What happens when previously segmented goods, like clothing and groceries, are sold together and online in increasing amounts? What happens when technology companies start building their own transportation companies? What happens when technology changes so fast the life-cycle of a typical business is slashed by two-thirds?
And where does trucking and the businesses that support them, like truckstops, fit into all of this?
Cassar, who’s been covering the e-commerce space for some 20 years now, noted that one of the biggest side-effects on the online shopping, buying, and shipping revolution is that the life-span of companies is being shortened considerably – even as they combine and re-combine to offer goods and services in non- typical ways.
“Consumers are more willing to adopt new technologies than ever before and that is shrinking the average lifespan of companies, from 61 years in 1955 to 17 years by 2015 – and it’s only going to shrink more,” he warned. “Technology is the main driver now. Uber, Google and Amazon are wired to disrupt and you are not immune; regulations, cost and experience no longer seem to matter.”
For example, he pointed to the list of the top five publicly traded companies by market capitalization and how it has changed in a decade. In 2006, Exxon was at the top at $446 billion, followed by GE, Total (another energy company), then Microsoft – the only technology company – at $292 billion and then Citi Bank. Fast forward to 2016 and only Microsoft remains, at the number three position, with $452 billion. Apple is at the top with $582 billion, followed by Alphabet (the holding company for Google) then Microsoft, Amazon and Facebook. No big industrial firm or energy company, such as Exxon, is in the top five anymore, Cassar said.
“This is a relatively scary time for many folks,” he stressed, especially in terms of just how fast technological change is occurring now.
“It took the telephone 75 years to reach 80% penetration among consumers; the clothes washer took 80 years and the automobile 55 years,” Cassar explained. “But the cell phone took just 15 years to reach mass penetration.”
A related trend is that the dominant companies are younger than ever before and technologically-focused. On top of that, consumers are discarding companies and brands like never before and at a faster pace. That’s causing more “established” firms to do different things. The Kohl’s department store, for example, is forging partnerships to add groceries to some of its stores, while Berkshire Hathaway forged a three-way partnership to address health care costs – with Amazon, one of the freight industry’s biggest disruptors, as one of the three partners.
“This is all causing CEOs to become paranoid; the world has turned upside down in 10 short years,” Cassar said. “Amazon the most extreme example of what we are seeing. They have six different store formats, they are leasing airplanes and leasing/buying trucks, they are getting into freight brokering and automated warehouses, plus they plan to compete head on with FedEx and UPS. They are defying the laws of traditional business function.”
And at the back of everyone’s mind is what he calls the “Netflix dilemma,” relating back to the “conventional wisdom” in the early 200os that there was no way a mail-order DVD business like Netflix could beat huge retail like Blockbuster Video; which it, of course, eventually did in dramatic fashion. “This shows anyone vulnerable,” Cassar pointed out.
Today, he said business-to-consumer e-commerce activity remains relatively small, totaling some $350 billion a year in U.S., which is 9% of total U.S. consumer spending. though that e-commerce spending has grown more than 20% year-over-year in each of the last three to four years
About 17% of all sales are online now, with 4% of food bought online. Amazon currently has 41% of total e-commerce sales and in 2017 was responsible for 54% of all growth in e-commerce. “They are killing it in every category,” Cassar noted.
On top of that, consumers now rank convenience (38%) above price (31%) and selection (29%) as the principal reason for buying online. And truck drivers are part of that wave, Cassar emphasized, as a National Institute for Occupational Health & Safety study conducted back in October of 2016 found that internet device usage” amongst truckers is climbing rapidly. At that time, 71% of truck drivers said they owned a laptop and/or smart phone, with 17% owning a tablet computer.
“Truckers are absolutely digitally engaged,” he said.
What this all means is that the “omni-channel” format is going to start dominating the supply chain: “It is great to have store, it is great buy online, but now we’re looking to find ways to match those together,” Cassar said. In the case of mega-retailer Wal Mart, that means ordering groceries online, then coming to a store to pick them up and buy coffee and gasoline while the groceries are loaded up.
Amazon is going a step further with a “fresh pickup” initiative whereby groceries ordered online are ready in 15 minutes and brought out to you when you arrive at a store location.
The whole point of discussing all those new efforts, stressed Cassar, is that past successes are now a “far less reliable predictor of future successes” than ever before. “And now big e-commerce players like Amazon, Uber, Walmart and Google will warrant much closer attention as they are beginning to play in the trucking and freight transportation space. This is where the challenges will come from.”