.com February 20031 Jean-François THONIN Cardiff February 2003 LOGISTICS AND BUSINESS TO CONSUMER COMMERCE.

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.com February Jean-François THONIN Cardiff February 2003 LOGISTICS AND BUSINESS TO CONSUMER COMMERCE

.com February The development of e-commerce 4 years ago: Except for the Post Office, there were no players in the business to consumer logistics market. Market in France : between 1 and 1.5 billion euros. Companies realized that if the Post Office was alone, it was because it’s very difficult to earn money in this market. Thought it was very interesting to anticipate which players would be able to compete with the Post Office. Today in France, there are around twenty organizations each with their strengths and weaknesses.

.com February Web Site: PRIVATE BUSINESS INTELLIGENCE AGENCY References : Leading companies : La Poste, Geodis, VediorBis, Vivendi… Local authorities : Conseil Régional de Lorraine, CCI des Deux Sèvres, CCI de Lille…

.com February Launch of a logistics marketplace for one of the global leaders in professional publishing : Our strength: Using first the telephone then the internet. For example, 10 years ago, their company launched a service on the Minitel (a sort of French Internet) which, today, generates an annual turnover of more than forty five million euros. In this company, the transfer of information from the Minitel to the internet hasn’t been easy; Minitel can be found in every warehouse but computers connected to the net are rare. Today, the so-called “pure players” have largely disappeared. However Internet sales complement traditional companies, and are not their competitor. PRIVATE BUSINESS INTELLIGENCE AGENCY

.com February PRESENTATION OF THE SURVEY RESULTS CALLED ‘E-LOGISTIC’ RESULTS CALLED ‘E-LOGISTIC’ The subject : the impact of e-commerce on logistics especially in ‘b to c’. The study highlighted the mistakes made by companies that launched e-commerce projects. How can logistics cause the failure of an e-commerce project ?

.com February % are global. 50 % provide delivery within one week. A FEW KEY NUMBERS ON BUSINESS WEB SITES

.com February First, you see the CEO of a large company surrounded by his colleagues. Second, you see the CEO of a small company surrounded by his colleagues. E-commerce gives companies the opportunity of contacting potential clients worldwide. The TV commercial was divided in 3 parts : A FEW KEY NUMBERS ON BUSINESS WEB SITES

.com February If the Internet is effectively global, it is first and foremost a local tool. One can go to the moon but they can’t deliver to consumers at home within one day at an acceptable market price. Consequence: the best lead time they can offer is over a week. Our advice: start with the local market. A FEW KEY NUMBERS ON BUSINESS WEB SITES What can we draw from this ?

.com February LIST OF FORESEEABLE LOGISTIC CONSTRAINTS Logistics supply constraints; Constraints in relation to the nature of goods sold; Consignee constraints; Consumer habit constraints; Stock constraints in relation to lead times. 5 major constraints encountered by companies implementing a “B to C” project :

.com February Most companies without any logistics experience that implements an e-commerce project in ‘b to c’ forgets logistics. They encounter this problem on receipt of their first orders. But the fact is that if you do not make companies aware of logistical problems then you take a risk of seeing them fail and abandoning the Internet for good. For those of you who accompany the development of small and medium-sized businesses in your own regions, please do not forget to make them aware of logistics. LIST OF FORESEEABLE LOGISTIC CONSTRAINTS

.com February / Clients do not want to pay a high price for delivery. 1/ Clients do not want to pay a high price for delivery. 2/ Delivery to the consumer’s home costs twice as much as to a company. 2/ Delivery to the consumer’s home costs twice as much as to a company. 3/ Current volumes do not yet allow for significant economies of scale. This would allow for a reduction in home delivery costs to approach that of business delivery for the consumer throughout France. 3/ Current volumes do not yet allow for significant economies of scale. This would allow for a reduction in home delivery costs to approach that of business delivery for the consumer throughout France. 4/ They failed, in particular, because they often had opposite them, clients who launched an e-commerce project who were completely ignorant of the logistics constraints. 4/ They failed, in particular, because they often had opposite them, clients who launched an e-commerce project who were completely ignorant of the logistics constraints. LOGISTICS SUPPLY CONSTRAINTS No player, not even the Post Office, is capable of offering delivery directly to consumers in accordance with market expectations. Why this shortage?

.com February Our advice: Our advice: We therefore advise any company wanting to start an e-commerce project to go and meet the logistics experts who are able to deliver their goods. We therefore advise any company wanting to start an e-commerce project to go and meet the logistics experts who are able to deliver their goods. LIST OF FORESEEABLE LOGISTIC CONSTRAINTS Consequence: Companies fell back on the “b-to-b” sector.

.com February We are far from being in a free market world. Try selling (French) cheese to the United States and you will soon see what is known as customs constraints. When you market products, you are often obliged to rely on several transport companies according to their area of expertise. CONSTRAINTS IN RELATION TO THE NATURE OF GOODS SOLD

.com February Contrary to a company: they value their peace and quiet, they are not always accessible, they are not always there. Solutions currently in use: Delivery by appointment, Delivery to predetermined pick-up points. CONSIGNEE CONSTRAINTS

.com February The Internet has dramatically changed consumption habits. Bergère de France, the French leader in knitting yarn, analyzed orders made on the Internet and surprisingly, noticed that people made orders at around 3 o’ clock in the morning… Indicating the lead time on the website isn’t enough. It’s important to specify the exact collection time. Example: If you tell a customer that the product will be delivered the following morning and if a customer orders at five to midnight, he will be disappointed if he doesn’t receive his package the following morning. The client will esteem that you haven’t respected your end of the deal. CONSUMER HABIT CONSTRAINTS

.com February An error frequently made by companies, as they embark in their first e-commerce project, is to underestimate the cost of offering shortened lead times. The adopted solution consists in offering a limited number of articles for the shortest delivery times (same-day or 24-hour delivery). STOCK CONSTRAINTS IN RELATION TO LEAD TIMES.

.com February CONCLUSION “Man knows how to go to the moon, but French logistics companies are still unable to offer a full range of worldwide delivery services (from small packages to bulky shipments - not to forget goods needing to be shipped under controlled temperatures) destined to private individuals and covering all of France.”