Last week, as part of our Future of Freight interview series, we sat down with Alibaba.com’s Head of North America Supply Chain, Jamin Dick.
This time we got to hear from the world’s largest B2B platform on how logistics digitization is impacting the landscape, and how logtech can be leveraged to serve SMB importers.
The market size is enormous…
Though SMBs have long gotten little attention from carriers and large freight forwarders, this segment actually makes up about 13% of the hundreds of billions of dollars spent on logistics for US and Europe imports.
Platforms like Alibaba.com have made it easier than ever for SMBs to participate in global trade. But a key to understanding SMBs is that – unlike large or enterprise shippers – they may not consider themselves importers at all.
They generally won’t have a head of logistics who spends time thinking about the supply chain, how it works and how theirs can be optimized. For them logistics is secondary: they are a business/small retailer first, and they just want logistics to operate in the background and get them their shipments on time.
So what’s most important to SMBs, and how can logistics providers leverage tech to serve this important segment as the recent surge in eCommerce makes them even more prominent?
Certainty is key
SMBs are generally not very sophisticated in terms of how logistics operates and what they can expect.
SMBs are really going to gravitate, towards services that provide them with certainty up front. they’re figuring out how to do a complex thing – to bring in a container of goods from China. And so if we can make it easier for them. I think that’s where the real opportunity is.
So logistics providers who can figure out, often through tech solutions, how to provide simplicity, reliability and give SMB importers certainty of what to expect during their shipment, will win the trust of this segment.
Keep it Simple, Stupid
Okay, we added the “stupid” – Jamin didn’t say that.
As the SMB segment grows and technology makes it easier for even large players to reach them directly, logistics providers are feeling the pressure to participate in this market.
And they can learn how to serve SMBs best from the suppliers who successfully sell to them.
Suppliers recognize that the most important thing they can do is make the right product and make it as easy as possible for the buyer to find and transact with them.
And in logistics, it should be the same. The more logistics providers can get out of the way, and simplify this complex operation, the better.
The less visible that we are as logistics providers, it’s actually a good thing to a seller or to a buyer in the US.
SMBs have a low tolerance for uncertainty in logistics because they’re focused on running their business efficiently. They want to know their exact cost unit ahead of time, and don’t want surprise fees later on.
One good example of this? Customs.
Jamin called out automated classification and electronic documentation as important examples of how tech is helping to simplify the SMB experience.
By automating the classification process, duties and taxes can more easily be calculated up front. Alibaba has made strides in this area to be able to estimate these costs accurately and ahead of time.
I think it 10 years ago, 15 years ago, you would find out that your container left a week later than planned or is stuck in customs, which is really challenging for a small business.
A lot of innovation has also focused on digitizing shipment documents and data, leading to better tracking and actionable messaging and updates. If there is a delay or disruption, these shippers can be updated avoiding last second surprises and improving the experience.
Lack of standards may be the biggest blocker
Logistics is often only as automated as the least digitized link in your supply chain. This is a recurring theme that also came up in our conversations with the Chief Digital Officer at Agility.
If digitized documents end up being printed out and sitting on someone’s desk to be processed, then that tech has only gotten you so far.
So digitizing entire processes is a big project that will require a lot of cooperation across industries and governments. And in Alibaba’s experience, that’s the biggest challenge to change that ecosystem.
Alibaba sees its logistics become quieter when all the data is reliable and digitized from the outset.
Buying, selling or participating as a logistics provider on a platform can solve for some of this lack of standardization. All the relevant trade and supply chain data on Alibaba, for example, is digitized already and ready to transact, which makes it that much easier to add the logistics part.
Thanks again to Jamin for taking the time to chat with us and share his insights.
Check out other episodes from our Future of Freight series here.