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Jurburg, D.; López, A.; Carli, I.; Chong, M.; De Oliveira, L.K.; Dablanc, L.; Tanco, M.; De Sousa, P.R. E-Commerce Challenges in Latin America. Encyclopedia. Available online: https://encyclopedia.pub/entry/51584 (accessed on 03 July 2024).
Jurburg D, López A, Carli I, Chong M, De Oliveira LK, Dablanc L, et al. E-Commerce Challenges in Latin America. Encyclopedia. Available at: https://encyclopedia.pub/entry/51584. Accessed July 03, 2024.
Jurburg, Daniel, Agustina López, Isabella Carli, Mario Chong, Leise Kelli De Oliveira, Laetitia Dablanc, Martín Tanco, Paulo Renato De Sousa. "E-Commerce Challenges in Latin America" Encyclopedia, https://encyclopedia.pub/entry/51584 (accessed July 03, 2024).
Jurburg, D., López, A., Carli, I., Chong, M., De Oliveira, L.K., Dablanc, L., Tanco, M., & De Sousa, P.R. (2023, November 15). E-Commerce Challenges in Latin America. In Encyclopedia. https://encyclopedia.pub/entry/51584
Jurburg, Daniel, et al. "E-Commerce Challenges in Latin America." Encyclopedia. Web. 15 November, 2023.
E-Commerce Challenges in Latin America
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This entry is adapted from the peer-reviewed paper 10.3390/su152215718

E-commerce and urban logistics are deeply connected. The development of new distribution methods, the optimization of last-mile delivery, and the location of urban warehouses in central areas are mainly due to e-commerce’s exponential growth in the last few years. E-commerce has increased last-mile deliveries. Increasingly diverse types of households buy online instead of going to physical stores. The change in consumer behavior affects cities’ mobility, with a growing network of logistic providers overseeing deliveries to final customers The rise of e-commerce has different consequences for cities. It is important to identify the aspects of e-commerce that challenge the urban systems and stakeholders involved. Decarbonization in the e-commerce logistics sector in Latin American countries still has room for improvement (for example, using metrics and electric vehicles) to match the levels of companies with similar characteristics in European, Asian, or North American countries.

urban freight transport logistics companies sustainability practices

1. Economic Challenges

A key aspect of e-commerce is that online buying reduces costs compared with physical store operations [1]. However, there are two main economic challenges: the costs associated with urban product distribution systems and their potential optimization to make them more efficient [2]. In this context, e-commerce retailers and shipping companies realize they must take different measures to reduce shipping costs and meet customer expectations [3]. Therefore, in addition to lowering costs, several initiatives have been used to improve the efficiency of delivery operations, reduce traffic, and limit social and environmental impacts [3].
Last-mile delivery costs can have a very different impact on each company’s operations. Therefore, last-mile delivery requires elaborate planning and scheduling to minimize overall travel costs, specifically those related to home deliveries that result in a failed delivery, as many consumers are away from home at the time of delivery [4]. Companies must reduce failed deliveries, which require redelivery, additional costs, and more emissions [5][6][7]. Failed deliveries in the UK generate additional costs exceeding a billion US dollars annually [8].
The main factors considered in last-mile delivery costs include the probability of failed deliveries, the density of customers in delivery areas, and the degree of automation of the process [9]. E-consumers demand services with higher service levels, including same-day or urgent deliveries. If these services are not offered, it is challenging to maintain a competitive advantage in the market [10]. Therefore, delivery vehicles often deliver without fully using their capacity, affecting the operational efficiency of courier companies and, consequently, posing negative economic challenges since they are more expensive than standard deliveries [10].
Also, the lack of use of full-capacity freight harms the decarbonization of cities. For this reason, some studies suggest using cargo bicycles or other sustainable freight vehicles, taking advantage of excess capacity and optimizing transport costs, congestion, and noise emissions [11]. Replacing the most frequent means of transportation with more sustainable technologies brings several benefits for companies, such as lower maintenance and operating costs and accessibility in restricted traffic areas, such as historic centers and pedestrian areas [12]. The delivery culture that focuses on meeting customer service levels increases the competitive aspect of the sector, which can have independent actors operating with a low level of vehicle utilization and marginal profit [13].

2. Environmental Challenges

According to the United Nations Conference on Trade and Development, global retail e-commerce sales rose to nearly USD 5 trillion in 2019 (half for goods) and are expected to exceed 22% of all retail sales by 2023. The economic growth of e-commerce trends and the high demand for urban logistics services put significant pressure on the environment [14]. Greenhouse gas emissions from the transport sector are expected to double by 2050, and the growing demand for parcel transport and cross-border parcel transport contributes to this scenario, with transport being one of the main contributors to greenhouse gas emissions [11].
E-commerce increases moving freight vehicles in urban areas [15] and decreases individual transport. It is more efficient for a few vehicles to make several delivery rounds (in the case of e-commerce) than for many vehicles to drive individually to and from stores (in the case of conventional commerce) [16]. E-commerce itself is less carbon-intensive than traditional commerce. However, current trends such as product returns and instant delivery could lead to inefficiencies in last-mile operations and, therefore, contribute to a general increase in the carbon footprint of consumption [16].
There are some factors related to e-commerce that can harm the environment. The growing demand for products through digital channels results in a complex last-mile distribution. Customers want to receive their orders as quickly as possible. Therefore, companies are forced to offer fast delivery times. According to some studies, approximately 25% of consumers are willing to pay an additional fee to receive their orders on the same day [17]. A study on green last-mile home delivery found that customers are willing to wait between 4 and 6 days depending on the incentives provided (4.2 days for no incentive, 5.5 days for a financial incentive, and 4.7 days for an environmental incentive) [18]. Logistics faces constant challenges in promoting and developing sustainable transport to reduce emissions, traffic noise, and traffic congestion.
E-commerce is challenged with fast and flexible delivery, which is essential to building a network of loyal customers. Fast deliveries can increase fuel consumption and lead to the inefficient use of vehicle capacity [1]. Some authors agree that reaching critical mass is one of the main problems associated with the last-mile distribution [19]. Shorter delivery times, although convenient for the customer, present logistical difficulties for companies in scheduling deliveries and managing their vehicle fleet [18]. In addition, one of the major problems of last-mile logistics is that customers are often absent when orders are received (failed deliveries); this problem involves costs, kilometers, and environmental emissions [5]. However, new distribution solutions and innovations are being implemented. One solution worth mentioning is the self-collection process in which the packages are left in a previously arranged location, and the client picks them up at a convenient time, which involves the client in the delivery process [8].
Generally, three types of action can be taken when a logistics company wants to limit its emissions. The first deals with reducing the environmental impact of each vehicle, the second involves using more ecological modes of transport, and the third aims to reduce the need for transport [20].

3. Social Challenges

The rise of e-commerce has changed consumer behavior. Another impact lies in the changes in people’s quality of life, infrastructure, and the risks associated with noise and accidents. The infrastructure, parking, loading, and traffic management initiatives of the public sector in the US have been thoroughly studied [21].
Another challenge of e-commerce is the health of the population. The congestion generated by freight vehicles is responsible for increasing air pollution, which deteriorates the health of residents [22]. High concentrations of pollutants are the leading cause of airway obstruction, which occurs much more frequently among city dwellers than in rural areas [23]. Furthermore, air pollution has negative effects on human health, causing stroke, ischemic heart disease, lung cancer, chronic obstructive pulmonary disease, and acute respiratory infection [24]. Due to its impact on population health, it is important to decarbonize the e-commerce logistics sector.
Lastly, it should be noted that people continue to fear buying online for several reasons, especially fraud, followed by mistrust in electronic media, ignorance, and lack of information, among others [25]. However, people had no choice but to turn to the online channel during the pandemic, which reduced this effect.
Other social challenges relate to jobs. Many new jobs, such as instant meal deliveries, have been created to serve e-commerce growth in cities, but many jobs are precarious [16].

4. Technological Challenges

E-commerce is closely related to technology since its success depends mainly on adequate technological implementation. At the same time, the development of the e-commerce market is based on integrating the information systems of market participants, which makes it possible to support supply chain processes and close cooperation between companies [26]. Through the Internet, retailers reach a more significant number of customers. At the same time, they can participate in the purchase or service process at any time and place, comparing different offers, which implies expanding more in the distribution chain and optimizing their resources [27].
E-commerce companies are adopting innovative technologies to reduce costs and time while meeting customer expectations regarding delivery service quality [28]. From an organizational point of view, introducing technological tools is generally associated with positive returns, be it long-term financial savings or eliminating human errors from the service [27]. Companies are imagining new ways of selling online, using a wide variety of digital technologies, including the Internet of Things (IoT); artificial intelligence (AI); blockchain; and autonomous delivery devices, such as drones or robots, among others, to facilitate e-commerce deliveries [29]. In turn, the scope of e-commerce is expanded by implementing new payment methods such as mobile money and digital wallets [28].
Several authors have revealed that autonomous vehicles, when replacing pickup trucks, have the potential to reduce energy consumption and CO2 emissions and, in many cases, are even more efficient than electric pickup trucks [30]. Other solutions, such as delivery lockers (DLs) or crowd logistics, involve technological applications that, through sophisticated sensors, collect data in real time and allow for the calculation of optimal transport networks for connecting people [2]. DLs present a sustainable advantage: They are economically, socially, and environmentally sustainable since they reduce travel distance and time, reduce vehicle accidents and therefore increase the habitability of the city, and finally reduce emissions and noise generated by operations [3][31]. At the same time, DLs manage to increase the number of successful deliveries in the first attempt, reduce carriers’ operating costs, and optimize delivery rounds [32].
However, public perception, that is, how people view new technology, generally strongly influences how quickly new technologies and solutions will be widely adopted, affecting the social benefits that can be gained from implementing such technologies [33]. Therefore, e-commerce logistics still faces challenges related to failed deliveries, time windows, the use of indicators, harmful gas emissions, congestion, freight vehicles used, and implemented innovative solutions.

References

  1. Muñoz-Villamizar, A.; Velázquez-Martínez, J.C.; Haro, P.; Ferrer, A.; Mariño, R. The Environmental Impact of Fast Shipping Ecommerce in Inbound Logistics Operations: A Case Study in Mexico. J. Clean. Prod. 2021, 283, 125400.
  2. Viu-Roig, M.; Alvarez-Palau, E.J. The Impact of E-Commerce-Related Last-Mile Logistics on Cities: A Systematic Literature Review. Sustainability 2020, 12, 6492.
  3. Alves, R.; da Silva Lima, R.; Custódio de Sena, D.; Ferreira de Pinho, A.; Holguín-Veras, J. Agent-Based Simulation Model for Evaluating Urban Freight Policy to E-Commerce. Sustainability 2019, 11, 4020.
  4. Wang, Y.; Zhang, D.; Liu, Q.; Shen, F.; Lee, L.H. Towards Enhancing the Last-Mile Delivery: An Effective Crowd-Tasking Model with Scalable Solutions. Transp. Res. Part E Logist. Transp. Rev. 2016, 93, 279–293.
  5. Buldeo Rai, H.; Verlinde, S.; Macharis, C. Unlocking the Failed Delivery Problem? Opportunities and Challenges for Smart Locks from a Consumer Perspective. Res. Transp. Econ. 2021, 87, 100753.
  6. Seghezzi, A.; Mangiaracina, R. Smart Home Devices and B2C E-Commerce: A Way to Reduce Failed Deliveries. Ind. Manag. Data Syst. 2023, 123, 1624–1645.
  7. Edwards, J.; McKinnon, A.; Cherrett, T.; McLeod, F.; Song, L. Carbon Dioxide Benefits of Using Collection–Delivery Points for Failed Home Deliveries in the United Kingdom. Transp. Res. Rec. 2010, 2191, 136–143.
  8. Arnold, F.; Cardenas, I.; Sörensen, K.; Dewulf, W. Simulation of B2C E-Commerce Distribution in Antwerp Using Cargo Bikes and Delivery Points. Eur. Transp. Res. Rev. 2017, 10, 2.
  9. Mangiaracina, R.; Perego, A.; Seghezzi, A.; Tumino, A. Innovative Solutions to Increase Last-Mile Delivery Efficiency in B2C e-Commerce: A Literature Review. Int. J. Phys. Distrib. Logist. Manag. 2019, 49, 901–920.
  10. Kedia, A.; Kusumastuti, D.; Nicholson, A. Establishing Collection and Delivery Points to Encourage Active Transport: A Case Study in New Zealand Using a Consumer-Centric Approach. Sustainability 2019, 11, 6255.
  11. Melo, S.; Baptista, P. Evaluating the Impacts of Using Cargo Cycles on Urban Logistics: Integrating Traffic, Environmental and Operational Boundaries. Eur. Transp. Res. Rev. 2017, 9, 30.
  12. Caggiani, L.; Colovic, A.; Prencipe, L.P.; Ottomanelli, M. A Green Logistics Solution for Last-Mile Deliveries Considering e-Vans and e-Cargo Bikes. Transp. Res. Procedia 2021, 52, 75–82.
  13. Allen, J.; Piecyk, M.; Piotrowska, M.; McLeod, F.; Cherrett, T.; Ghali, K.; Nguyen, T.; Bektas, T.; Bates, O.; Friday, A.; et al. Understanding the Impact of E-Commerce on Last-Mile Light Goods Vehicle Activity in Urban Areas: The Case of London. Transp. Res. Part D Transp. Environ. 2018, 61, 325–338.
  14. Vural, C.A.; Aktepe, Ç. Why Do Some Sustainable Urban Logistics Innovations Fail? The Case of Collection and Delivery Points. Res. Transp. Bus. Manag. 2022, 45, 100690.
  15. Song, L.; Cherrett, T.; McLeod, F.; Guan, W. Addressing the Last Mile Problem: Transport Impacts of Collection and Delivery Points. Transp. Res. Rec. 2009, 2097, 9–18.
  16. Dablanc, L.; Buldeo Rai, H. E-Commerce Mobilities: The Impacts on Cities; Welcome to Logistics City: Paris, France, 2021; pp. 1–65.
  17. Joerss, B.M.; Schröder, J.; Neuhaus, F.; Klink, C.; Mann, F. How Customer Demands Are Reshaping Last-Mile Delivery; McKinsey & Company: Chicago, IL, USA, 2016.
  18. Fu, A.; Saito, M. “Would You Be Willing to Wait?”: Consumer Preference for Green Last Mile Home Deliver. 2018. Available online: https://dspace.mit.edu/bitstream/handle/1721.1/117624/Fu_Saito_2018_Capstone.pdf (accessed on 8 August 2022).
  19. van Rooijen, T.; Quak, H. City Logistics in the European CIVITAS Initiative. Procedia-Soc. Behav. Sci. 2014, 125, 312–325.
  20. Anderson, S.; Allen, J.; Browne, M. Urban Logistics––How Can It Meet Policy Makers’ Sustainability Objectives? J. Transp. Geogr. 2005, 13, 71–81.
  21. Holguín-Veras, J.; Amaya Leal, J.; Sánchez-Diaz, I.; Browne, M.; Wojtowicz, J. State of the Art and Practice of Urban Freight Management: Part I: Infrastructure, Vehicle-Related, and Traffic Operations. Transp. Res. Part A Policy Pract. 2020, 137, 360–382.
  22. Nürnberg, M. Analysis of Using Cargo Bikes in Urban Logistics on the Example of Stargard. Transp. Res. Procedia 2019, 39, 360–369.
  23. Badyda, A.J.; Lubiński, W. The Influence of Air Pollution on Pulmonary Function Test Results in People Living Close to Busy Roads. Pol. J. Environ. Stud. 2009, 18, 7–12.
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  26. Jędrzejczak-Gas, J.; Barska, A.; Siničáková, M. Level of Development of E-Commerce in EU Countries. Management 2019, 23, 209–224.
  27. Vakulenko, Y.; Shams, P.; Hellström, D.; Hjort, K. Service Innovation in E-Commerce Last Mile Delivery: Mapping the e-Customer Journey. J. Bus. Res. 2019, 101, 461–468.
  28. Yoo, W.; Yu, E.; Jung, J. Drone Delivery: Factors Affecting the Public’s Attitude and Intention to Adopt. Telemat. Inform. 2018, 35, 1687–1700.
  29. OCDE. Unpacking E-Commerce: Business Models, Trends and Policies; Organisation for Economic Cooperation and Development: Paris, France, 2019; pp. 1–129.
  30. Figliozzi, M.A. Carbon Emissions Reductions in Last Mile and Grocery Deliveries Utilizing Air and Ground Autonomous Vehicles. Transp. Res. Part D Transp. Environ. 2020, 85, 102443.
  31. de Oliveira, L.K.; Morganti, E.; Dablanc, L.; de Oliveira, R.L.M. Analysis of the Potential Demand of Automated Delivery Stations for E-Commerce Deliveries in Belo Horizonte, Brazil. Res. Transp. Econ. 2017, 65, 34–43.
  32. Morganti, E.; Seidel, S.; Blanquart, C.; Dablanc, L.; Lenz, B. The Impact of E-Commerce on Final Deliveries: Alternative Parcel Delivery Services in France and Germany. Transp. Res. Procedia 2014, 4, 178–190.
  33. Xing, Y.; Zhou, H.; Han, X.; Zhang, M.; Lu, J. What Influences Vulnerable Road Users’ Perceptions of Autonomous Vehicles? A Comparative Analysis of the 2017 and 2019 Pittsburgh Surveys. Technol. Forecast. Soc. Chang. 2022, 176, 121454.
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Subjects: Green & Sustainable Science & Technology
Contributors MDPI registered users' name will be linked to their SciProfiles pages. To register with us, please refer to https://encyclopedia.pub/register :
Daniel Jurburg
,
Agustina López
,
Isabella Carli
,
Mario Chong
,
Leise Kelli De Oliveira
,
Laetitia Dablanc
,
Martín Tanco
,
Paulo Renato De Sousa
View Times: 252
Revisions: 2 times (View History)
Update Date: 15 Nov 2023
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