Peak And Beyond: How Delivery Holds The Key To The ECommerce Revolution
Parcelhub, the leading provider of multi-carrier delivery management and outsourced tracking support, experienced a 250% increase in parcel traffic and a 100% spike in delivery tracking queries during the early stages of lockdown. But what has been going on in the wider environment?
This year’s Black Friday has kicked off a peak season like no other. While peak has increasingly seen digital growth, 2021 is set to be one dominated by digital retail and eCommerce – and that is changing how people shop in some dramatic ways.
Arguably this year’s peak season kicked off not with Black Friday as is sort of becoming a tradition, but with Singles’ Day on 11 November. Usually a sales event with a more Asian bent, 11.11 this year was a truly global affair.
According to figures from Alibaba – the Chinese marketplace behind Singles’ Day – £42 billion was spent across the day, with UK shoppers alone spending £1.44 billion on Singles’ Day purchases according to Statista. Naturally, 98% of that was online.
Why does this matter? Firstly, it shows that in an increasingly digital world, eCommerce is more cross-border than ever. Secondly, it also showed early on in peak 2020 how marketplaces are coming to dominate where shoppers shop.
This is something that has already started to play out across the more traditional ‘Western’ peaks of Black Friday and Cyber Monday and will be a trend that continues on into Christmas – and probably beyond.
In the run-up to this year’s peak, marketplaces were already starting to show signs of dominance in eCommerce. Research in September by Rakuten Advertising, suggested that 48% of shoppers in the UK use Amazon or other marketplaces as their first port of call for gift inspiration – outstripping social media, which has long held that mantle.
Learning from the lockdown peak
This year’s peak is not only being dominated by marketplaces but is also being impacted by the coronavirus pandemic, which has in many ways seen many retailers already have to face a peak like no other when the UK went into Lockdown.
According to data from the Office for National Statistics (ONS), online sales exploded when the UK went into lockdown in late March and peaked at 33% in May. Indeed, to put it in context, in May 2020, at Parcelhub we saw a 250% increase in the number of orders we handled and a 100% spike in delivery tracking queries, as detailed in this video:
The second lockdown, which ended on 2 December, saw similar levels of eCommerce growth and, encompassing Black Friday and Cyber Monday, gave a foretaste of what the run up to Christmas is going to look like.
This lockdown peak has propelled the total value of the UK’s eCommerce market to some £78.9 billion, according to retail insights firm Edge by Ascential. This is way ahead of the pre-pandemic prediction that 2020 would see eCommerce grow to around £74 billion.
While some 38% of this online sales increase – or £2 billion – will end up in the coffers of Amazon, says Edge by Ascential, many other retailers are also going to see great benefits from the ecommerce boom.
This pandemic peak has been a wake-up call for many retailers as it has exposed just how tough – and different – the current online market is. Retailers are having to fight for every customer, not just with each other, but with marketplaces and social media sites, all of which are pushing hard.
The winners are those that can, simply put, supply the phenomenal demand. They are the ones that have got their order management, shipping, returns and customer service aligned and can get it right.
Delivery: the key to peak and beyond
One of the lessons that this pandemic peak has taught retailers is that delivery is key to meeting peak demand on this unprecedented scale. And one of the cornerstones of making that work is delivery.
A survey of more than 2,000 British consumers by Citizens Advice in October found that, thanks to lockdown, 51% say they feel more reliant on having products delivered to their homes. Almost all of them (96%) claimed to have ordered products that require parcel delivery since March.
However, delivery has for some retailers become the weakest link. Nearly half (47%) told Citizens Advice that they had issues with delivery, with 30% experiencing shipping delays, making it the biggest issue cited by consumers. A further 18% said they had lost out financially due to a home delivery gone wrong or missing, with 40% of those losing out by more than £20.
With delivery being one of the most important competitive differentiators for retailers, this is really bad news. The eCommerce boom offers retailers a sure-fire way to generate revenue, but getting delivery wrong can easily cost them any new customers in an instant.
The biggest challenge with peak delivery in 2020 – and beyond, as we shall come to – is capacity. Online sales volumes have exploded, so retailers need a multi-carrier strategy that can meet the increased volume, but more complicatedly, capacity is going to fluctuate around what happens with the pandemic, lockdowns and other non-calendar events.
Planning around this is really hard and makes having the right capacity in place along with the right capacity waiting in the wings makes getting an eCommerce delivery strategy that works tricky.
One way around it is to leverage companies like Parcelhub. Such third-party carrier management companies sit between retailer, carrier and the marketplace, handling orders placed with retailers and then, through their own network of warehouses and vehicles, along with a range of relationships with carriers, can consolidate orders and get them delivered in the most efficient way depending on the delivery option the customer has chosen.
This approach works well for eCommerce and marketplace trading in any conditions as it allows the retailer to offer the widest range of delivery options to the customer, while getting the most efficient use of carriers for all its deliveries. In peak – and particularly in the variable demand market we currently find ourselves, it is even more effective.
Customer service is king
With so many shoppers having to trust online retail and its attendant delivery services, there has also been an up-tick in customer issues. As the Citizens’ Advice’ research shows, consumers are having more delivery issues.
That aside, more online shoppers will generate more questions and contact – and handling this can be as mission critical as the delivery itself.
Smart tracking can allow third-party carrier managers to also help retailers by taking this customer service demand off their hands. For example, Parcelhub can handle all its clients’ customer delivery queries in variable volumes, to ensure customer service doesn’t degrade when peak hits.
On a typical day during the first lockdown, Parcelhub’s agents handled around 200 tickets for customer service queries, double what they normal have. And the variety of queries was also increased: covering everything from delivery times to returns to social distancing queries and concerns.
Handling this massive volume of customer queries along with handling the vast amounts of packages being sent during lockdown demonstrates how ready for the ‘peak of peaks’ that we now find ourselves in can really help. Parcelhub saved one company £40,000 in customer service time alone.
Adding Brexit to the mix
Pulling together delivery capacity management – and a contingency capacity – with customer service are key facets of making any eCommerce offering work this peak. But this isn’t a short-term undertaking. The coronavirus pandemic will be with us for many more months, with lockdowns and other social-distancing measures causing fluctuations in demand.
The switch to eCommerce that has taken place throughout 2020 is also likely to continue, so the level of deliveries and customer management that retailers are currently experiencing is set to continue.
And then there is Brexit. From January things will be very different with both imports and exports impacted in way that, at the time of writing, are yet to be clarified. What is certain is that delivery, cross-border eCommerce and even supply of goods are all going to be impacted in some way.
Taken together, the shift to eCommerce, the pandemic and its societal changes and Brexit are all set to make eCommerce in 2021 look different again from how it looks here in 2020. Rising to the challenges this presents is going to be crucial to retail success. The retailers, merchants and marketplaces that meet these demands will be the winners. With ‘old school’ retailers closing in droves, things are never going to be the same. Are you ready?
About Parcelhub – Where proactive delivery management comes as standard:
Parcelhub is a bespoke multi-carrier delivery management and proactive tracking support solution. Flexible and scalable, its unique portfolio of services integrates seamlessly with marketplaces, eCommerce platforms and order management systems, providing hundreds of multi-channel retailers, global brands and wholesalers with one access point to 20+ carriers and 600+ delivery options.
Distributing more than 6 million parcels on its own carrier contracts every year, Parcelhub’s free multi-carrier shipping software grants hundreds of national and global businesses access to 'pooled volume' discounted rates from its carefully selected range of carrier partners, including Yodel, Hermes, DPD, DHL, UPS, DX, Parcelforce, CollectPlus, SkyNet, ArrowXL, Interpost, Panther Logistics, Direct Link and Palletforce. Dedicated proactive parcel management comes as standard.
Parcelhub is part of the Whistl Group. Whistl is the leading delivery management company enabling customers to get their letters, leaflets or parcels to customers efficiently and cost effectively both in the UK and internationally. It is headquartered in Marlow with 8 depots and 2 fulfilment centres across the UK handling 3.8bn items a year. The company is privately held with over 1,500 employees and a turnover in excess of £600m. It has grown significantly over the years and is now expanding its presence in the eCommerce sector offering fulfilment services to customers through a seamless experience from first click to final delivery.