E-commerce is constantly evolving and retailers are pressured to
keep up with changing customer expectations. In this QAD Precision
Report we look at 7 e-commerce trends for 2020.
The rise of e-commerce has made most of us impatient. We want what we
want, delivered how, where and when we want it. As e-commerce matures,
our expectations are likely to become increasingly demanding.
A few years back, price was the major issue determining our
purchasing behavior. Now our decision-making takes into account a
number of factors such as delivery speed, costs and convenience along
with price. Retailers and e-commerce merchants need to leverage
fulfillment as a competitive weapon to capture our business — and in
particular, our loyalty. With so much choice, domestically and
globally, we are unwilling to offer repeat business to retailers that
cannot fulfill orders quickly and accurately.
In order to survive and thrive in the e-commerce landscape, retailers
need to be able to meet customers’ needs. Here we look at trends that
are shaping e-commerce in 2020 and beyond.
Trend 1: The Unstoppable Rise of the Marketplace
Shoppers like choice and convenience. It’s therefore no surprise that
e-commerce marketplaces are the first place many of us look when
considering a purchase. Last year’s UPS
Pulse of the Online Shopper survey found that 96 percent of
shoppers globally had made a purchase in the last three months from a
marketplace such as Alibaba, Amazon, eBay, Taobao, Walmart and their ilk.
We spend around $1.7 trillion annually with marketplaces. iBe, the
pan-European financial services advisory firm, forecasts that this
could rise to as much as $7
trillion by 2024.
Joining a marketplace offers some distinct advantages for retailers,
not the least of which is accessing customers far beyond the
geographic footprint of a bricks-and-mortar store. Just this week,
eBay announced eBay
International Standard Delivery — a Delivered Duties Unpaid
(DDU) solution offering low cost shipping from the US to over 210 countries.
On the other hand, the marketplace model has significant challenges,
particularly for retailers whose products are not unique or
sufficiently different to their competitors. If a retailer’s products
are not on the first or second page of results, shoppers may not see them.
Furthermore, when you sell on a marketplace, it is the marketplace
that owns and controls the customer shopping and delivery experience.
For certain brands, particularly luxury ones, this could be a disadvantage.
Trend 2: Data, Data Everywhere
Think about all the moving parts in an e-commerce transaction. These
could include a marketplace, a payments provider, a 3PL and one or
more carrier services to get goods from one part of the world to the
In order to make this process as seamless as possible, real-time data
will become increasingly important. Retailers can use real-time
analytics to keep customers
informed with accurate delivery dates and times. In addition,
retailers can leverage real-time
visibility in their delivery operations to monitor key performance
indices, proactively take action when needed and make informed decisions.
Trend 3: Augmented Reality and Robotics in Warehouses
Augmented reality (AR) and robotics both have the ability to make
warehouses — and warehouse workers — more productive. AR can provide
guidance during the picking process, for example, reducing search
times and improving accuracy.
It seems unlikely that robots will replace humans in warehouses — at
least not in the immediate future. The capital investment is too high
for many companies. Instead, companies are likely to first invest in
technologies to automate certain workflows and increase efficiencies.
This means identifying and optimizing manual and/or labor-intensive
processes or workflows.
Trend 4: Containing Costs
Fulfilling e-commerce orders can be an expensive business. Across
2020 and beyond, retailers will look for ways to contain costs by
streamlining and improving their logistics processes with technology.
Retailers need to drive costs from their fulfillment operations to
preserve margin. “Set it and forget it” automated routing along with
configurable business rules can help retailers to increase
shipping speed by 60 percent and reduce delivery costs by 30 percent.
In addition, omnichannel
retailers should consider ways of incentivising store pick-ups.
This increases store footfall and upsell opportunities. It also allows
the customer to decide whether or not to keep a product and decreases
the cost of returns.
Companies without a bricks-and-mortar footprint can consider
partnering with a company that does. Even the biggest retailers and
carriers have done this to increase their geographic reach. Examples
include FedEx and Walmart, UPS and Michaels, and Amazon and Kohls.
Trend 5: Fast vs Free Shipping
The 2019 UPS Pulse of the Online Shopper survey found that 41 percent
of us have abandoned a cart because the delivery costs were too high.
Free or cheap shipping is important to most of us. Deloitte’s
latest annual holiday survey found that 85 percent of online
shoppers look first for free shipping when considering a purchase.
Online shopping can save us time but we are less and less willing to
pay high shipping fees for convenience. Of course, free shipping is
only free for the customer — not the retailer. Despite this, free or
cheap shipping can drive sales, allowing certain retailers to absorb
Retailers should also look at their carrier strategy. Using a single
carrier for all deliveries can have benefits as there is one
relationship to manage, and retailers can negotiate volume discounts.
Nonetheless, a single carrier strategy can leave you vulnerable to
monopoly-like pricing. Multi
carrier shipping solutions allow retailers to effortlessly
balance the trade-off between carrier volume discounts and the
benefits of using specific carriers on certain lanes for efficient,
Trend 6: Going Green
In the last few years, shoppers have had to face what Al Gore called
“an inconvenient truth” — online shopping is terrible for the
environment. Single use plastic packaging and cardboard waste, plus
carbon emissions from delivery vehicles all add up. Given this, it is
perhaps unsurprising that half of US and UK online shoppers say environmental
concerns impact their shopping decisions. In addition, 68
percent of online shoppers in the US say that the sustainability of a
product impacts their decision to purchase.
The demand for greener products — and greener
logistics — is likely to become ever more important.
Trend 7: The Ongoing Appeal of Subscription Services
It is easy to see the appeal of subscription boxes. Whether you use
them to try out the latest trends or take the pain out of shopping for
dinner, subscription boxes have captured the imagination of consumers.
Consultancy firm McKinsey & Company distinguishes three
kinds of subscription box:
Curation: The subscription service sends collections of new
products for customers to sample.
Replenishment: The subscription service sends regular
replacements of a product or set of goods.
Access: The service offers subscribers access to perks and discounts.
The subscription model offers benefits for shoppers and retailers.
Consumers get convenient and ongoing access to needed or desired goods
and services. Retailers get recurring, predictable income from
subscribers. Furthermore, as deliveries are done at a steady cadence,
retailers can use lower cost shipping services.
Churn can be high however. Many shoppers sign up for a limited period
only as a low-cost and low-stakes way to try a subscription. Unless
retailers offer an exemplary service, renewals are unlikely.
Having said that, subscriptions also allow for personalization, which
can help retailers build a loyal customer base. The success of razor
subscription service Dollar Shave Club is instructive. The company
began by offering to supply no-nonsense razors for $1 plus shipping.
These days, subscribers can choose from personalized grooming packages
— including hair- and skincare — alongside razors.
This personalization has resonated with consumers. Dollar Shave Club
has around 4 million members, and Unilever
paid a cool $1 billion to acquire the subscription service last year.
About QAD Precision – Trusted Global Trade and Transportation Execution
QAD Precision, a division of QAD Inc., provides industry-leading global
trade compliance, and multi carrier transportation
execution solutions from a single, integrated platform. An
ISO-certified company, QAD Precision assists companies to streamline
and transportation operations, optimize deliveries, and increase
logistics ROI. QAD Precision’s scalable and extensible solution easily
integrates with existing ERP and WMS solutions. Industry leaders in
every region of the world rely on QAD Precision’s global support
centers to leverage thousands of carrier services and manage millions
of global trade and shipping transactions every day. For more
information about QAD Precision, visit www.qadprecision.com.