For the last 10 years, e-commerce has been increasing worldwide by approximately 20 percent each year. While it’s too early to forecast e-commerce growth for 2020, with Covid-19 restrictions prohibiting brick-and-mortar retail, online shopping is experiencing significant growth and could be poised to exceed the 20 percent figure. In fact, retail platforms globally experienced a six percent increase in traffic between January and March alone.
According to Adobe's Digital Economy Index (DEI), Covid-19 has inflated electronics prices for the first time in years, with sales up 58 percent online. With many consumers sheltering-in-place and setting up home offices and classrooms, electronics like computers, webcams and audio equipment have been in high demand.
Furthermore, history suggests a sustained uptick in e-commerce is likely. In the early 2000s, the SARS outbreak made e-commerce platforms such as Alibaba and JD.com household names – and neither platform has since forfeited their winning positions.
Omnichannel models build resiliency
Many traditional retailers were struggling before the Covid-19 outbreak. The confluence of competition from online retailers, changing shopping behavior, and unpalatable operating costs such as rent and insurance, created a formidable marketplace. Throw an unforeseen pandemic into the equation, when retailers that rely on in-store sales can no longer sell their goods, and suddenly it seems inevitable that some retailers will disappear.
The pandemic has highlighted the importance of digital transformation. Retailers with a strong e-commerce strategy have more flexibility than their brick-and-mortar counterparts and are therefore more likely to survive a supply chain disruption; in fact, many are thriving in the current environment. For example, reports suggest consumers now spend approximately $11,000 per second on Amazon; and Amazon isn’t an outlier. Electronics retailer Best Buy’s online sales, which include both curbside pickup and delivery, have skyrocketed 155 percent since late March.
As Covid-19 outbreak restrictions ease, forward-thinking retailers will learn from these examples and embrace digitization, moving to an omnichannel model that includes e-commerce channels. Growing customer expectations, rising competition in the marketplace, and the increased prevalence of supply chain disruptions leave them no other choice. To successfully pivot to an omnichannel model, retailers will need to look beyond website and marketing technologies in their digital transformation and make investments in the right supply chain technology.
Cloud shipping technology creates agility
Any retailer pivoting to an omnichannel model that includes e-commerce needs to minimize order fulfillment costs. Shipping products to consumers is expensive, particularly in the last mile, and post-pandemic, decreasing net landed cost of goods will be critical. This means retailers will have to examine their parcel shipping operations and optimize strategies for better cost control.
In a multi-carrier parcel shipping strategy, retailers contract with multiple carriers and then “rate shop” carrier services to use the most cost-effective shipping option according to their business rules, shipment delivery location, package size and shipment delivery window. To do so, the retailer utilizes a cloud multi-carrier shipping system, which goes beyond anything a single carrier-supplied parcel shipping system can accomplish.
For example, cloud multi-carrier shipping software enables retailers to easily use “zone skipping” to improve customer service and decrease transportation costs. Zone skipping occurs when multiple customers’ orders are consolidated for the first leg of the delivery journey and then inserted into a parcel carrier network for the last-mile delivery. This is especially beneficial for cross-border shipping because it significantly simplifies end-to-end logistics and decreases customs clearance costs. The approach also provides greater flexibility since retailers can select local carriers in different countries and regions that have optimal delivery networks for serving their customers.
Importantly, multi-carrier shipping software also ensures retailers have the right mix of carrier services in their transportation strategy from the onset. The software aggregates and normalizes shipping data across carriers, so retailers know when deliveries moving to a particular region, customer or carrier do not meet service levels. Retailers can hold carriers accountable for failing to meet expectations and wield hard data to back up rate negotiations, and they can consolidate carriers to ensure they get the best possible price.
Finally, integration between a multi-carrier shipping system and other supply chain systems, including an ERP, WMS, and OMS, increases responsiveness. When supply chain disruptions occur or customer preferences change, retailers have the flexibility to execute any number of shipping scenarios:
- Buy online, pick-up in store (BOPIS)
- Buy online, drop ship
- In-store purchase, home delivery
- Ship from store
- Drop ship
- Buy online, return in store
- Same-day/on-demand delivery
When integrated to other systems of record, shipping technology empowers retailers to enhance the flow of products both within and without facilities, turning operations toward omnichannel success and future-proofing the organization against additional changes to come.
Covid-19 boosts buy online, pick up in store
The costs associated with both final mile delivery as well as returns can have a substantial impact on retail margins. Therefore, as e-commerce has increased, many retailers have encouraged customers to consider cheaper delivery options such as BOPIS to keep these costs in check. Adobe’s DEI also found BOPIS orders surged 208 percent year-over-year (YoY) in April – another sign of people trying to limit their exposure to the coronavirus, in this case, by limiting their time in the store. Under normal conditions, BOPIS increases store traffic, creates an opportunity for additional purchases, and allows customers to return the item while in-store.
During the Covid-19 outbreak, retailers such as Abt Electronics, Best Buy, GameStop and Lowes have leaned heavily on BOPIS, offering curbside pick-up to adhere to social distancing recommendations. In addition, many retailers have partnered with carriers to widen their pick-up location footprint. For example, Walmart customers can retrieve their online orders from a FedEx location, and retailer Michael's has a partnership in place with UPS. As retail chains increasingly adopt BOPIS, it could easily become a fulfillment staple once the coronavirus curve flattens.
Pandemics may fade, but e-commerce will remain
The current situation will have lasting effects, one of which could be a persistent increase in e-commerce with many consumers hesitant to return to shopping in-store. Retailers can win in the long-term by looking at e-commerce as a key sales channel and identifying how they can make omnichannel order fulfillment better.