Thursday 24th Aug 2017 - Logistics & Supply Chain

E-commerce: the driving force

The largest driving force in the global economy is now e-commerce. By changing how we buy, and from whom, the marketplace connects consumers in the most populous countries of China and India to an entrepreneur in London or Manchester with an idea, a product, and a laptop.

E-commerce is getting faster and smarter, but a truly borderless global economy relies on both the Internet and a worldwide delivery network, like FedEx. Celebrating the company’s 40th Anniversary in April, it’s interesting to reflect on the world in 1973 – before personal computers, digital cameras, or mobile communication – and realise that all industrial revolutions involve innovation.

That innovation over the past four decades is perhaps best illustrated by China, whose growth in e-commerce specifically has been nothing short of meteoric. China is now the second-largest e-commerce market in the world, with online sales of £125 billion in 2012—and it is soon to be the first with expected sales to reach £270 billion by 2015.

The figures are indeed stunning: By 2020 Chinese e-tailing is projected to match the size of today’s US, UK, Japan, German, and French markets combined, reaching up to £419 billion in sales, according to the McKinsey Global Institute. That is backed up by the 193 million Chinese consumers who shop online, more than any other country in the world. When you look at the numbers involved, the possibilities for UK SMEs are tremendous.

It is clear that China will be a powerhouse marketplace and supplier in the coming years. It is already the largest trading partner for more than 100 other countries and from January to May 2012 the UK exported over £3.98 billion worth of goods to China, highlighting this continually important trade relationship. Since January 2012, China has even risen from 9th place to 7th in the UK’s most important export markets by value, overtaking both Italy and Spain. With strong trade relationships like these, a globally connected logistics company such as FedEx is essential.

Yet there are still challenges when it comes to e-commerce and SMEs, one of the biggest being the confusing and complex array of documents and paperwork required by hundreds of countries. A recent World Economic Forum report said if trading nations reduced supply chain barriers, such as inefficient customs procedures, just half way to best practices, GDP globally could increase nearly 5 per cent.

Just as access to the global marketplace continues to evolve, so do we. It’s how we plan to be successful for another 40 years and beyond.

Raj Subramaniam, executive vice president, marketing and communications, FedEx Services.

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