Freight Insights General News

From Alibaba to Freight: Online Sales and Networking

Alibaba and Global Freight: The Networking/Sales Relationship

The US EIA's oil forces, compared to actual pricesThe US EIA’s oil forces, compared to actual prices

Predictions are hard.

In 2013, the US Energy Information Administration believed crude oil prices would drop to $95 dollars/barrel by the end of 2014. A more optimistic business analyst firm predicted $85 a barrel.

This Thursday, the West Texas Intermediate price per barrel hovered at under $60 dollars.

But sometimes a trend comes along that can’t be disputed.

Our big 2015 prediction:

Freight sales are going online

In this post we’re going to take a look at online B2B sales, pinpoint companies that are doing something right and then talk about logistics organizations that are already online…and where they’re going.

Online B2B Sales

Last week, IDC predicted that industry disruption is on its way in the form of 3rd Platform (cloud, mobile and social software) investments that will account for a full third of the $3.8 trillion that will be spent on ICT in 2015.

It’s not hard to see why – business are going online. Alibaba’s $9 billion in sales on one day showcased the power of online sales. So we decided to take a look at the top 20 global online marketplaces and found out two key facts:

1: B2B marketplace visits are growing. Especially Alibaba.

Alibaba is miles ahead of the competition when it comes to online B2B marketplaces. In the past three months, traffic to Alibaba effectively doubled.

Website visits to online B2B marketplaces 2014Website visits to online B2B marketplaces 2014

2: But Alibaba has something else too – a diversified userbase.

Alibaba has managed to garner an extremely diverse user base. Looking at the visitor data, one can see that Alibaba visitors come from around the world. Specifically, we found that all of the visitors from the 5 countries that visit Alibaba the most accounted for only about 30% of all their visitors, while, on average, most B2B sites have the top five country visitors account for almost 70% of all visits.

How diversified are Aliababa's visitors compared to other online B2B marketsHow diversified are Aliababa’s visitors compared to other online B2B markets

The bottom line? Alibaba is tapping more markets around the world, making it even easier to expand.

So let’s talk freight.

3PLs are facing stiff global competition. In a fragmented industry with historically low price margins, standing out from competition while reducing cost of sales, as well as cost of operations, is key. Adrian Gonzalez of Talking Logistics recently enumerated some ways  for a 3PL to grow:

  • Provide new services
  • Service new vertical industries
  • Geographic expansion
  • Mergers/Acquisitions
  • Upselling
  • Increasing SMB business penetration

While SMBs have huge logistics potential (over 90% of US importers and exporters are SMBs), Gonzalez cites their main challenge SMB sales present:

“traditional 3PL sales and deployment model makes it cost prohibitive and non-scalable”.

Which is exactly why logistics companies need to make the net…work.

Freight forwarders’ Online

Screen Shot 2014-12-14 at 1.18.10 PM

In a recent study, we found that among the top 20 freight forwarders in the world, only 30% have any messaging and functionality on their website homepage that targets new customers (!). And new customers are an average of about 2.5 clicks away form even being able to get in touch with the forwarders.


So what does it mean?

  • 3PL websites get anywhere from 20,000-600,000 visits a month. The exact number is likely a by-product of what services are being offered to users and customers. But many people do visit their sites. And, those websites are simply not optimized for new business.
  • 3PL leaders haven’t fully diversified their online business. The most diversified website we found was Kuehne + Nagel and Panalpina, both of which have about 50% of their visitors coming from only 5 countries. In such a globally distributed business, we believe that that number can be higher. (According to their last investor meeting, UPS’s number one focus for long term growth is international expansion.)
  • There are some companies that clearly focus on national business. For example, CH Robinson have 93% of their website visitors coming from five countries, while Hub Group, JB Hunt and SCNF Geodis have anywhere from 95%-98.8% of their visitors coming from the same countries, usually the United States.
  • There are particular countries that clearly dominate when it comes to online accessing of the top 3PL websites. Visitors from the United States are in the top 5 users of 90% of all top 25 3PL websites, followed by India and the UK (50%), and Netherlands and France (~30%).

Frequency of times that countries show up as top 5 user locations for leading 3PL websitesFrequency of times that countries show up as top 5 user locations for leading 3PL websites

While few forwarders optimize sites for new business, many do provide some time of portal for scheduling pickups, tracking and invoices though, which proves that they are on the right track.

But there’s a whole wide world of companies looking to ship online. They’ve already found online B2B sites…and now they’re looking for online shipping sites.