November 11, 2016
Column | outbound

What shoppers want ... and what it means for you

How consumers shop and buy is driving change in logistics at a dizzying pace.

By Mitch Mac Donald

When Black Friday arrives in just a few weeks, the lines will likely be shorter than last year's, and they will probably shrink further in the coming years. The mass migration of shoppers from traditional brick-and-mortar stores to digital storefronts is well under way and continues to gather steam.

The latest evidence quantifying what we in logistics already know comes from an annual study released earlier this year by UPS. The fifth annual "Pulse of the Online Shopper" study shows that avid online shoppers, defined as those who make two or more online purchases in a typical three-month span, are now making more than half of all their purchases online.

This is the first time in the study's five-year history that more than half (51 percent) of all purchases made by respondents are made online, up from 48 percent in 2015. The study also suggests that the shift from traditional in-store shopping to e-commerce will continue. Nearly one in five respondents indicated that more of their shopping will take place online in 2017 than in 2016.

And traditional stores aren't all they are migrating away from. They are also moving away from their computers as their primary shopping tool and instead turning to their ever-present smartphones. A full 77 percent now conduct their online shopping primarily on mobile devices, up from two-thirds in 2014.

Physical retail stores, though, still have a place in the brave new omnichannel world. "This year's study revealed that 45 percent of online shoppers love the thrill of hunting for and finding great deals, and that physical stores continue to play an important role in that experience," said Teresa Finley, chief marketing officer at UPS, in a press release.

In fact, the study revealed that some traditional online retailers are establishing a brick-and-mortar presence—although these are storefronts with a twist. The retailers are experimenting with showrooms without inventory to provide consumers with the opportunity to examine products before buying them online. One in six shoppers say they have visited such retailers.

Just as today's customers expect to shop via any channel they choose, they also expect to use more than one channel to execute a single transaction. For instance, the study showed that about half the buyers who shop and buy online want to pick up their order at a store. These "cross-channel transactions," defined as purchases using in-store and at least one online channel, now account for 38 percent of all purchases.

All this has enormous implications for the back end of the operation—the retailer's order fulfillment and delivery processes. For one thing, it means retailers must have integrated visibility into available inventory in both the store and at the supporting DC(s). It also means retailers must create a seamless experience between their virtual and physical storefronts that reflects how their customers want to shop. Providing detailed product information with good photography, professional and peer reviews, and online access to store inventory are critical.

Our annual report on omnichannel distribution provides great insight into how retailers and their logistics service providers are responding to these new and rapidly changing demands. The report features the results of an exclusive study in which we asked respondents what processes and technologies they used to fill the various types of orders. As it turned out, their answers were all over the map. Just as there is no one specific buying pattern common to the majority of shoppers, there is no one specific solution to satisfy these shoppers.

Logistics professionals will continue to face challenges as the complexities grow and the variables multiply. As to how they'll fare, their fortunes will depend on their ability to remain agile and responsive, and their willingness to adapt to consumer demands that seem to change by the day.

About the Author

Mitch Mac Donald
Group Editorial Director
Mitch Mac Donald has more than 30 years of experience in both the newspaper and magazine businesses. He has covered the logistics and supply chain fields since 1988. Twice named one of the Top 10 Business Journalists in the U.S., he has served in a multitude of editorial and publishing roles. The leading force behind the launch of Supply Chain Management Review, he was that brand's founding publisher and editorial director from 1997 to 2000. Additionally, he has served as news editor, chief editor, publisher and editorial director of Logistics Management, as well as publisher of Modern Materials Handling. Mitch is also the president and CEO of Agile Business Media, LLC, the parent company of DC VELOCITY and CSCMP's Supply Chain Quarterly.

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