E-Commerce sales in the U.S. spiked by 44% in 2020, driven mostly by consumers who spent over $861 billion shopping from the safety and comfort of their own homes during the COVID-19 pandemic. According to Digital Commerce 360, this represented the highest jump in yearly U.S. E-Commerce growth in at least 20 years. It’s also about three times the prior year’s 15.1% increase in E-Commerce sales.
“E-Commerce accelerated by two years and reached sales it would have otherwise reached in 2022,” the company points out.
Behind the scenes, the companies fulfilling all of those online orders had to make some quick pivots in order to accommodate the unpredictable shifts in buying behaviors. Manufacturers that sold mostly through brick-and-mortar retail suddenly found themselves selling direct to consumers; fulfillment centers built to handle pallets had to be retrofitted to handle smaller orders; and large retailers ramped up their buy online pickup in store (BOPIS) and curbside delivery operations.
Another Banner Year Ahead
These and other shifts directly impacted companies’ logistics and transportation operations, right at a time when those functions were gaining in complexity and getting more expensive to run. With many signs pointing to another banner year for E-Commerce in 2021 (eMarketer is predicting 14.3% growth in E-Commerce sales worldwide this year), there’s still more work to be done to get the world’s supply chains ready to accommodate these double-digit increases.
“E-Commerce really exploded due to the pandemic; consumers’ behaviors are changing, and companies are working to keep up with these shifts,” says Tanguy Largeau, DB Schenker’s Head of Vertical Market Consumer & Retail in the Americas. Companies that lacked robust E-Commerce models before the pandemic faced an important decision: build out their own E-Commerce platforms or leverage an already-established, online marketplace.
“That choice these companies make dictates their logistics, fulfillment, and transportation strategies,” Largeau points out. Where those taking the DIY approach can maintain direct content with their customer bases and control the customer experience, they also have to build out their own fulfillment and shipping strategies. Companies that align with a marketplace may lose some control of the customer relationship, but they also gain access to established fulfillment processes.
Tricks of the Trade
Regardless of which E-Commerce fulfillment approach a shipper takes, Largeau says it’s important to consider both inbound and outbound logistics and transportation. Knowing that at least 30% of all products ordered online are returned (versus about 9% for brick-and-mortar sales), companies need robust forward and reverse logistics processes in order to accommodate the influx of online orders.
“Returns are a major challenge that can become pretty complex, depending on the type of goods being sold,” Largeau says. A seller of consumer electronics, for instance, needs a process for refurbishing returned items, wiping them clean of any personal data, and then reselling them on the market. Environmental issues also come into play in a world where sustainability has become an important focus for consumers and organizations alike.
With transportation costs rising across most modes right now, E-Commerce companies are looking for the most affordable and efficient ways to meet their customers’ two-day and next-day delivery expectations. A global container shortage, dearth of truck drivers, and high demand for capacity are all making life a little tougher for the typical E-Commerce shipper right now.
Finding a Strong Partner
Largeau tells companies to lean on their logistics providers during this disruptive period. Logistics experts like DB Schenker, for example, have put in place the processes needed to help E-Commerce companies navigate the challenges of the current E-Commerce fulfillment environment.
It’s also important to find a logistics service provider whose warehouse management system (WMS) integrates with your company’s internal order management system (OMS). With this integration in place, E-Commerce companies can more easily create a seamless integration between their logistics providers and their end customers.
Finally, Largeau tells E-Commerce companies to seek out true partners, and not just “providers” that fulfill one specific need. “Find a logistics partner that helps you design a solution that works today, but can also be scaled as the market continues to shift and as new opportunities emerge,” says Largeau. “That way, you’ll be able to ‘flex’ your capacity based on customer demand.”