How Covid-19 is Shaping E-Commerce

E-commerce sales have skyrocketed during the last few months, accelerating growth in this retail channel. In this QAD Precision Report we look at current e-commerce trends and how retailers can respond.

The global Covid-19 pandemic has caused e-commerce growth to surge around the world, leaving retailers and carriers to deal with peak-like levels of demand.

The difference is, of course, that retailers and their carrier partners plan for peak season. The pandemic and the resulting deluge of e-commerce orders caught everyone, including shoppers, off guard. Unsurprisingly, this impacted delivery times, and certain in-demand items quickly sold out.

Covid-19 E-Commerce Trends

In the US, online spending in May totalled $82.5 billion. That represents a 77 percent year-on-year increase compared to May 2019. To put that into perspective, Adobe’s Digital Economy Index found that the total spend for two months — November and December — during the 2019 peak was $142.5 billion. On Memorial Day alone e-commerce sales spiked 75 percent and shoppers spent $3.5 billion online, compared to $2 billion in 2019. As a result of the high demand, fulfillment models have changed as well. While home delivery is still the most popular option for online shoppers, Buy Online, Pick Up in Store, or BOPIS, grew 195 percent in May. 

The UK also experienced a similar spike in e-commerce shopping. Before the UK government announced lockdown measures on 23 March, online-only brands were experiencing an average growth in revenue of 17 percent. By 1 May, this grew to 144 percent. 

A survey of consumers in Europe’s three largest e-commerce markets, the UK, Germany and France, found that shoppers who do 50 percent or more of their shopping online increased between 25 and 80 percent since the Covid-19 pandemic shut down many bricks-and-mortar stores. 

Australia also experienced a significant increase in e-commerce demand. A report from Australia Post found that e-commerce grew more than 80 percent year-on-year in the 8 weeks after the World Health Organization declared that the outbreak of Covid-19 was a pandemic. Furthermore, Australia Post had initially forecast that online shopping would account for 16 to 18 percent of total retail spend by 2025. However, Australia Post now predicts that online shopping will make up 15 percent of the country’s total retail market by the end of this year.

Lasting Change or Blip?

It is as yet unclear whether or not these pandemic e-commerce trends will permanently affect consumer behavior. However, there are strong indications that many shoppers who rarely shopped online before the pandemic are likely to continue to do so afterwards.

Lockdown measures and store closures meant that consumers who may have been wary of online shopping had little choice but to do so during the crisis. A March 2020 survey found that, in the US, nine percent of shoppers made their first online purchase due to lockdown measures and self-quarantining. As a result, these shoppers have become more comfortable buying online, which may permanently impact their shopping behavior. 

In Germany, France and the UK, millennials are the most prolific of online shoppers. However, a survey of consumers in these markets found that people in older age groups say that they plan to continue shopping online once the pandemic has passed. Overall, the survey found that 80 percent of respondents plan to continue shopping online for non-essential items post-pandemic.

Taylor Schreiner, Director, Adobe Digital Insights stated that Covid-19 e-commerce trends, such as the increase in BOPIS, may be here to stay. However, Adobe also found that one in four shoppers have had a poor experience shopping online.

Inefficiency Everywhere

The retailers that already had a robust e-commerce strategy have fared better than those that do not. Nonetheless, the pandemic has starkly illustrated an unassailable fact — e-commerce is rife with inefficiencies.

It has long been the case that when shoppers order two or more items from a single retailer, there is an excellent chance that there will be two or more deliveries to fulfill the order. Granted, a retailer with a number of different warehouses across one geographic region often uses these to hold different SKUs. From the consumer perspective, this mattered less when all parts of an order arrived in one or two days. 

Most consumers are aware that the coronavirus has made express delivery impossible for a number of items. However, at a time when delivery windows have widened to five or more days — and in some cases, two or three weeks — receiving only part of an order is poor customer service.

Furthermore, consumers are increasingly aware of the environmental impact of online shopping. An order of three parts received as three separate deliveries, can mean three times the amount of packaging, and three times the pollution from delivery vehicles.

Of course, all this also means that the retailer is paying three separate delivery charges. Nevertheless, many retailers continue to allow delivery to squeeze margins instead of turning shipping into a competitive advantage.

Lessons From Peak Season

As bricks-and-mortar retailers are beginning to open up around much of the world, some consumers will certainly return to in-person shopping. Many others will be cautious. On Monday this week, retailers in England opened up for the first time since the UK went into lockdown. However, footfall was down 54 percent compared to the same week last year. 

While the massive double digit percentage increases in online shopping are unlikely to continue climbing throughout the year, significant numbers of consumers will continue to shop online, either for convenience or through caution. As a result, retailers need to be able to fulfill online orders, efficiently and cost-effectively. The pandemic has underscored the need for multi carrier shipping with automated routing.

Multi Carrier Parcel Shipping Software with Automated Routing

Multi carrier parcel shipping software does exactly what it says on the tin — multiple different carriers deliver your goods to customers. This offers several advantages over using a single carrier, including more routes, service level options, and more capacity to move your products from your warehouse to the final customer.

It is important to note that retailers using two or more carriers are not necessarily using a “multi carrier strategy.” If you use one carrier for domestic shipments, and a different carrier or carriers for international deliveries, you may have multiple carriers, but none of the benefits of multi carrier shipping.

Multi carrier shipping along with automated routing allows you to ensure that each parcel is automatically shipped with the carrier who can achieve on-time delivery at the lowest cost. 

Automated routing follows your business rules. Therefore, you decide what happens to a package depending on its characteristics, such as size, weight, destination, customer and so forth. 

Of equal importance is the fact that multi carrier shipping solutions allow for consolidation. This is particularly beneficial for retailers that send high volumes of parcels. Parcels can be consolidated into a single shipment when goods are going to the same destination country or regional geography.

Using multi carrier shipping to consolidate packages that are going to the same destination and using the same carrier and service level means that you are paying for a single shipment rather than multiple shipments. On-the-fly consolidation is particularly advantageous where the sequence of processing packages going to the same destination is spread out across the day. 

To find out how multi carrier shipping with automated routing could help improve your delivery strategy, contact us here.

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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.