A retailer at a crossroads: price or quality?
The actions of most domestic entrepreneurs during periods of crisis are quite the same. As practice shows, as in the 1998 and 2009 years, now consumers of logistics services are beginning to pay attention primarily to their price, completely forgetting about quality. However, the poor quality of services is fraught with significant losses for the business.
What will happen to the logistics market in the context of the ongoing crisis, you ask? Of course, serious changes await him. Small logistics structures that operate in the low-priced services education sector with a low share of modernization and low labor productivity will disappear from the market. They will be joined by those logistics companies that adhered to the strategy of exponential growth and capture the maximum market share. The scope of the management was not supported by the financial capabilities of shareholders, who, in a recession, simply ran out of resources for development.
The decrease in demand in the logistics services market has occurred in different directions. In premium logistics, the drop in newly attracted services amounted to 25-30%. On the other hand, at 10-15%, stocks of already contracted customers at the same logistics operators increased due to a drop in consumer demand from the public and external customer companies. Accordingly, the decreased traffic on processing goods in warehouse operations.
In ordinary logistics, approximately the same indicators of a decrease in ordered logistics services. But the problem is in ordinary logistics, where there is a low level of automation and skill, customers are more susceptible to changes in market conditions and more serious pressure to reduce prices for logistics services. Such logistics is carried out mainly in warehouses of class "B", "C" and "D" with low technical parameters and the client always has a set of arguments that cannot be ignored in a crisis, and accordingly, such logistics operators have to reduce prices additionally due to fear of losing existing customers and the inability to attract new ones to replace.
Price changes in one direction or another always occur and this, first of all, depends on the client himself. It is easy to play at a price when the stock goods, the number of personnel involved is small, since the goods are not moved and not processed. It is a completely different matter to lower prices for services for active transnational customers with their huge turnover and a rigid supply chain to key networks. In relative terms, the price indicator for a number of items can fluctuate in premium logistics in the range of plus or minus 10%. In ordinary logistics, this range is much higher and can be in the range of plus or minus 20%. There is also a big difference in the price deviation for logistics services in the regions, excluding Moscow and partially St. Petersburg, where there is a significant decline in customer activity in warehouse logistics.
Dumping has always been an “anti-market” strategy that has spoiled a lot of blood for professional logistics operators. Now in business everything is quite transparent and it is quite easy to calculate the cost of operations and the profitability of business processes. And if companies appear on the market that offer logistics services two times cheaper than the market, then there are only two explanations:
- companies go broke and try to cling to the market by any means, including low prices at a loss to themselves;
- when, for various reasons, a significant number of narrow aisle racks appeared on the market, which allows keeping slightly above "zero" even at low prices.
However, for the premium logistics sector, where highly qualified personnel and developed technologies of business processes, from two sides: both from the side of the logistics provider and from the side of the consumer of services - the price consensus is reached faster.
In the premium logistics sector, an increase in prices for basic operations is projected. It would seem a crisis and how can this be? However, first of all, because the contracts concluded by 3-4 years ago, are still working at the tariffs of those years. Secondly, over the past three years, cumulative inflation amounted to about 30%, by the end of 2015 of the year, another 15-20% will be added. Thirdly, the ruble depreciated almost twice from 30 rubles per dollar to almost 60 rubles. And as you know in the logistics costs, the share of employee wages and salaries is approximately 30-40%, which cannot but put pressure on the price. Thus, we should expect a correction in the cost of logistics services by approximately 15-20% by the second half of this year.
Outsourcing turned out to be one of the ways to optimize logistics processes and costs for the company. In difficult conditions of the crisis market, this service was very popular.
According to business analysts, in the 2015 year, the outsourcing market for transport and logistics services will exceed 800 billion rubles, with the market growing at about 20%. This conclusion was reached by analysts at City Express, a major Russian logistics operator. According to experts, a comparative analysis of the structure of changes in product portfolios in the logistics market, as well as an analysis of the dynamics of changes in the client portfolio for the 2007-2009 and 2013-2014 years, shows that in economically unstable periods, companies actively transfer logistics services to outsourcing.
According to the analysis of the logistics services market, more than 30% of companies in Russia now outsource their logistics operations. The explosive growth of e-commerce and the development of online stores are believed to be the main driver of this market's growth. According to the experts of J'son & Partners Consulting, the next three years, sales via the Internet (including footwear) will grow by about 20-25% per year.
On the other hand, the country's economic situation is difficult and strong competition forces most retailers to maximize cost optimization, which in turn stimulates the growth of the logistics services outsourcing market. And as consumer interest in FMCG segment goods continues to grow, primarily in footwear in the regions, manufacturers and retailers are interested in the quality service of logistics companies.
In the current situation, in order to maintain and strengthen the position of business, participants in the logistics market must constantly improve their own competitiveness. The main points of growth are the offers of industry-specific logistics solutions that meet the maximum requirements of the clients' business, the development of the autonomy of regional transport routes.
But the “fulfillment” segment has the greatest development potential - outsourcing of internal logistics and inventory management, whose share in Russia is about 12-14%. Realization of this potential will allow bringing the logistics business in Russia to a fundamentally new level.
According to the General Director of Optima Logistics, Georgy Vlastopulo, the main thing now is to resist external and internal negative factors and keep what has been gained and leave an opportunity for business development. “Outsourcing provides a lot of opportunities. First of all, this is a reduction in the risks associated with logistics and customs activities, which are transferred to the outsourcing company. At the same time, risks are protected not only conceptually, but also legally. Focusing occurs
on the main competencies, the release of administrative resources, which allows you to implement the secondary processes of the company and get additional competitive advantages. Decrease in capital investments in the non-core area of the company's activity, and, as a result, the emergence of free funds to improve the efficiency of their own business ... "
Running away from problems
Over the years of practice, many shoe retailers have abandoned the wording "Difficulties", re-qualifying them into tasks and careful detailing in the context of the industry, product nomenclatures, etc. If you have knowledge and experience, then any product requiring customs clearance must be algorithmic and consistent. If you know the process, then its implementation takes place in the most comfortable conditions for all participants.
When making shoes, the following features should be considered:
1. All footwear is divided by belonging to the brands "luxury" - the most famous brands, "comfort" - the declared trademarks, "unnamed" - trademarks that are not present in the first two categories. There are different levels of customs risk for each category. The customs value index for the risk management system is formed "per pair", but the customs authorities also control the cost "per kg". Certain trademarks are included in the Register of Intellectual Property Objects, for this product it is required to obtain permission from the copyright holder of this trademark on the territory of the Russian Federation (if the recipient is not included in the list of official suppliers of the trademark
2. HS Code. It is important to correctly determine the correct code in order to check the same risks and determine the customs payments.
For this, it is necessary to obtain a detailed description of the goods (especially for special, protective and sports shoes) in the context of: name of the shoe (boots, boots, shoes, etc.); sole material; top material; method of attaching the sole and top; top height (closes the ankle, knee, etc.); purpose (sports, work, etc.); affiliation (children's, male, female); the presence of add. processing (sockets, straps, perforation, metallic. toe cap, etc.); insole length (in cm); heel height, etc.
“I would like to note separately,” explains Georgy Vlastopulo, “that there are additional conditions for children's shoes (insole length up to 24 cm). She is given a preference - 10% VAT (instead of 18% VAT), Resolution of the Government of the Russian Federation of December 31, 2004 N 908 "On approval of the lists of codes for types of food products and goods for children subject to value added tax at a tax rate of 10 percent" ...
In addition, for the certification, a detailed description of the goods is required, and for children's shoes and special shoes, which are personal protective equipment, also the provision of samples for examination in laboratories:
- TR CU 017/2011 "On the safety of light industry products"
- TR CU 019/2011 "On the safety of personal protective equipment".
- TS 007/2011 "On the safety of products intended for children and adolescents."
And finally, the search. This process in the shoe industry is also individual. Unlike a number of other product groups, inspection can be carried out not only for each article, but also for each size, color of the article. All labels, composition of materials, marking of boxes, etc. are studied in detail. In total, as in any process, experience, knowledge and reliable partners are needed. Having all the knowledge and papers, you can be sure of the success of the event.
With pine forest
In crisis conditions, importers use another fairly common method - groupage cargo. Due to surges in the value of currencies, announced sanctions, fluctuations in consumer demand, investing in large quantities of goods is too adventurous. In this regard, the majority of importers use the splitting of supplies and the formation of a warehouse stock outside the territory of the Russian Federation. What does it do?
“We can expand the assortment group of goods sold without reference to a specific manufacturer and country of origin,” comments Georgy Vlastopulo. - You can import trial small consignments of goods. In addition, it is very important not to have a warehouse stock on the territory of the Russian Federation, respectively, to ensure a quick turnover of investments. The best thing today and in today's situation is to import the required amount of goods for existing needs ... "
In addition, some companies are gradually moving from direct lease to safekeeping services. For small companies, renting excess warehouse space and maintaining warehouse personnel is very expensive. And during an economic downturn, many owners think about optimization. One option is to outsource the warehouse function. As you can see, it is enough to study all the possibilities and available options in order to save good money, which is especially important in a crisis. However, in pursuit of a low price, you should not sacrifice the quality of logistics services, since overlaps with deliveries and possible problems with customs clearance will cost you much more than "saving".
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