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The Logistics of Pivoting from B2B to B2C

The pandemic has brought swift surges to e-commerce and D2C sales. How can a traditionally B2B company quickly pivot to the B2C market during these times?

How B2B can pivot to B2C operations.
How B2B can pivot to B2C operations.
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At the WERC annual conference yesterday, Kenco Group representatives Kristi Montgomery, VP of Innovation, David Caines, Chief Operating Officer, Dan Coll, VP of E-commerce Fulfillment, and Chris Hess, Director of Supply Chain Solutions, discussed how to find balance and accommodate B2C market demands. Kenco Group is a woman-owned, full-service third-party logistics company that has been in business 71 years and has $800 million in revenue. This conversation has been edited for length.

E-commerce Growth

Kristi Montgomery:

I'll start with you, David. What have we seen in the last 18 months as it relates to e-commerce growth and how are our B2B shippers tackling that challenge?

David Caines:

It depends on what source you're looking at, but obviously several years were pulled ahead in terms of e-commerce last year. Forty-four percent growth is the number that we see from 2019 into 2020, and as it's sitting now 22% - 23% of retail spend is happening digitally through e-commerce. So, it's pretty incredible and any B2B shipper that didn't have their focus on that obviously was shaken up in 2020 and had to turn their attention.

I think part of the trick for some of the B2B is when they don't control a full basket of goods - figuring out how they'd partner with different aggregators to really bring forth a viable solution that includes their products and their brands and their logos. Then of course on everyone's mind when you bring up the word e-commerce is Amazon, and I think what people struggle with there is competing with the uncompetitive. Amazon's logistics cost as a percentage of their net sales depending on what source you look at is 26% - 28%. That's not sustainable or competitive but it doesn't seem imminent for them to cut that back right now.

Key Learnings for Those New to E-commerce

Kristi Montgomery:

Dan, what would you say is one of the key learnings that traditional shippers are often caught off guard by, when they step into this e-commerce world?

Dan Coll:

I think the biggest shock to the system is the difference between the customer experience or customer expectations. From an expectation standpoint, the constant communication of “I received the order, the order is shipped, details of when it's going to be delivered.” So, it's not just pushing information, but it's continuous information on status, which requires a different way of thinking from a technology stack perspective. Customers expect that when they place an order it's obviously going to be processed and en route the same day, unlike getting a B2B PO and having 48 hours or 72 hours to get the order prepped and ready to ship. It's all about time in transit. Once it leaves the facility to the time it gets to the customer door - whether someone is trying to compete with an Amazon Prime-like service and have a same day, next day, or two day, or they have a strategy where they commit to having the order delivered in several days.

Facing Customer Expectations

Kristi Montgomery:

Do you have any tips or tricks to offer B2B shippers as they're stepping into this space to face that customer expectation requirement?

Dan Coll:

In relation to transportation on the B2B side, for LTL and full truckload, we have hundreds of options and that's not really the case in parcel. There's less providers but there's niche solutions, and really understanding if you could take advantage of those niche solutions is really important.

I break the small parcel transportation space into four buckets. You have the duopoly with FedEx and UPS, you have USPS, you have postal consolidators like Pitney Bowes and DHL e-commerce, and then you have regional carriers, for example OnTrac, that serves Western U.S. and LaserShip, that serves Eastern U.S. Then there are a bunch of smaller providers in there.

I think when you're looking at this space, whether you're in it or just starting to embark on it, is really getting strategic ...understanding your transportation data, having conversations with the carriers that are a good fit for you, and what's really important and critical for this year is every one of these carriers right now is asking for your forecast. When is your peak forecast, what's your volume going to look like in November and December, and it's basically coming down to what carrier can you use for what percent of your volume? So having a multi-carrier strategy is really going to be critical as we enter into the 2021 peak season.

David Caines:

There's some data, to put behind what Dan's talking about. UPS and FedEx - and I'll lump DHL in there even though they're an aggregator, those three, their market cap grew $110 billion in 2020. So, their ability to really control that market, pick and choose what they want, find the most attractive freight that works for their network. The ability to start to find some of those other solutions if you can't get everything you need out of the two giants is going to be really, really critical to success.


Read article   Read this story on post-covid trends impacting the CPG industry.

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