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Report: Signed, sealed, delivered – analysing the impact of e- commerce on urban areas

From electronics to groceries – today, nearly everything we need can be ordered online and delivered to our doorsteps. For the consumer, e-commerce can be a time and cost saver. For urban planners, retailers and logistics companies, on the other hand, the great flow of products from manufacturer to consumer presents completely new challenges. What are the effects of increasing e-commerce in our European cities? And what can be done to facilitate this transformation of our shopping habits? The report “Signed, Sealed, Delivered – Analysing the Impact of E-commerce on Urban Areas” explores European e-commerce and the development of supply chains from a citizen perspective.   

Global e-commerce has expanded at a high rate over the past decade, although it still constitutes a relatively low share of total turnover. Growth is expected to continue at a high rate.

Shopping habits differ between European countries, different age groups and areas. For example, Nordic consumers make more online purchases than consumers in Italy or Hungary. Eurostat statistics show that e-commerce is used by urban as well as rural inhabitants although urban inhabitants in many countries use it to a greater extent. Statistics also reveal that younger people are generally more inclined than older people to make online purchases.

People have different reasons and motivations for using e-commerce. The timesaving aspect is the most important reason for some people. For others, the range of products available urges them towards e-commerce and offers access to products not available in local stores. Price is important for many, and e-commerce offers competitive prices.

Retail supply chain solutions are experiencing a dramatic shift in required performance – and therefore also in optimal design – as compared with traditional processes for supplying stores. The convenience aspect is expected to place even greater demands on delivery time and convenient options such as home delivery. And e-commerce growth will further reveal and accentuate the demand for sustainability of applied solutions.


Solutions for delivery – last mile logistics

There are a number of solutions for delivery applied with varying popularity in different countries. Home delivery, pick-up at a collection point, parcel locker and click-and-collect in-store all have their pros and cons. Last mile logistics, when goods are transported to their final destination, is generally considered the most expensive, least efficient and most polluting part of the supply chain. To improve e-commerce competitiveness and efficiency new solutions are developed and tested continually. In the Nordic countries, collection points for parcel pick-up are widely used, while in most countries home delivery is the default solution.

Effects of increased e-commerce

Research findings from recent years suggest that an increase in e-commerce will indeed produce both positive and negative effects for urban areas – effects that are complex and not yet easily measurable.

From a citizen perspective, the effects of e-commerce may be experienced as less time spent travelling to and shopping in stores resulting in a decrease in brick-and-mortar shopping, and a change in personal travel patterns. At the same time packaging waste and freight traffic in residential areas is likely to increase. E-commerce might also change our homes. Some early adopters have already made adaptations to allow in-home delivery when they are not at home. An increase in these types of solutions is expected and will require adjustments to recipients’ properties.

E-commerce is sometimes far from beneficial for supply chain efficiency, and therefore does not always promote a sustainable society. In meeting these new demands, the retail supply chain is facing a potential paradigm shift. Warehousing operations and locations, and transport solutions are profoundly affected by e-commerce, as single items need to be stored, handled, packaged, and delivered and return flows need to be managed. Packaging and product returns increase energy use and place new demands on the system.


Challenges and solutions for the integration of e-commerce in cities – conclusions and recommendations

E-commerce growth is challenging our supply chains. The existing supply chain designs are complex and are undergoing dramatic development. Many supply chains are not adapted or optimised for the anticipated increase in services and volumes. The key challenges in urban areas are the resources required, environmental and cost efficiency of last mile transport, and the location and function of facilities.

These challenges resonate throughout the supply chain and in urban planning– from warehouse design and location, delivery networks of hubs, depots and transportation, to and into consumers’ private homes. Smart packaging solutions that improve fill rates, reduce waste, and enable recycling and re-use are a natural part of efficient logistics. The ineffeciency of today’s solutions highlights the need for innovative thinking to identify solutions for efficient distribution principles and supply chain strategies and design, integrated into urban structures. Stakeholders throughout the supply chain will benefit by looking beyond their current boundaries and interests to search for efficient solutions through collaboration, co-ordination, co-location and co-transportation.

Incorporating new trends and needs into urban planning and design will benefit citizens as well as e-commerce businesses.Stakeholders in urban logistics and those responsible for land and property planning need to be co-ordinated as future requirements are specified for urban logistics facilities’ location and function. Adequate domestic logistics reception capability and capacity also need to be ensured. Logistics facilities will have different requirements for space and location as compared with more traditional set-ups.

Public authorities and other powerful stakeholders can promote and support new ideas and new thinking regarding the development of solutions for efficient distribution principles and supply chain strategies and design. Authorities can also inform citizens about the impact of e-commerce on urban areas. Logistics needs to be given high priority on the regional political agenda, and authorities can guide development through regulations and incentives to steer development in a desirable direction.

Signed, sealed, delivered – analysing the impact of e- commerce on urban areas

About the authors

Robert Sommar holds an M.Sc. in Automation and Mechatronics and a Lic. Eng. in Logistics, both from Chalmers University of Technology, Gothenburg, and has over ten years of experience as a consultant. He works with description, analysis and development of transport systems on the strategic and tactical level, covering rail, sea, road and intermodal transport. Robert oversaw the production of this report and co-ordinated the experts from Sweco who provided their expertise.

Peter Mellander holds an M.Sc. in Mechanical and Production Engineering and Industrial Management from Chalmers University of Technology, Gothenburg. He has 22 years of experience in the design and automation of logistics facilities. Peter leads strategic and conceptual feasibility studies and develops requirement specifications for logistics and order-fulfilment sites. In this report, Peter primarily contributed by identifying plausible future challenges and the change requirements along the supply chain.

Other contributing experts from Sweco:

Rikard Lannemyr, Johan Sandevärn, David Lindelöw and Sara Ranäng.

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