In his latest opinion piece, Paul Skeldon, Contributing Editor, predicts the key trends that will shape eCommerce logistics for 2022.
“Two months into 2022 and how eCommerce shipping is going to look this year – and how that is going to change next year – is still, in many ways, unclear.
Where the industry ended 2021 with fuel shortages, a dearth of HGV drivers and the continuing impact of Covid-19 isolation on the retail, shipping and logistics industries, 2022 starts with all these issues resolved.
However, early 2022 also heralds the outbreak of the most ferocious fighting in mainland Europe since 1945 and, as a result, disruption to supply chains, fuel and energy supplies and the beginnings of more consumer unease over the impact all this may have on the economy and, as a result, spending.
For an ecommerce organisation this makes predicting what the year ahead has in store all the more difficult. Many are, of course, getting used to unpredictability; the past two years has taught us to ‘expect the unexpected’ and for many organisations this has meant that the name of the game when it comes to shopping and shipping habits is to be flexible, agile and ready for anything.
So with that in mind, what are etailers likely to face this year in terms of delivery?
Delivery speed is now the crucial deciding factor for many shoppers when looking at which sites to buy from – and that acceleration of instant gratification has only intensified over the past two years.
Where predictions for shipping trends in 2019 and 2020 alluded to free next-day delivery and posited that same-day – at a high price point – was on the horizon, now it is a very real prospect.
As far back as 2014, a study by McKinsey suggested that 50% of online shoppers in Germany, France, Sweden and the UK would be prepared to pay as much a €7 on a €59 purchase for same-day delivery. Today, the proportion has risen and the price they are willing to pay has come down significantly.
Statista predicts that in 2022, the global market for same-day delivery will top $10bn, and already in 2021 around a third of online shoppers told a survey by Bizrate Insights in the US that they ordered from a specific website so that they could have same day delivery.
The business criticality of same-day has been cemented in the UK by M&S, which has already introduced same-day delivery on fashion items – the first large UK retailer to so and aiming squarely at competing with pureplays such as Asos.
Data from Bringg forecasts that one-in-three retailers plan to add same-day delivery services in the next six to 12 months, including the 38% of retailers that already offer same-day delivery.
Timed delivery slots
Many consumers may want to have rapid same-day delivery as a way of sating their need for instant gratification, many others who are happy with ‘normal’ delivery are starting to insist that, while they are happy to wait a day or two for their items, when they do arrive, they need to be delivered at a specific time.
Pioneered and perfected in the grocery sector, timed delivery slots are becoming the norm for many ecommerce consumers and are set to grow in popularity throughout 2022.
In 2020 45% of UK shoppers expect an estimated day or time of day with their orders – even if they aren’t paying extra for fast delivery. Some 22% expect to be at least notified of a three-to-four-hour window. This trend for timed delivery is only going to narrow into consumers looking for more specific slots as standard.
Beset by disease, consumers have over the past two years become much more focussed on the environment and sustainability. Research by EY in its Future Consumer Index in December 2021, found that consumers are increasingly prioritising sustainability and fulfilling experiences for their purchase decisions, with half of consumers saying that they will pay more attention to the environmental impact of their consumption (51%), but 75% said they would not pay a premium for more sustainable goods and services.
This is having an impact on delivery, albeit somewhat on the down-low. Many retailers are starting to cash-in on the green pound, implementing low and net-zero policies to woo consumers. However, consumers concerns over delivery being environmentally friendly are less impactful on their choice of retailer.
That doesn’t mean that it isn’t important. Royal Mail is trialling all-electric delivery vehicles across the UK, while the City of Oxford has gone zero-carbon in the city centre, with carriers pledging to use all electric fleets to service customers therein.
Fast fashion chain H&M has gone as far as offering ‘climate smart delivery’ by bicycle in the Netherlands, Sweden, Italy and France, while biogas vehicles take goods from the logistics centre. In Sweden and Norway deliveries are made to climate smart lockers.
These are just some of the ways in which sustainable delivery is starting to creep into the ecommerce market. While consumers like it, they aren’t choosing who to shop with based on, but rest assured that running sustainable vehicles – both for B2C deliveries and within the supply chain – will increasingly start to become something that brands will boast about in 2022 and which will land them sales as a result.
As ever, returns will continue to be a major area of competition for retailers. As ecommerce has boomed, returns have grown. Research suggests that they will grow by as much as 27% by 2023, costing retailers some £5.6bn a year.
Reducing returns is obviously a pre-requisite for retailers and they can do that at source by investing in better product pages, better use of 3D and AR technology to allow shoppers to have a better idea of the look and feel of what they are buying and so on.
Education can also play a role to disabuse the 88% of consumers that believe that their returns just go back on the shelf and no harm has been done.
From a delivery point of view, managing the returns that are still made is going to be an ongoing problem. Increasing fuel costs, driver shortages and growing worry about the environmental impact of logistics are all set to make returns a costly headache for retailers. While they need to manage the problem at the selling stage to minimise returns, they also have to do all they can to make returns as cost effective to operate as possible, turning to collection points and encouraging store returns as much as they can.
The issue of encouraging returns to stores or other locations by the consumer themselves ties in nicely with another delivery trend coming to the fore in 2022: PUDO.
For those that don’t know, PUDO is ‘pick-up and drop-off’ and refers to delivery – and collection – from any kind of designated area, such as a locker, store or transport terminus. And its going to be big.
PUDO allows carriers to drop off multiple packages to one location, all to be collected by their individual purchasers, thus saving the retailer the cost and complexity of delivering to many individual locations.
For the consumer, this can be dressed up as being adding convenience for them, as they can collect goods while in a store or on their way to or from work (now that restrictions are ending). It also can be sold as a way of making delivery greener as it dramatically cuts down on delivery miles and diesel fumes.
PUDO sites can also act as returns hubs, again allowing carriers to pick up numerous returns in one location.
These trends all have one unifying factor: complexity. While they are largely driven by consumer demand, they all add a level of complication to any retailer looking to run a successful online channel.
This, then, delivers the overarching trend for 2022, delivery management. According to a study by Parcelhub and Brightpearl, 30% of retailers are looking to invest in a delivery management platform this year, alongside 28% looking to also invest in outsourced delivery tracking.
Being able to manage the complexities of delivery (and returns) alongside other back office systems such as demand planning software and warehouse management systems, allows retailers to offer the kinds of delivery services that users want.
It also opens up the ability for retailers to sell on more channels. The Parcelhub/Brightpearl research shows that e-retailers using back-office systems and delivery management platforms are more likely to sell across five channels than those who do not (three on average).
74% of retailers also reported that the use of a back office system led to a 50% plus customer retention rate compared to 52% of retailers that did not use such technology.
A similar trend is seen with Delivery Management Platform (DMP) users. 73% of e-retailers that use a DMP have 50% or more returning customers, as a proportion of the total customer base, compared to 48% of retailers not using a DMP.
While investment into these platforms is helping retailers meet the demands of their customers for rapid, clean and increasingly flexible delivery, many others – especially smaller ones – are looking at how third-party providers can help them with this.
They can also help offer multi-carrier solutions that allow a retailer to create the roster of delivery options that cover all bases for consumers who are looking today not just for the right goods at the right price, but also the right time and method of delivery.
Using third-parties to track packages can be a real boon to any retailer looking to achieve same day and defined-time deliveries, as well as upping their customer service credentials – another key factor shoppers have for staying loyal to a particular retailer.”