A Look at How 2020 Affected the Retail Shipping Industry
It is safe to say that 2020 had an impact on nearly every facet of modern life. As the global pandemic raged across borders and continents alike, the thriving interconnectivity of the modern supply chain came to a full-stop in some places. This downtime left the retail shipping industry as a whole scrambling about in an effort to solve a few major underlying issues with the global supply chain.
E-commerce became the favorite shopping option for the masses during the COVID-19 pandemic who looked to avoid crowded public spaces and the potential for contact with those who might be positive for the virus. Delivery companies began to face surges, unlike anything they had faced before, leading to slowdowns and an overburdened shipping sector. Rapid increases in volume eventually put some retailers in a bind, without enough space negotiated with carriers to manage the overflow.
However, through all of the chaos, the retail shipping industry began to adjust, to become accustomed to the volume, and to shift pressure on some areas toward innovative solutions.
Furthermore, the shift toward e-commerce isn’t likely to change course anytime soon. In fact, even pre-pandemic, more and more shoppers were trending toward making purchases primarily online. Now, having experienced the convenience and with reluctance to return to “normal” as things were before, consumers aren’t likely to revert to their previous shopping behaviors. This will likely have a significant impact on brick and mortar stores in the near future.
Handling the increased demand for e-commerce
Residential e-commerce package deliveries continue to see increased volume, and grocery delivery has surged across the US and global markets. Beginning in March, when global lockdowns began, the increase in online grocery shopping was astronomical- one of the areas of e-commerce that had seen slower growth than other forms of retail e-commerce.
The impacts on the retail shipping industry are likely permanent, and the consequences are significant for the companies tasked with delivering all of this increased volume.
Thanks to the costs incurred by shippers to hire and maintain a larger workforce, protect workers and customers, and put effective COVID-19 safety measures in place, the generally more profitable B2B delivery space has seen a decrease in profits. Shippers who wish to maintain a strong presence have needed to make rapid shifts to accommodate fluctuations and increases in volume that have left some companies struggling to keep up.
Those that adapted to the changes swiftly have seen significant benefits and will continue to do so as this new reality continues to unfold.
Online shopping not likely to decrease
The numbers indicate that the shift to e-commerce isn’t likely to decrease. The increases in online shopping in the US alone have led to massive online sales increases in a variety of categories. Grocery, electronics, health care products, and toys have been on the rise, while other retail categories deemed nonessential have suffered.
Pandemic restrictions have also led to both an increase in the frequency of online purchases for existing customers and a new market share of first-time customers as well. Across the globe, consumers were buying- and retail shippers were handling the increases in loads.
ShipStation recently conducted a national consumer study which resulted in North American consumers reporting an increase of 33% of online purchases over the past year. In that same study, nearly two-thirds of consumers reported that the majority of their shopping is now done online as a direct result of the pandemic.
While these increases present challenges for the retail shipping industry, the delivery experience becoming commonplace means consumers are viewing delivery as a vital part of the customer service experience. 84% of shoppers stated that delivery experience stands out most in the overall e-commerce customer experience, up from 80% in 2019.
Consumer demands will shift again
Findings also indicate that consumers have taken a relatively understanding approach as the supply chain became overburdened. A society generally accustomed to an increasingly shortened shipping window -thanks in large part to standards set by retail shipping giants- had long shown a preference for same-day shipping experiences, but made allowances and showed understanding temporarily while the pandemic caused a major slowdown.
However, expectations aren’t likely to remain quite so low. There is even some research to show that shopping patterns may change again due to a COVID-19 vaccine.
Shipping will likely still play a critical role in both converting and retaining customers. While the understanding will likely remain in place while the pandemic’s effects continue, consumers generally agree that when the restrictions are lifted and the general public is no longer at risk of infection, fast and inexpensive shipping expectations will be instrumental in purchasing decisions. ShipStation’s consumer study further showed that the lowered expectations led to an increase in costs for shippers- many expected all brands to provide free shipping options in light of longer shipping times.
The big picture
Taken all together, the impacts of 2020 on all industries have been rather astronomical. The retail shipping industry is no different.
While the increases in volume have led to slowdowns and delays on a dramatically overburdened system, the retail shipping industry has been presented with an opportunity to make needed adjustments and capitalize on the shifts in consumer behaviors to their benefit. It’s vital that the system changes are made quickly, however, and consumer patience for the slowdowns isn’t likely to last beyond the pandemic.
Want to learn about how your retail operation can rebound from the COVID-19 pandemic? Reach out to our team of logistics experts and let us show you how.