Leaders Unpacked: Unveiling the Future of E-commerce with Sven Kukemelk
Welcome to another article form series “Leaders Unpacked” presented by ParcelLockerCentral. This is vibrant community where the movers and shakers of CEP industry share their insights and experiences. I'm Andre Veskimeister, your host for this series. Today, we are joined by an esteemed figure in the world of e-commerce logistics, Sven Kukemelk, the Vice President of Omniva International Business. Despite the frenzy of his daily operations, Sven took the time to shed some light on the prevailing trends and future trajectory of international e-commerce.
The video interview can be found here - https://youtu.be/dzPUxYsuJoE
Sven likens the onset of the COVID-19 pandemic to an intoxicating party. During this time, growth surged as e-commerce boomed amidst global lockdowns, resembling the revelry of a never-ending festivity. However, every party must end, leading to a "hangover phase" characterized by unrealistic expectations of indefinite, explosive growth. The reality of the situation became evident when growth rates dropped to a more modest 2-3% per annum. Despite the pandemic's boost to e-commerce, brick-and-mortar stores continue to retain their appeal, especially among older generations.
Speaking on domestic versus international e-commerce, Sven stresses the prominence of domestic demand in larger markets such as the U.S., China, UK, France, and Germany. However, in smaller markets, international demand holds considerable sway. This trend is driven by consolidation, as smaller marketplaces are gradually absorbed. Using the cell phone industry as an example, Sven points out that the number of cell phone producers has dramatically decreased over time, with only a handful controlling the majority of the market share. He foresees a similar scenario unfolding in the e-commerce industry.
Our discussion then shifted towards Alibaba's AliExpress and its growth trajectory. Despite a slowdown caused by the pandemic, Sven believes that China will maintain dominance in the market for inexpensive, lightweight items. However, high-value goods are another matter. The prohibitive costs of transporting heavier goods from China makes it less viable. This has led giants like Amazon to localize their warehouses closer to their customer bases.
The conversation then veered towards the expansion plans of Amazon in Central and eastern Europe. According to Sven, Amazon and other large e-commerce platforms put their expansion plans on hold during the pandemic due to the sheer volume of existing business. They were focused on managing the current demand and consolidating their position. While some predict Eastern Europe to be the next battleground between giants like AliExpress and Amazon, Sven thinks otherwise, due to the distinct market segments and the lack of strong brands and presence in Eastern Europe.
On the topic of delivery preferences, Sven notes a shift towards customers deciding their own delivery channels, ways, and prices. This change is reflected in the increasing options provided by platforms such as Amazon, AliExpress, and eBay. For the end consumer, the decision revolves around factors such as price, speed, and location.
Speaking about the transformation his company Omniva underwent during the Russian invasion of Ukraine, Sven recounted the tough decisions that had to be made and the subsequent shift in focus towards Central Asia. This period of upheaval led to the creation of a hub in Bishkek, Kyrgyzstan, situated near China, allowing for convenient transport of goods. Despite this shift, the company maintains a strong focus on the western world, specifically on the politics of Finland, Scandinavia, and Eastern Europe, including the Balkan region.
Lastly, Sven provided his insights on parcel lockers versus home delivery. He believes that the ideal choice depends on market dynamics and customer preferences. In Eastern European countries where many live in apartment buildings without the infrastructure for secure home delivery, parcel lockers are an effective solution. However, in markets like the U.S. where people live in residential houses, home delivery holds more appeal. Sven concludes that while parcel lockers will remain a preferred solution in certain regions, home delivery is set to increase as e-commerce volumes continue to grow.
Sven's insights into the changing landscape of international e-commerce serve as a valuable guide for those navigating this evolving sector. Stay tuned for more enlightening conversations with industry leaders in our forthcoming articles.
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