Ecommerce Continues to Gain a Large Share of the Retail Market

Now that the 2020 holiday season is officially in full swing, we’re seeing predictions of an eCommerce-dominated retail market come to fruition. As seen in CBRE’s 2020 retail holiday trends report, eCommerce is still holding a strong majority of total retail purchases, both for holiday gift items as well as everyday essentials.

What has been driving this eCommerce boom, and what does it mean for the 2020 holidays moving into Q1 2021?  

What’s driving the holiday eCommerce boom in the retail market in 2020?  

The simple answer: the pandemic.

Because people are staying at home more, eCommerce has become the primary way that consumers are getting their products.   The three key causes for eCommerce growth this season:

• Previous and anticipated lockdowns
• Early start to sale season
• Marketing promotion

Anticipated lockdowns  

A number of European countries are already heading into a second lockdown as cold and flu season hits. Whether or not the U.S. will lockdown again remains to be seen, but even without an official lockdown, consumers are likely to stay inside their homes significantly more this season than in years past. As people are likely to spend the holidays from the comforts of their own living rooms, they’re going to be looking to their computers and phones to deliver the holiday spirit they crave at home. This means they’re not only purchasing gift items online but also decorations, food, entertainment, and even wine and spirits.    

Early start to sale season  

How—in the first week in November—are we already “in” the holiday season? This year, retailers and consumers alike started the season even before Halloween finished. There are several reasons for the early start:

• Since traditional Black Friday sales aren’t going to be a reality this year, stores are looking to match the revenue from Thanksgiving weekend by launching deals earlier and longer.
• People are bored, so they’re already spending free time doing online Christmas shopping.
• Consumers also are looking to avoid in-store crowds and potential shipping delays as a result of last-minute shopping. It feels a lot safer to get everything done ahead of time, so the holidays can be a safe and healthy time.

An earlier start to the season means that people can purchase online goods and know they’ll be at their doorstep before the holidays without having to pay expedited shipping. The concern for shipping speed is still there, but the urgency isn’t as strong as it has been in previous years with a shorter holiday purchasing window.  

Read: Holiday Shipping Happening Earlier This Year Due to Pandemic    

Marketing promotion    

Before COVID-19 took the world by storm, a lot of those in the retail market was already heading down the path of social media marketing and omnichannel business. Now that people are inside more often, businesses are further ramping up marketing on social media to try to offer a holiday shopping experience through frequently-used platforms.  

More and more social media users, particularly ages 18 to 34, are being swayed by Instagram sponsored posts. 37% have reported they’ve purchased something through social media. These numbers are only rising as lifestyle images and products are becoming synonymous on these platforms. Smart retailers are using social media not only to market but to finalize online sales for younger consumers, and this new channel of sales is causing a surge in eCommerce demand.  

Impact of eCommerce for the season  

Because of the continued strain of lockdowns and supply chain pressure, operations companies are having to quickly adapt to this sudden surge in inventory levels and shipping demand. How are retailers and shipping companies handling this increased eCommerce demand?  

• Businesses need to figure out how to create the same feeling and sense of excitement of the traditional holiday shopping experience through an online platform. This is encouraging new ways of interacting with customers through customer service (which often means expedited shipping and easy returns) and digital offerings.
• Transport companies are going to be slammed with an influx of eCommerce orders. This will especially strain the last mile logistics. We’ve seen “package pressure” in years past, but this year’s eCommerce demand is unprecedented—and its impact on the supply chain can’t be understated.
• In an effort to meet this demand effectively and quickly, smart 3PLs are leveraging advanced technology to best optimize distribution, routes, and planning.
• Warehouses too are preparing to meet the holiday demand by hiring seasonal workers, implementing technology, updating floor plan layouts, doing maintenance, and even including sanitization robots to keep the inventory, picking, and packing processes quick and safe.
• A number of physical storefronts are functioning like warehouses to store goods near local customers and then offer buy online, pick up in-store options.
• January 2021 is going to be an absolute nightmare for logistics companies who haven’t mastered reverse logistics, as an influx of holiday returns will likely come through the mail.
• More and more retailers are frantic to work with third-party logistics providers who have the networks, tools, technologies, and experience to handle this level of inventory and shipping demand.

If you’re a retailer looking to dominate the 2020 peak shipping season amidst the eCommerce boom, check out this guide for everything you need to know about optimizing your supply chain for the holidays.