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How COVID-19 is Shaping the Way You Ship, Now and Into the Future
Thanks to COVID-19, retail does not resemble what it did in years past. The pandemic has caused a chaotic spike in the demand for the delivery of goods. Strict movement measures like the closing of retail outlets led to a sudden rise in demand for home deliveries of both essential and non-essential goods.
According to a new Accenture report, there is a strong correlation between this e-commerce growth and the length and severity of mandated lockdowns. According to their research in April, respondents who used online channels for less than 25% of purchases prior to the pandemic went from 1 in 20 of their purchases being online to 1 in 6—a 160% increase in online activity.
Consumer buying habits are sending more residential deliveries into parcel networks than ever before, and at an accelerated rate than predicted prior to the pandemic. Supply chains around the globe are buckling under extreme pressure, and unprecedented surges in digital commerce have limited shipping capacity and impacted delivery windows. In fact, last mile delivery is predicted to be 14% CAGR during the period 2020-2024. This means that delivery will continue to be more important than ever—one that will be an extension to your brand’s customer experience.
What does this mean for your business and the way you ship, now and into the future? We have a few predictions:
The pandemic has revealed that couriers are able to implement peak surcharges and process changes quickly to counteract their own escalating costs and manage new, unprecedented, yearlong peak season like capacity with the fast pace of e-commerce growth. This growth will only continue, crowding more last-mile deliveries into all transportation networks and increasing costs for shippers in the process. As parcel carriers adapt to these volume shifts, they’re instituting new surcharges, adding pricing complexity and targeting rate increases for the hard-to-handle shipments. In turn, costs are rising, and service delays are occurring within their networks.
The average rate increase for UPS and FedEx may be the same in previous years at 4.9%, but surcharges and new fees are outside that average. A recent Salesforce report projects that COVID-delivery surcharges from traditional delivery providers will be approximately $4.5 billion when all is said and done. They can have a significant impact on your bottom line and when unmonitored and unchecked, these changes could have a drastic effect on how you manage your budget in 2021.
This additional cost structure creates cost management challenges unless you maintain ongoing visibility to your shipment characteristics and activity. In the midst of the pandemic and an e-commerce boom, the impact of those changes in 2020 has been more disruptive than ever. COVID-19 rolled into peak surcharges and now rate increases that can affect your business in different ways based on your shipping characteristics.
Having a diverse courier mix can offset a lot of these costs. Working with a local delivery partner, like ShipperBee, can help you avoid all of these hidden fees and surcharges thanks to simple, transparent, flat rate pricing.
With the shift in consumer shopping behaviours, retails stores will be critical again this year for order fulfillment. According to Accenture, retailers saw a 195% increase in click and collect dollars when physical stores closed. In addition, Salesforce predicts that brands offering store pick up—whether curbside, inside or drive-through—will see a 90% increase in digital sales over the 2020 holiday season. This shift has increased demand by retailers for small, local warehouse space and a transformation in supply chains.
These trends point to retailers accelerating the transformation of brick-and-mortar stores into local fulfillment centers, which means inventory will be moved to the source—the physical stores. As a result, Accenture estimates that 50% of all deliveries will be local by the end of 2020.
What does this mean for you as a retailer? You now have to anticipate customers’ needs in each market by leaning on customer data to guide your inventory assortment and allocation in each of your markets served. Store associates will need to be trained and re-skilled to act as fulfillment gurus, and new incentives implemented to empower and motivate these new processes and procedures.
This new shift also enables brands to fulfill orders in a matter of hours and not days, allowing merchandise to turn faster and get into the customers hands more quickly. With the shipping delays we have seen during the pandemic, this only lends to a better customer experience. Retailers can also better predict accurate demand forecasting, which is critical as inventory has been locked in stores for much of the first half of the year.
Shifting to a local delivery model also reduces your shipping costs. Working with a local courier, like ShipperBee, means simple, transparent pricing with no hidden fees or surcharges. In turn, you’ll experienced increased margins and no invoice reconciliation at the end of the month. Plus, local shippers like ShipperBee can deliver faster than the large, traditional hub-and-spoke couriers.
As discussed in our recent blog, The Importance of E-commerce Shipping and 3 Ways to Use it to Deliver a Better Customer Experience, paying attention to your delivery process is an important element to improving your customer service and boosting your business. Working with a delivery partner that can be an extension of your brand experience will set you apart from your competition as consumers today demand a positive experience across the entire value chain.
So how do you increase customer satisfaction with your delivery experience? First, we recommend offering a variety of delivery options that provide your customers the freedom to choose and receive their order in a timeframe they want. Some customers may want it next day, while others are willing to wait and select a slower modal of shipping, especially those that are more environmentally conscious. You can check out how planet friendly shipping is possible in our Eco-friendly Shipping: The New Way That’s Better for the Planet blog.
Another way is to go above and beyond with your proof of delivery. You achieve this by offering real-time GPS-enabled tracking which allows you and your customer to pinpoint a parcel’s exact destination at any time during the delivery process. According to McKinsey & Company, transparent, real-time tracking is going to be something consumers and shippers will be tapping into as digitization of the value chain continues to evolve. Another commonly used proof of delivery tool used today is text messaging when the customer provides a mobile phone option to receive such messages.
When texting isn’t an available option, you’ll want to select a courier that offers additional safeguards, especially as porch pirates become more and more common. ShipperBee, as an example, rings the customer doorbell in an attempt to get a virtual signature from the recipient. Our drivers also take photo proof of confirmation of the address and house so you and your customer can see the date and time stamp of delivery and the exact destination the parcel was delivered to.
COVID-19 has not only reshaped consumer shopping behaviours and delivery of goods, it has also impacted the $900 billion-a-year packaging industry. In the same McKinsey & Company report, the online shopping mega trend is expected to shift packaging design in fundamental ways.
Packaging companies need to rethink packaging design beyond the usual cost, convenience and performance requirements and place focus on three new requirements: sustainability, design with hygiene in mind, and design for e-commerce, ship-ready design and direct-to-consumer models.
Designing with a strong sustainability narrative include eliminating unnecessary packaging, increasing the use of recycled content in packaging materials and supporting consumer education on recycling. It also involves going a step further by taking the full circular economy into account and the direct environmental impact of producing packaging materials.
As consumer awareness of hygiene and safety concerns remain on high alert, and undoubtedly long after the pandemic, there will be a continued emphasis on package materials that reduce virus viability. One study published by the National Institutes of Health in March shows that COVID-19 can remain on package material anywhere from 24-72 hours. Retailers and packaging manufacturers will implement new package design that is geared toward protecting consumers from virus transmission.
Package designs will also be optimized specifically for e-commerce that could be ship-ready with minimal added transport and protective packaging—preventing damage, boosting productivity and improving the overall customer experience. This includes tamper proof packaging, packaging and systems for returns, and improved unboxing experiences.
There are many changes underway and, on the horizon, when it comes to the world of shipping. Overall, they look to be positive changes when it comes to increasing your margins and providing an exceptional customer experience across the value chain.
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