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Logistic companies unable to cope with e-commerce expansion

22 January 2015 - 10:11 by David Aiken

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Figures suggest that the weight of expectation placed on delivery companies in the age of  shopping online is such that many fail to survive in the long term, according to Business Reporter.

Over the course of 2014, a total of 221 delivery firms closed their doors for the last time, which is up from 184 during the previous year. Analysts take this to be an indication that although e-commerce is booming, many logistics firms simply cannot operate effectively in the current conditions.

The problems are multilayered, since organisations not only have to have an effective network of delivery drivers and distribution centre employees to get products to people on time, but also need computer systems that are capable of keeping all of this organised. And even major firms have fallen foul of inefficient or outdated elements within their infrastructures.

Industry expert, Jeremy Willmont, said that there was a widening gap between the delivery companies that are managing to profit and thrive in the age of safe shopping online, and those that are finding it hard to make up ground.

Ultimately, it is the smaller organisations that are most likely to end up on the scrapheap, although with companies like City Link and Yodel encountering issues in recent months, this is clearly not always the case.

Analysts further point out that although the price of fuel has dropped steeply in the past few months, most delivery firms cannot leverage this to increase profits because they tend to operate on models that pass these savings onto customers.

Consumers have sky-high expectations about home delivery when they order online, so the firms that cannot cut the mustard are inevitably going to fall by the wayside, leaving a smaller group of big companies to take up the slack.