It looks like it will be a while before consumers flock back to retail stores in any great number.
The ninth release of GlobalWebIndex’s coronavirus study reports that almost half of consumers worldwide will not return to brick-and-mortar stores for “some time” or “a long time,” even after lockdowns end. Only 9% say they expect to return to shopping in stores immediately.
According to a May 2020 survey from Fluent, only one in five U.S. consumers would “feel comfortable” going to retail stores and shopping malls within 30 days.
At the same time, eCommerce orders are soaring. Adobe reports that online spending in May was up 77% year-on-year, a figure which has significantly accelerated growth. “According to our data, it would’ve taken between 4 and 6 years to get to the levels that we saw in May if the growth continued at the same levels it was at for the past few years,” says Vivek Pandya, Digital Insights Manager at Adobe.
With consumers preferring to have items delivered rather than pick them up in-store, what does that mean for brands, logistics providers and the eCommerce industry as a whole?
Consumers Are Willing to Trade Longer Delivery Times for Greater Communication
The coronavirus has laid bare underlying problems in the country’s logistics infrastructure. Stores are taking longer to fulfill orders, especially large products, says Kirsten Newbold-Knipp, the Chief Growth Officer for delivery experience management platform Convey. Carriers are taking longer to deliver items, too. All three major U.S. carriers (FedEx, UPS and the U.S. Postal Service) have seen their on-time delivery rates fall below 90%, according to Convey data.
The good news for brands is that consumer expectations are changing as a result. Longer delivery times may become acceptable to consumers who don’t want to shop in-store, writes Michael Ugino, Director of Product Marketing at GoDaddy. Amazon may have made free two-day shipping the industry standard, but even they are struggling to fulfill demand.
“This means online shoppers are more likely to convert on products they need, even if they have longer delivery windows, to avoid going to brick-and-mortar stores, where inventory may be low or even nonexistent,” he says.
Scalefast’s Rebuilding Retail report reveals similar findings. Almost half (45%) of consumers surveyed said they would be more patient of longer delivery windows, and 15% said they would start holiday shopping earlier this year.
While longer delivery times may become acceptable, a lack of communication won’t. A March 2020 study by web-based shipping solution ShipStation found that 85% of consumers expect “proactive and transparent communication” if a delivery is delayed or canceled due to the coronavirus.
In the same study, the same percentage of consumers said their perception of a brand wouldn’t be negatively impacted by a delayed or canceled delivery — if they were told proactively.
Grocery Delivery Goes Mainstream
Before the coronavirus, grocery shopping was one of the few retail sectors in which eCommerce had not made inroads. That’s now changing. Even though grocery stores are one of the few brick-and-mortar retail locations that have remained open throughout the crisis, online grocery sales have soared, writes Neil Stern, Senior Partner at retail consulting firm, McMillanDoolittle.
The Coresight Research U.S. Online Grocery Survey 2020 predicts that online grocery sales will jump by 40% this year. More than half of those consumers surveyed (52%) report buying groceries online in the 12 months prior to March 2020.
Online grocery shopping has surged in China, and the U.S. is also seeing a similar trend with delivery volume up by 30%, says Pradeep Elankumaran, Co-Founder and CEO at online grocer Farmstead.
Chances are high demand will remain after the coronavirus abates, writes Andrew Lipsman, a Principal Analyst at eMarketer. Online shopping habits are from periods of high activity like the holidays, he says. They tend to stick after the period ends, too.
“Grocery eCommerce is now having a similar moment,” he writes. “Millions of first-time online grocery buyers are materializing, and millions of infrequent buyers are now doing so on a weekly basis, vs. over multiple weeks or months.”
It will likely be the industry’s most established brands that take advantage of this, says Recode Senior Correspondent Jason Del Rey. Prime members will opt for delivery from Amazon Fresh and Whole Foods, with Walmart and Instacart picking up the remaining consumers.
All three have hired more workers due to increased demand, reports Sarah Perez at TechCrunch. Instacart has even become profitable for the first time.
Last Mile Innovations Now and in the Future
Growing demand for delivery places even more pressure on last-mile delivery, writes ShipBob’s Kristina Lopienski. “Where logistics often fall short in consumers’ eyes is precisely here: within that last mile,” she says. “There are many factors that can trip a delivery at the final hurdle; most often, the recipient isn’t home or there’s a problem with the local courier.”
Richard Tucker at Oslo-based logistics optimization cloud platform MixMove says brands will need to offer a range of delivery options to meet demand. Already contact-free and signatureless deliveries are replacing click and collection options.
In the U.K., such innovations mean parcels are being delivered faster than usual during the pandemic. Analysis by U.K.-based logistics company ParcelLab found that average delivery times have fallen from 2.1 days to 1.7 days.
There are several reasons for this, says Katharine Biggs, parcelLab’s Content and Marketing Manager. Consumers have been much more likely to be at home during pandemic lockdowns to accept deliveries, for one. Carriers have also removed the requirement that packages be signed for, and at the same time more customers are choosing to have their parcels left in a safe location.
Some of these factors won’t last past the pandemic, writes Josh Dinneen, SVP of Commercial Development at LaserShip, which is why companies are already investing in technology like automation and driver apps to increase delivery efficiency. “We see the growth of innovative technologies as a trend that will continue post-pandemic as companies continue to see increased demand from the accelerated conversion to online shopping.”
Curbside pickups, locker delivery and in-store fulfillment are all being used by eCommerce brands, too, writes the team at predictive logistics platform FarEye. This makes the need for a BaaS solution crucial. The more strategies brands use to deliver last-mile fulfillment, the more important it will be to have centralized management of fulfillment operations.
Brands Move From Amazon To 3PL
As Amazon struggled under the weight of demand, in March 2020 it stopped accepting shipments for any products it deemed non-essential, writes Jake Rheude, VP of Marketing at Red Stag Fulfillment. While understandable, it has left some brands that rely on Amazon for sales and fulfillment short. Rheude says they will be forced to look at alternative fulfillment strategies, such as third-party logistics providers, as a result.
Marc Fontanetta, Logistics Manager at Bakblade, has already made the move. When he discovered his products were no longer eligible for Prime delivery, he moved from the platform to a third-party provider and secured faster delivery times.
Building your own fulfillment service may also become unpopular as a result of the pandemic. Single warehouses look good on the face of it, but if you’re forced to shut down (because someone has tested positive for coronavirus, for example) then “you’re done,” says Glenn Gooding, President of iDrive Logistics. The more fulfillment options you have, the less risk to your business.
The pandemic has definitely shown the importance of an omnichannel model, writes Logistyx President Ken Fleming, particularly in the form of a multi-carrier shipping strategy. Using this model, brands can secure the most cost-effective and efficient shipping model by shopping rates from several different carriers at once. If one carrier can’t handle your shipment or another raises rates, there’s always another carrier to fall back on.
With consumers unwilling to head back into retail stores despite loosening restrictions, an omnichannel sales strategy — specifically a strong digital presence — remains crucial. Learn how to get your products online in just 15 days with Scalefast.