This devastating global pandemic has forced online merchants to evaluate their operations, and in many respects opened a world of opportunity given the inevitable acceleration of a digitalized world.
According to Adobe Analytics’ Adobe Digital Economy Index, online sales surged above holiday levels (Nov.-Dec.) in May and spiked further over Memorial Day weekend. Adobe found that e-commerce has gained $53 billion in extra online spend since the pandemic began, up 77.8 percent year-over-year. This sustained strong percentage growth happened in the midst of the outbreak in the U.S., indicating the resiliency e-commerce played during this pandemic when other industries were hanging on by a string.
For many online merchants, the coronavirus exposed their weaknesses and for others it has given them the needed push to update or invest in new technology, such as warehouse management systems.
How to plan for a never-ending peak
What does this surge in volume mean for the holiday 2020 peak season and how can e-tailers plan?
In a best case scenario where we do not see a second wave or a significant resurgence of COVID-19 cases, we can most likely expect that e-commerce volumes remain strong and steady into the fourth quarter of 2020.
In a worst case scenario with a significant increase in COVID-19 cases, we can confidently predict this would solidify e-commerce’s position as one of society’s life-lines to the outside world amid fearful consumers who may be reluctant to shop in brick and mortar stores.
How can e-tailers be prepared for best or worst case COVID-19 scenarios, future crises or ongoing peak-like volumes? Below are four practical actions every online merchant should take:
- Diversify carriers: Through a multi-carrier approach, online merchants can benefit from cost savings and delivery times. Based on different parameters (e.g. package weight, destinations, and delivery promise) shipping rates can vary and in the event of a major crisis the flexibility to tap in to existing relationships with logistics operators goes a long way to help reroute or expedite shipments, when needed. Additionally, an approach that includes multiple carrier relationships from consolidators to regional carriers can provide greater options in the event of unforeseen surcharges.
- Forecast volumes: Providing your logistics service provider the most accurate volume forecasts per season, for future promotional campaigns or based on new products that will be launched can make a huge difference to ensure goods are not backlogged. This is difficult for many online merchants, but just going through the process helps from a planning perspective both to ensure fulfillment capacity and to help the carrier plan for volume. An open and flexible relationship allows for the logistics operators to ensure they are able to handle any and all volumes, as well as have a contingency plan in place in case of unexpected volume spikes.
- Invest in people: Some online merchants are reluctant to make investments in hiring more staff at competitive rates to increase their efficiency in light of uncertainty. As we learned from COVID-19, having proper staffing in place ensures your operation continues if employees get sick, others are not able to fulfill their duties due to lack of childcare or resources, transportation or other barriers. Also, with the surge in online sales, now is the perfect opportunity to win new long-term customers and an excellent service experience is part of that. If customers have a terrible experience due to an e-tailers’ lack of proper staffing, this can result in losing the chance of a lifetime to grow its customer base.
- Invest in technology: Moving from old legacy technology systems to integrated inventory management or warehouse management systems can help eliminate multiple applications and spreadsheets, making expediting shipments faster. Additionally, utilizing multi-carrier integration software can provide more flexibility in an online merchant’s e-commerce volume flows across carriers. Most online merchants are adopting cloud first architecture strategies, but those who have not, need to consider how cloud based strategies enable shippers to scale up to meet demand and offer new capabilities in a more agile, scalable and cost-effective manner.
Crisis can come in all forms, be it natural, financial or manmade and while no one can know what the remainder of the year holds, the truth is that the e-commerce industry has been changed forever. With what is shaping up to be a new normal of considerably higher volumes, we can also expect the usual holiday volume surge in November and December, so it is time for online merchants to prepare.