Peak 2020 is underway and it is set to be a peak like no other. Coronavirus has seen swathes of shoppers forced to switch to online shopping whether they wanted to or not and, even when stores did reopen, the online trend continued to grow.
In fact, the lockdown has, in many ways, seen many retailers already have a peak this year. In May 2020, Parcelhub experienced a 250% increase in the number of orders it handled.
Now retailers are facing another peak as we rapidly approach Christmas – and a new year that will potentially see more lockdowns along with the as yet unknown impact of Brexit.
And delivering all this to consumers who have been forced to shop in a whole new way is perhaps the biggest challenge many retailers have ever faced. Making sure that they get the delivery options they want, that they get the goods they want when they want them, that they can track what is going on and that you as a retailer can do all that and make money is going to be key. So, how can you make that happen?
What the new landscape looks like:
First, we need take a look at what Peak this year is looking like and where that is heading.
According to data from the Office for National Statistics (ONS), online sales grew rapidly as the UK went into lockdown in late March. Peaking at around 33% in May, there has been a slowing in the growth rate of online shopping as shops have started to re-open, but by July online still accounted for just shy of 30% of retail sales. In November 2019 it was just a fifth.
This naturally has boosted eCommerce sales, bringing the total value of the UK’s eCommerce market to some £78.9 billion, according to retail insights form 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, many other retailers are also going to see great benefits from the eCommerce boom. Grocery retailers are naturally seeing a large boost to their online delivery businesses.
Asda, for example, has said it expects a record online Christmas as shoppers start to stock up earlier than they have in previous years. The retailer has expanded its online grocery service to 765,000 delivery slots a week while expanding its partnership with Uber Eats to 100 stores from 50. This trope will be seen across all sectors this Christmas.
While there have been early winners in online commerce, the overall impact on retail has been to make online more competitive than ever – with retailers of all kinds fighting over a finite number of consumers.
Amazon, naturally, has come out in front, with many newbie shoppers using it to all intents and purposes as a shopping search engine, even turning to it as a source of inspiration ahead of social media.
Amazon’s brand recognition, wide variety of goods, price competitiveness and delivery options have all seen it win out. Supermarkets too have also come to play a larger role in online shopping, with again shoppers searching for brands they know and trust in this time of crisis.
Cross-border retail has also seen a jump in 2020, with a study showing an 11% increase in overseas retail following the start of the pandemic, while events such as China’s Singles’ Day on 11 November have offered both UK consumers and overseas consumers looking to buy from UK retailers the chance to tap into these markets – even though they come with considerable logistical issues.
Another issue with this year’s peak is that consumers are planning to downgrade their spend. According to research by JRNI, UK shoppers plan to spend one third (32%) less in the Black Friday sales this year, and 43% less overall for their Christmas shopping, with jobs fears and lack of ability to shop the ways in which they are accustomed cited as their main reasons for keeping their wallets shut.
How delivery holds the key
Let’s be clear: Black Friday is only the starting gun for peak. Peak now runs from around the week before Black Friday right through to the January sales and, while Black Friday and Cyber Monday are all about bargains, the rest is all about volume.
Peak season is about Christmas presents and here competition is driven increasingly less by price and more by other factors such as novelty value, availability and delivery.
Delivery has increasingly become a key differentiator for any eCommerce site, and that is increasing in peak. Offering the right option of delivery to suit the customer, as well as the tools to help the customer manage that delivery, has become a massive driver.
While Black Friday deals start to peak, getting things delivered quickly and, more importantly, exactly when they are needed, becomes a growing imperative for consumers as peak plays out and Christmas day draws nearer.
But there are issues…
Many retailers have already seen a strong peak-like market during the earlier lockdown, when pretty much all commerce went online – and there are distinct lessons to be learned from that first attempt at lockdown peak delivery.
A survey of more than 2000 British consumers, commissioned by Citizens Advice in October, found that nearly half (47%) have had issues with the delivery of parcels since the first lockdown began in March.
With the UK having been in full or partial lockdown for much of this year, 51% say they feel more reliant on having products delivered to their homes. The increased numbers of people now shopping online, whether for necessity or convenience, seems to have thrown retailers’ logistical issues into the spotlight.
Of all respondents, almost all of them (96%) claimed to have ordered products that require parcel delivery since March. Unfortunately, three in 10 of these have experienced 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.
And Citizens Advice has said views of its webpage providing advice on parcel issues had more than doubled to 208,000 between March and October this year compared to just 94,000 over the same period last year.
As a result, nearly one in four have lost confidence when ordering goods from some online stores – something that could have a larger impact as people begin their Christmas shopping.
Of course, with many more people shopping online and on mobile there are going to be many more deliveries and there will be more problems, but the research highlights an important issue: delivery is not only an important positive differentiator that can drive shoppers to use one retailer over another but also if it goes wrong it can have the same degree of impact in reverse.
Meeting the delivery challenge
So how can retailers meet the challenges of consumer delivery demands – even if they continue to be lower than expected – in the run-up to peak?
The biggest challenge that retailers face is capacity. The increased volume of sales online through necessity means that many carriers are already operating at near-Peak levels and, as we have seen, retailers need to make sure that if they are able to sell they have to be able to fulfil expediently – certainly if they are to maintain customers post-peak.
Using an array of carriers and working with third parties to manage the operations of these carriers has increasingly been a vital step in delivering competitive advantage in eCommerce. This is now truer than ever during peak.
Maintaining a constant flow of goods out to consumers is a basic requirement of any logistical plan, but with such an unusual peak falling in the midst of unprecedented online demand, keeping that basic level of goods flow is essential.
Meeting the challenge of peak 2020 and beyond lies in not only maintaining this, but also in building in the flexibility to be able to increase – and indeed decrease – carrier support quickly and efficiently as needed.
Having options with carriers, including having the option to also deploy contingency carriers as needed to augment existing carriers, is one way to manage this. Working with multiple carriers is always advisable to be able to offer the range of delivery options needed to satisfy the differing needs of the consumer. Under Covid conditions, this becomes even more important.
But this just meets the demands of peak. Enhanced online competition is also going to make meeting this demand while offering the range of delivery options that will give a retailer a competitive advantage is going to make this challenge harder still to meet.
Again, the answer lies in having the flexibility to manage a range of carriers – or to get a third party to manage those carriers for you – so that you can meet the high demand, be able to go higher as needed and offer a range of flexible options so that your site stands out from all the many others.
SMART tracking: just the ticket
Understanding where each package is within a manged delivery network is vital to not only pushing the packages out to the right carriers for the right delivery slots but also to handling customer enquiries around those packages. At Parcelhub we have developed SMART Notifications in-house, in response to customer feedback and demand. SMARTs analyse delivery data and identify non-deliveries and exceptions, allowing them to be monitored and action taken as required.
Higher volumes of packages mean more customer queries and handling these effectively is key to customer service and to holding on to customers who may have been buying from you for the first time.
SMART tracking can allow third-party carrier managers to also help retailers by taking this customer service demand off their hands. For example, Parcelhub, using a white-labelled version of Freshworks’ Freshdesk software as part of its tracking and customer handling solution, can handle all its clients’ customer enquiries – even when peak hits.
On a typical day during the first lockdown, its agents handled around 200 tickets for customer service queries, double what they normally 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.
The road ahead
While this is true for peak 2020, Covid has reshaped the entire retail landscape, and what we are dealing with today is going to be the new normal for delivery for many years to come.
The vagaries of lockdowns and waves of the virus are going to make demand and capacity fluctuate more widely than in previous years. Brexit too, which will play out from January, is also going to shift the demand for delivery in new directions.
All this means that, for retailers, there is going to be the need to manage delivery demand and customer services with much greater agility – and that means locking in a solid relationship with carriers and carrier management companies that can help manage those demand fluctuations for you, as well as maintaining customer service levels.
Peak has only just begun, but the real challenges lie in the months beyond that.
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