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
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
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.
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
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
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 Shipping with Automated Routing
Multi carrier shipping 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
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.