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How the COVID-19 Outbreak is Driving E-Commerce

For the last ten years, e-commerce worldwide has been increasing by approximately twenty percent each year. While it’s too early to tell what e-commerce growth for 2020 will be, with COVID-19 restrictions prohibiting brick-and-mortar retail, online shopping is experiencing significant growth and we may be poised to exceed the twenty percent figure.  In fact, retail platforms globally experienced a six percent increase in traffic between January and March alone.

Furthermore, history suggests a sustained uptick in e-commerce is likely. In the early 2000s, the SARS outbreak made e-commerce platforms such as Alibaba and JD.com household names–and neither platform has since forfeited their winning positions.

Omnichannel Models Build Resiliency

Many traditional retailers were struggling before the Covid-19 outbreak. The confluence of competition from online retailers, changing shopping behavior, and unpalatable operating costs such as rent and insurance, created a formidable marketplace.  Throw an unforeseen pandemic into the equation, when retailers that rely on in-store sales can no longer sell their goods, and suddenly it seems inevitable that some retailers will disappear.

New call-to-actionThe pandemic has really highlighted the importance of digital transformation. Retailers with a strong e-commerce strategy have had more flexibility than their brick-and-mortar counterparts and are therefore more likely to survive a supply chain disruption–and many retailers are not only surviving but thriving in the current environment. For example, reports suggest consumers are now spending approximately $11,000 per second on Amazon. And Amazon isn’t an outlier. Retailers such as Wayfair and Bed, Bath & Beyond are also thriving. In fact, Wayfair more than doubled online sales in March.

As the COVID-19 outbreak restrictions ease, forward-thinking retailers will learn from these examples and embrace digitization, moving to an omnichannel model that includes e-commerce channels. Growing customer expectations, rising competition in the marketplace, and the increase in the prevalence of supply chain disruptions leave them no other choice.  But to successfully pivot to an omnichannel model, retailers will need to look beyond website and marketing technologies in their digital transformation and also make investments in the right supply chain technology.

Cloud Multi-Carrier Shipping Technology Builds Agility

Any retailer pivoting to an omnichannel model that includes e-commerce will need to minimize order fulfillment costs. Shipping products to consumers is expensive, particularly in the last mile, and post-pandemic, decreasing net landed cost of goods will be critical. This means retailers will have to examine their parcel shipping operations and implementing and optimizing a multi-carrier parcel shipping strategy will be a key ingredient in cost control.

In a multi-carrier parcel shipping strategy, retailers contract with multiple carriers and then “rate shop” carrier services so they use the most cost-effective shipping option according to their business rules, shipment delivery location, package size, and shipment delivery window. To do so, the retailer utilizes a cloud multi-carrier shipping system, which goes beyond anything a single carrier-supplied parcel shipping system can accomplish.

For example, cloud multi-carrier shipping software enables retailers to easily use “zone skipping” to improve customer service and decrease transportation costs. Zone skipping occurs when multiple customers’ orders are consolidated for the first leg of the delivery journey and then inserted into a parcel carrier network for the last-mile delivery. This is especially beneficial for cross-border shipping because it significantly simplifies end-to-end logistics and decreases customs clearance costs.  The approach also provides greater flexibility since retailers can select local carriers in different countries and regions that have optimal delivery networks for serving their customers.

Importantly, multi-carrier shipping software also ensures retailers have the right mix of carrier services in their transportation strategy from the onset.  The software aggregates and normalizes shipping data across carriers, so retailers know when deliveries moving to a particular region, customer, or via a particular carrier are not meeting service levels. Retailers can hold carriers accountable for failing to meet expectations and wield hard data to back up rate negotiations, and they can consolidate carriers to ensure they get the best possible price.

Finally, integration between a multi-carrier shipping system and other supply chain systems, including an ERP, WMS, and OMS, increases responsiveness.  This means when supply chain disruptions occur or customer preferences change, retailers have the flexibility to execute­ any number of parcel shipping scenarios:

  • Buy online, pick-up in store (BOPIS)
  • Buy online, drop ship
  • In-store purchase, home delivery
  • Ship from store
  • Drop ship
  • Buy online, return in store
  • Same-day/on-demand delivery

When parcel shipping technology is integrated to other systems of record, retailers enhance the flow of products both within and without facilities, turning operations toward omnichannel success and future proofing the organization against additional changes to come.

E-Commerce Play During COVID-19: Buy Online, Pick Up in Store (BOPIS)

The costs associated with both final mile delivery as well as returns can have a substantial impact on retail margins. Therefore, as e-commerce has increased, many retailers have encouraged customers to consider cheaper delivery options such as “Buy Online, Pick Up in Store” (BOPIS) to keep these costs in check. Under normal conditions, BOPIS increases store traffic, creates an opportunity for additional purchases, and allows customers to return the item while in-store.

During the COVID-19 outbreak, retailers such as The Home Depot, Lowes and Michaels have leaned heavily on BOPIS, offering curbside pick-up to adhere to social distancing recommendations. In addition, a large number of retailers have partnered with carriers to widen their pick-up location footprint. For example, Walmart customers can retrieve their online orders from a FedEx location, and retailer Michaels has a partnership in place with UPS.  As BOPIS is increasingly adopted by more retail chains, it could easily become a fulfillment staple once the coronavirus curve flattens.

Pandemics Like COVID-19 May Fade, but E-Commerce Will Remain

Our current situation will have lasting effects, one of which could be a greater-than-anticipated increase in e-commerce. Retailers that are currently looking at e-commerce as a key sales channel and identifying how they can make omnichannel order fulfillment better are going to win in the long-term.  To learn more about how a multi-carrier shipping system can meet your e-commerce shipping needs, watch our expert video.