According to Techopedia, “Business to Business to Consumer (B2B2C) is an emerging ecommerce model that combines Business to Business (B2B) and Business to Consumer (B2C) for a complete product or service transaction. B2B2C is a collaboration process that, in theory, creates mutually beneficial service and product delivery channels.”
In its current form this ecommerce model takes one of two forms:
As the European and international ecommerce market grows and matures, the complexity and costs of selling online are increasing. Retailers need to consolidate and create synergies if they are to thrive.
And delivery is a significant cost factor in any online transaction.
In a digital economy, a delivery model consisting of competing monopolies, reserved areas of interest, and closed standards has no future:
The demands of both consumers and online retailers can only be satisfied by commoditising delivery and integrating delivery chain management into the B2B2C model.
Quite simply, delivery chain management is the process of directing delivery of a product to the last mile delivery service provider most able to meet the specific delivery preferences as stated by the consumer during the purchasing process.
As the B2B2C business model continues to grow strongly, delivery chain management is the only means of ensuring cost-efficient delivery and eliminating system discontinuities.
It requires cooperation between online retail platforms and delivery service providers, exchanging data by means of end-to-end shared standards (e.g. GS1), and mapping delivery against service levels. This, in turn, has an impact on delivery models and removes dependence on third parties.
Today’s B2C delivery processes are primarily determined by the national postal administrations/designated operators (DO) who enjoy exclusive access to the global postal network and IT applications exclusively operated by the Universal Postal Union for global postal exchange on their behalf and at marginal cost.
As the European postal market has increasingly liberalised there has been a huge rise in the volume of commercial letter post items.
At the same time, retail delivery prices have harmonised with exchange prices, set as the settlement tariffs between the DOs for delivery in the territory of each individual UPU member state.
When it comes to cross-border delivery, the delivery prices for commercial letter post items sent between the market-dominant DOs are set by a system of multilateral agreements, agreed at UPU level.
Anyone sending items privately, or who does not have the access or necessary volumes to negotiate preferential rates with DOs, pays up to 4-times the national tariff for cross-border delivery within the EU, and much more globally.
At the same time, private courier, express and parcel services serve the same end customers as the DOs, but are forced to operate in parallel systems outside DO networks.
Simultaneously, the growth in commercial letter post items is increasingly dissolving the boundaries between courier, express and parcel services.
Delivery services using data-supported and clearly optimised logistics chains can easily consolidate, enabling delivery routes to be directed to national, regional and local delivery services.
Ironically, the DOs themselves have demonstrated how this can work and what is required to do so: when it benefits them to do so, they deliberately operate outside their own monopoly structures (e.g. the Deutsche Post AG’s departure from the multilateral REIMS V contract) in order to optimise markets in which they are themselves active outside their own protected position (e.g. as DHL).
They prefer to do this than to partner up with other DOs and compete with players in the courier, express and parcel sector (to which they themselves now partly belong).
If we look at the major online retailers, who currently generate around 10% of parcel volumes in selected EU markets, we can see that they are taking steps to creating their own delivery chain management through consolidation and optimisation.
They do this by creating middleware which locates existing prices for the delivery service which best meets the consumer’s demands.
Data management – starting from the order by the customer on the online platform, through to pre-sorting for final mile delivery – is the backbone for preparing item-specific delivery services.
It doesn’t matter if one service provider covers the first delivery mile, a second the transport, and a third actual delivery to the end customer.
What is important is that the middleware can monitor the entire process, guaranteeing that each service level has been fulfilled.
When private German bank Lampe stated in Die Welt (9 March 2016) that Deutsche Post AG will not feel the impact of restructuring in the parcel delivery markets much before 2019, they hadn’t properly analysed the fundamentals.
The middleware that is about to disrupt the Deutsche Post business model is currently being tested as a prototype in Germany, and has already been successfully implemented – and exceeded all expectations in the UK – currently Europe’s no. 1 ecommerce market.
The services offered by today’s market-dominant DOs will simply be incorporated into delivery chain management systems. The DOs will not succeed in offering their own solutions exclusively as standalone services.
Delivery chain management will be activated directly by data generated via the online retail platforms (including related upstream and downstream 3PL, or 4PL providers).
The supply chain pre-sorts for the different delivery providers according to the service levels agreed via the online platform.
The result is a highly efficient and cost-optimised B2B2C delivery offering which meets specific customer requirements.
Walter Trezek is the Chairman of the Consultative Committee (CC) of the Universal Postal Union (UPU).
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