Ozon will transform into a logistics platform
The company Ozon decided to change its working model with its partners. In 2020, the company will begin to operate on the principle of a logistics platform.
The bulk of orders will be delivered by Ozon's logistics partners. At the same time, the number of regular Ozon delivery agents and the volume of orders delivered by them will sharply decrease.
Giants of the global eCommerce have been successfully using this approach for many years, as Ozon reminds us: now over 80% of Amazon orders are delivered with partners, and Alibaba uses 100% affiliate delivery.
What will change in the company itself?
Due to the transition to the platform model, reductions will be made: the network of delivery agents throughout the country will be optimized. The company now has several hundred delivery agents. Ozon has not reported how many will be left after optimization.
"For such employees the company has provided the most comfortable conditions in dissolving employment contracts. At the same time,developing the platform model will create thousands of jobs at small and medium-sized enterprises in dozens of cities - they will be able to work not only for Ozon, but for the entire e-commerce market," Ozon promises.
As part of transforming the delivery service, Ozon will standardize its fleet and switch to single-model vans. Unifying the fleet will increase the accuracy of load planning and the quality of service and will further raise the rate of timely delivery, the company promises.
The new model will make it possible to quickly scale delivery under conditions of exponential growth (Ozon has grown by more than 80% in the last 1.5 years) and to flexibly manage capacities at peak demand moments that today occur almost every month. It will provide an opportunity to launch courier delivery in towns of any size, and will also stimulate the development of small logistics businesses in the country. The number of Ozon's external partners will grow, primarily in the regions and small cities.
"By 2025, Russian e-commerce will triple in size, while the main barrier to growth is the lack of infrastructure: the country today is only 75th in the world ranking of logistics infrastructure development according to the Logistics Performance Index (for comparison, the US is 14th)," the company notes.
What will change for Ozon’s sellers?
From a “technical” point of view, nothing will change for the seller, because sellers transfer their goods to Ozon, and the company, as a platform, already consolidates the goods into orders, determines delivery flows, and is responsible to the client and the seller for the goods and orders. Recall that recently, Ozon has been doing everything possible to stimulate sellers to refrain from dispatching shipments from its warehouses.
The company remarks that for sellers in the regions it is very important to have "discharge points" where they can deliver their goods. It can be a fulfillment center, a sorting center, or pickup points. In this regard, in 2020, the marketplace will actively expand fulfillment infrastructure in the regions. In particular, the company plans to open new logistics hubs and sorting centers.
Moreover, the infrastructure of the last mile, pickup points, will be developed. To this end, in December 2019 Ozon announced the launch of a "logistics marketplace" and a special program for opening affiliate pickup points branded by Ozon.
"’Around’ the infrastructure of the last mile is where special delivery services are also concentrated; for example, a courier can pick up goods from a seller in city X and take them to a sorting center or pickup point in a neighboring city. We already see that such small logistics businesses are actively developing ‘around’ our product marketplace. Developing a platform model for delivery together with developing the pickup points still stimulates the development of a small business, especially in the regions. As a result, sellers will receive drop points and logistics services ‘around them’, it’s convenient for them," said a company representative.
And one more aspect: developing according to the platform model will make it possible to flexibly manage delivery volumes and quickly launch courier delivery in those cities where it did not exist before. This will stimulate the sales of goods that are most often ordered with a courier, and in addition, being able to quickly scale delivery of the last mile will help ensure efficient delivery to both pickup points and parcel lockers. As a result, this will make it possible for sellers to sell their goods even more actively throughout the country, including in small towns.
Last mile infrastructure development continues daily. For example, on January 17, information became apparent that the company would place a network of its own parcel lockers in the subways of Novosibirsk.
Andrey Pavlovich, Ozon Supply Chain Director:
"Many foreign e-commerce giants initially built their business on the basis of affiliate delivery, this was facilitated by the presence of large players providing delivery services for e-commerce throughout the country of operations. In Russia, such players, in fact, do not exist; therefore, being the leading player in e-commerce, we decided to create such a platform on our own.
We are actively developing our infrastructure in Moscow, St. Petersburg and other regions in order to ensure even faster delivery of orders to customers, which means that in each region there are even more jobs at warehouse facilities, pickup points, and partner delivery services. We also plan to become a major partner for the self-employed in all regions where this system began to operate on January 1, 2020."
In the future, Pavlovich believes that participants in the Ozon product and logistics marketplaces will unite: a seller will open a pickup point that will issue orders to customers and take goods from other sellers, and couriers hired by them will be able to pick up their goods from other sellers if necessary. As a result, everyone will be winners: customers, marketplace sellers, entrepreneurs who are able to provide last-mile logistics services, and the Internet platform itself.