analysis, and client interaction, IDC forecasts local and worldwide markets and trends to deliver dependable service and client advice. More than 700 analysts in 43 countries provide global research with local content. IDC's customers comprise the world's leading IT suppliers, IT organisations, eBusiness companies and the financial community. Additional information can be found at www.idc.com.au