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  January 5th, 2017 | Written by

Online Retailers Investing in Logistics

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  • Transportation and logistics could be the next billion dollar opportunity for ecommerce companies.
  • Walmart de Mexico is investing $1.3 billion in logistics.
  • Amazon has made major moves across each shipping stage.

Transportation and logistics could be the next billion dollar opportunity for ecommerce companies. The global shipping market, including ocean, air, and truck freight, is a $2.1 trillion market, according to World Bank, Boeing, and Golden Valley Co.

A case in point: Walmart de Mexico, the largest retailer south of the border, is investing $1.3 billion into its logistics operations over the next three years. The company is interested in capitalizing on the growth of ecommerce sales to reach customers quicker, according to a report in The Wall Street Journal.

Walmart de Mexico reported that total sales in the third quarter of 2016 grew at an 11-percent clip year over year. The company does not break out ecommerce sales numbers.

Mexico is currently the second-largest ecommerce retail market in Latin America, although countries like Argentina and Brazil see a larger proportion of their retail sales transacted online. Mexico accounts for 12.3 percent of the ecommerce in Latin America. Reports indicate that the figure will increase to 15.6 percent by 2019. Online retail sales in Mexico grew 27 percent to $7.2 billion, according to the same reports. In 2018, Mexico is expected to reach $11 billion in ecommerce sales—or around 2.5 percent of all retail sales in the country.

Because parcel deliveries are booming due to ecommerce growth, more and more retail players are looking to control more of their own shipping, according to a Business Intelligence report. Besides Walmart, Amazon and Alibaba, a large ecommerce concern headquartered in China, also fall into that category.

Amazon, Alibaba, and Walmart have so far focused on building out their last-mile delivery and logistics services, the report noted, but are increasingly going after the middle- and first-mile of the shipping chain.

Amazon has already made major moves across each stage of the shipping journey. It launched same-day delivery service, which it handles through its own fleet of carriers, cutting out third-party logistic sproviders. The company also recently began establishing shipping routes between China and North America.

Walmart’s interest in expanding its transportation and logistics operations is almost purely related to cost-savings, according to the report. It’s begun leasing shipping containers to transport manufactured goods from China and is making greater use of lockers and in-store pickup options to cut down on delivery costs.

Alibaba has begun leasing containers on ships, allowing that company to facilitate first-mile shipping for third-party merchants on its marketplace.