Online shopping is experiencing significant growth at a time when
traditional retail is restricted. In this QAD Precision Report we
look at this trend and how retailers can respond.
The drive towards online shopping is being accelerated by the global
Covid-19 pandemic. As a consequence, retail platforms globally
experienced a six
percent increase in traffic between January and March this year.
That increase translates to 14.34 billion visits in March 2020,
compared to 12.81 billion visits in January 2020.
Globally, e-commerce has been growing an average of 20 percent
year-on-year for the last ten years. While it may be too soon to
predict what growth for this year — if any — current conditions make
shopping online more attractive than ever.
Across the world, many of us are still living with severe
restrictions to our movements and all but essential retail outlets are
closed — although what governments define as “essential” differs
globally. Given the unprecedented situation, it is perhaps
unsurprising that we have turned to online shopping, for both
essential and non-essential items, including food and cleaning
supplies, home furnishings, DIY tools, crafts and games.
History suggests that a surge in e-commerce was likely — we’ve seen
it before. In 2002 and 2003, the SARS outbreak helped cement the
popularity of B2C and B2B e-commerce platforms in China. E-commerce
giant Alibaba experienced tremendous growth
during the outbreak. Then, as now, people turned to online
shopping to meet their needs while reducing contact with others.
It seems all but inevitable that certain retail outlets will
disappear from our high streets and shopping malls. Retailers and
brands that rely primarily or solely on in-store sales are, of course,
unable to sell goods at this time.
Unfortunately, many retailers were in a difficult position before the
Covid-19 pandemic. Competition from online retailers — both local and
international — as well as changing shopping habits, along with high
operating costs such as rents, rates and insurance, all meant that
traditional retailers were already facing an existential threat.
Moreover, the pandemic points to the increasing importance of
digitization. Retailers with strong e-commerce operations are better
placed to ride out the current shutdown — and some are positively
thriving. Amazon, unsurprisingly, is seeing a huge demand for its
products and services. Reports suggest that consumers are spending
almost $11,000 per second on Amazon.
The e-commerce behemoth is not the only one. Popular online furniture
retailer, Wayfair, and home goods store Bed, Bath & Beyond have
seen online sales surge. Wayfair more
than doubled its online sales in March, and experienced strong
growth in April too.
As we move past this disruption, future-minded retailers will need to
invest in technologies to support a digitized world. What was quickly
becoming a necessity prior to the coronavirus pandemic, will be
crucial after it for any retailer that wants to compete in an
increasingly digitized world.
As the surge in Amazon sales indicates, shoppers like the convenience
and choice available on e-commerce marketplaces. In 2019, the UPS
Pulse of the Online Shopper survey found that 96 percent of
consumers had made at least one purchase from a marketplace in the
previous three months.
Consequently, brands and retailers — even those with their own
e-commerce operations — have found it increasingly important to sell
on marketplaces as well. On the plus side, joining a marketplace gives
a brand access to customers far beyond the geographic boundaries of
their stores. Nonetheless, it does also mean that a brand may be
competing for the same customers with several other similar brands.
This can be a distinct worry for retailers whose offerings are not
niche, or sufficiently differentiated from their competitors.
Wholly relying on a marketplace can have unexpected downsides too. In
March, Amazon announced that due to the skyrocketing demand for
essential items, it would recruit 100,000 extra staff in the US as
well as stop
accepting non-essential items at its warehouses. Furthermore, in
parts of the world, notably France
and Italy, Amazon is only selling and delivering essential
items. Given the unprecedented situation, it is obvious that essential
items should be given priority. However, for retailers and brands that
sell goods exclusively, or mostly, through Amazon, this has been a
Any company that sells its products online needs to contain
fulfillment costs. Getting products to consumers is an expensive
business — particularly when delivering to rural communities. In a
post-pandemic world, keeping those costs as low as possible will
become even more important.
A true multi-carrier
shipping strategy is one of the most important aspects of
controlling costs. Multi carrier shipping is not the same as “many
Take, for example, a retailer based in the UK. The retailer might use
one carrier for domestic shipping; a second carrier for delivery
across Europe; and a third for all other international deliveries.
That’s many carrier shipping, not multi carrier.
A true multi carrier shipping solution allows you to switch between
carriers for both domestic and international shipments. As a result,
you always use the lowest cost carrier that can meet the promised
delivery date. It is possible to rate-shop every delivery this way,
but that is time-consuming and not feasible if you are a high volume shipper.
Multi carrier shipping along with automated routing allows you to set
business rules that govern each shipment. Parcels are automatically
routed to the lowest cost service depending on its characteristics,
such as delivery address, weight, customer and so forth.
Furthermore, multi carrier shipping also allows for consolidations.
This is particularly useful when shipping internationally as a
consolidated shipment only requires one customs declaration for the
Additional cost savings can be achieved by using local carriers when
a consolidated shipment arrives at the destination country. If you are
shipping from the US to Europe, for example, this would be
particularly advantageous. There are a wide range of carriers
available across Europe, and using different carriers for final
deliveries across different countries can result in significant cost savings.
Final mile delivery to customers — and the high number of items that
online shoppers return — can significantly squeeze a retailer’s
margin. As a result, retailers should encourage customers to use less
expensive options such as “Buy Online, Pick Up in Store” (BOPIS)
options. Under normal trading conditions, this increases store
footfall, offers a chance to upsell, and allows customers to decide if
they want to keep or return the item while in-store.
During the current pandemic, a number of retailers that sell
essential goods are using curbside pick-up. This helps retailers
maintain social distancing guidelines in-store for both employees and
customers. Examples include The Home
It is likely that this delivery channel, along with BOPIS, will
remain after conditions return to normal. Even retailers with a huge
number of outlets can benefit from partnering with others to expand
their pick-up locations. Walmart customers can choose to pick up their
online orders from a FedEx location, while Amazon, Michaels and Kohls
have a similar partnership with UPS. No matter how large or small a
retailer is, cutting shipping costs makes good sense.
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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.