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7 E-Commerce Fulfillment Trends for 2020

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 customer’s doorstep. 

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 these costs. 

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, cost-effective fulfillment.

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 their import, export 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.

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