The growth of ecommerce
is resulting in a renewed interest in the internet. UPS recently acquired
privately owned Belgian company Kiala and also entered into a partnership with
Kabbage to provide funding for online merchants. Expect more transportation and
logistics providers to enter this market.
Déjà vu. The 1990s introduced the world to the likes
of Amazon, AOL and EBay. Companies scrambled to build a presence on the
internet and then when the dot com bubble burst in the early 2000s, a sense of
reality set in for the business world. Now, thanks to the increasing use of
smart phones and social media, the internet market is taking off again. As
such, the rise in ecommerce has many companies renewing their interest in this
market, including those within the logistics and transportation industry. After reporting an impressive holiday peak
season thanks to strong ecommerce sales, UPS unveiled part of its strategy to
penetrate the ecommerce market by acquiring privately owned Belgian company,
Kiala. Launched in 2001, Kiala operates
in Belgium, France, Luxembourg, the Netherlands and Spain. According to Norman Black, UPS spokesperson, "We're devising and looking for new
answers in this space," Black said of e-commerce. "We need to be a
leader in supporting this type of economic growth."
Through proprietary software, Kiala
has integrated with more than 450 etailers through a network of over 6,500 collection
point retail shops. This allows etailers
to offer their shoppers the option of having goods delivered to a convenient
retail location. Kiala is able to handle
150,000 packages per day and more than 50m per year.
Although terms of the deal were
not made public, according to the co-founder and President of Kiala, Denis
Payre said the company’s 2011 revenue was €49m.
Another ecommerce move UPS made was that of
partnering with Kabbage, a provider of working capital for online
merchants operating on eBay, Amazon, Yahoo Stores, Etsy and Shopify. UPS Capital
has provided Kabbage with a new debt facility specifically intended to fund
small ecommerce business through Kabbage’s proprietary system. In addition,
small businesses will be able to direct UPS to share their shipping history
with Kabbage via the Kabbage.com website, giving the company more info about
merchant’s operations, which Kabbage uses to determine how much capital and at
what rates it will provide the seller.
Ecommerce has been a bright spot in an otherwise uneven and
sluggish economic recovery. The two largest ecommerce markets, Europe and US
witnessed double-digit growth in 2011 with European internet sales growing 18%
to €200.5bn,
based on figures from the Center for Retail Research. Based on data from
Comscore, the US market grew 12% to $256bn. Double-digit growth for both Europe
and the US is expected to continue in 2012.
For transportation and logistics providers, this growth is creating changes
in warehousing and distribution, delivery methods, and modes of transportation.
These trends will likely benefit small
parcel companies such as UPS, FedEx and DHL due to frequent small packages that
ecommerce generates.
