E-Commerce Logistics Strategies for the Fashion Industry

Laurent Cochet

Independent Consultant

+86 139 1679 0471

YOUR DC PROJECT IN CHINA

SUPPLY CHAIN - LOGISTICS WAREHOUSE DESIGN

AUTOMATION

MHE - IT

ROI

ENERGY EFFICIENCY

Shanghai, June 11 2014

STORES

DROP POINTS

HOME

HOME

EC PLATFORM

and/or

PARTNER

NATIONAL

DCs

REGIONAL

DCs

X-

DOCKING

PLAFORMS

EC PLATFORM

and/or

PARTNER

OWN

EC PLATFORM

and/or

PARTNER

3PL 3PL

and/or

KUAIDI

NATIONAL

DCs

REGIONAL

DCs

X-

DOCKING

PLAFORMS

Challenges

Trends (mature brands)

Consolidation

Automation

Networks designed for

wholesales models

Limited proximity Coverage

Challenges

Trends Moving from liquidation

to selling New Styles

SKU Range

<2 Items / Order

Challenges

Trends Kuaidi & China

Post

Heterogeneous

coverage & costs

Challenges

Trends Regional or

“Zones” strategies

Size and diversity

of the country

NATIONAL

DCs

REGIONAL

DCs

X-

DOCKING

PLAFORMS

Trade-off between cost and service level

Use EC to reach areas with no stores

EC PLATFORM

and/or

PARTNER

OWN

Luxury Goods Online Share (including Fashion)

Luxury Goods: a “less likely” online segment … but growing

E-Clients expect bargains (30 to 60% discount)

Counterfeiting Risk remains the main barrier in China

High end luxury brands are not selling online (yet) * Global Trend

across categories

EC PLATFORM

and/or

PARTNER

Internet overall shopping growth in China*

66% in 2012

43% in 2013

Already online players expect 20/30% over next 2 years

Apparel accounts for 36% of online

Chinese consumer goods spending*

* Source: McKinsey Insight, 2013

Key Figures

Lack of real time visibility on Own Customers Habits

Brand Loyalty and deep understanding of customer’s

taste are key to EC business

Lack of real time visibility on daily sales, affecting

replenishment reactivity

Besides lead times, smart replenishment and real time

inventory visibility are key to EC business

Challenges

*(2013, average from multiple sources)

HOME

HOME

EC PLATFORM

and/or

PARTNER

NATIONAL

DCs

REGIONAL

DCs

X-

DOCKING

PLAFORMS

EC PLATFORM

and/or

PARTNER

EC PLATFORM

and/or

PARTNER

3PL 3PL

and/or

KUAIDI

1 - Pure Platforms (Tmall, Taobao)*

Vendors operate their e-store and own the products

No in-house logistics, relying on third-party players to fulfil orders, though

delivery and tracking is integrated

2 - Open Platform (Jingdong)*

Vendors own the products but only partially operate the e-store

In-house logistics capabilities, option to use a third party and pay a service fee

3 - B2C pure players (51buy)

Platform Operate the e-store and fully own the products

In-house logistics

* Most players have now diversified their strategies

EC PLATFORMS: 3 main (original) Business Models

HOME

HOME

EC PLATFORM

and/or

PARTNER

NATIONAL

DCs

REGIONAL

DCs

X-

DOCKING

PLAFORMS

EC PLATFORM

and/or

PARTNER

EC PLATFORM

and/or

PARTNER

3PL 3PL

and/or

KUAIDI

Require to manage multiple

business models across Regions,

Brands and Product Categories,

hence making it difficult to align the

organization with the EC Strategy

Real Time Replenishment

Delivery Tracking

Returns Management

Limited Online SKU Range

3PL historical set up

WH space rental contract

Challenges

Brand need to cope with

heterogeneous set up for now

Both EC Platforms and Vendors are

preparing the next move:

EC Platforms are massively

investing into in-house logistics

capabilities, but likely also

aiming to sell their own

products

Brands are ramping up their

emphasis on their own e-store

operations

Trends

STORES

DROP POINTS

HOME

NATIONAL

Cs

REGIONAL

DCs

X-

DOCKING

PLAFORMS

OWN

Many brands have a limited

geographical coverage (Tier 1, 2…)

Achieve short home delivery times

in a wide geographical area

Develop IT capabilities to ensure full

line real time Sales & Inventory

visibility across a diverse fulfillment

network

Widen Online SKU Range

Challenges

Consolidate the network so as to

concentrate picking in less locations

Leverage existing assets

Improve operational efficiency

through modern warehousing:

Advanced Process Design

WMS

Automation when justifiable

Trends

Laurent Cochet

laurent.cochet@cocoongroup.net.cn

+86 139 1679 0471

Logistics Centers Projects – Independent Consultant

SUPPLY CHAIN - LOGISTICS WAREHOUSE DESIGN

AUTOMATION

MHE - IT

ROI

ENERGY EFFICIENCY