Consultant’s Insight: Focusing on SMBs

Parcel, express and other logistics providers are particularly interested in small and medium-sized businesses, and in offering services tailored to the sector. [caption id="attachment_69752" align="alignleft" width="298"] Cathy Roberson, Cargo Facts Consulting senior consultant and Air Cargo Next columnist[/caption] There are 33,185,550 small businesses in the United States, representing 46.4% of private sector employees and generating 32.6% of known export value, according to the U.S. Small Business Administration ’s Office of Advocacy. UPS aims to have 40% of the market share for small and medium-sized business (SMB) volume in several ways, including through its Digital Access Program (DAP) and recently launched Fast Lane. DAP helps small and medium-sized businesses conduct e-commerce through UPS, and Fast Lane is an AI-driven optimization tool for rates and routes. “We can optimize rates and target attractive volume growth, whether by partner, by product or by customer segment, all of which can drive revenue-per-piece growth,” UPS Chief Executive Carol Tome said about Fast Lane on the company’s April 23 earnings call . “We can even target volume growth by geography to drive density. Before Fast Lane, rate and other adjustments in DAP could take months. Now, we can make them in days or even hours.” FedEx launched the e-commerce platform fdx in January. “The platform connects the entire customer journey by offering end-to-end e-commerce solutions, making it easier for companies to grow demand, increase conversion, optimize fulfillment and streamline their returns,” FedEx Chief Customer Officer Brie Carere told analysts in March. E-commerce providers such as Amazon and Mercado Libre , retailers such as Walmart and freight forwarders such as Flexport are also focusing on SMBs by providing logistics tools to streamline operational processes efficiently and cost-effectively. B2B e-commerce Many logistics carriers and providers are paying particular attention to business-to-business (B2B) e-commerce. Consultancy firm Merkle estimates that B2B e-commerce will reach $25 trillion in sales globally in 2030 and that digital B2B marketplaces will play a significant role in the B2B e-commerce landscape by 2030. B2B marketplaces are expected to account for $12 trillion in sales in 2030, according to Merkle. In comparison, less than 15% of global B2B purchases occurred through B2B marketplaces in 2023. About 60% of business-to-consumer e-commerce took place during the same period through marketplaces. The number of B2B marketplaces is growing. Amazon launched its B2B marketplace, Amazon Business , in 2015. It is a procurement and wholesale buying marketplace built predominantly on the same supply of products as core Amazon but with additional features like bulk buying, quantity discounts, recurring delivery, purchase orders and payment terms. It also has its own Business Prime membership. Amazon Business reached a $35 billion run rate in 2022, according to a 2022 letter to shareholders from Amazon Chief Executive Andy Jassy . Walmart launched the Walmart Business marketplace in early 2023. It is “designed to empower SMB and nonprofit customers,” Walmart stated in a Jan. 20 blog post. “Our focus is to remove complexity in purchasing, lower costs and give our customers more opportunities to serve their customers and communities.” Along with selling goods, Alibaba.com also offers a marketplace for logistics services for SMBs. Chinese e-commerce provider Alibaba recently introduced its own logistics marketplace to the U.S. market via its B2B e-commerce service Alibaba.com. The logistics marketplace allows buyers to connect with logistics service providers vetted via the platform, according to the company. It enables logistics buyers to send inquiries to forwarders and receive responses without having to start a chat conversation. It also lets buyers submit information about their shipping requirements and receive quotes from a network of freight forwarders. Juozas Kaziukenas , founder of e-commerce intelligence firm Marketplace Pulse , noted that not all the growth in B2B e-commerce will accrue to horizontal marketplaces like Amazon Business. Verticalized B2B marketplaces such as Alibaba.com’s logistics marketplace and those from manufacturers that incorporate suppliers, customers and others into an online ecosystem will also experience growth, he said.

Consultant’s Insight: Focusing on SMBs

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