If there was ever any doubt about the staying power of online shopping, the COVID pandemic has erased it. According to U.S. Census Bureau numbers, online shopping soared by 43% in 2020, up $244.2 billion from the previous year. Total online sales eclipsed $815 billion. That is all well and good, but now what?
COVID having reached endemic stage has encouraged more people to go back to in-person shopping. But the trend back toward traditional retail has barely had an impact on ecommerce and online shopping. People continue to shop online because it is easy and convenient. At this point, the online model is firmly entrenched in many parts of the world.
This leaves the retail industry having to deal with a new reality. For some companies, the question is whether to continue brick-and-mortar operations. Is it better to go fully online or offer a hybrid experience? But that is not where the decisions end. There is so much more to think about.
It goes without saying that shipping is the linchpin of e-commerce. Without shipping, you don’t have the ability to sell online. This suggests that a company’s choice of shipping partners is critical to its success. So is the shipping model.
As far as that goes, there are two primary choices: free shipping and customer-paid shipping. Free shipping is preferred by customers for obvious reasons. But it does present some hassles for retailers. Customer-paid shipping is just the opposite. It is easier on retailers, but customers don’t like it.
As far as shipping partners go, retailers should not assume all shippers are alike. For example, international shipping requires a partner capable of reaching just about any destination in a timely manner. Texas-based Preferred Shipping says DHL Export Express can get most packages to their destinations within three days. There are not a whole lot of international shippers able to honestly claim that.
Retailers have all sorts of options, not only for carriers, but also for the services they provide. There’s standard shipping, next-day shipping, basic shipping for smaller packages, and custom shipping for larger ones. It is almost overwhelming.
Inventory and Stocking
The e-commerce model requires a new way of thinking about inventory and stocking. Retailers operating only brick and mortar stores tend to store their inventory on site. Chain operations might utilize separate warehouse space through which inventory is distributed to local stores.
The e-commerce realm offers so many more choices. Retailers can maintain onsite storage. They can warehouse their stock at a remote location. They can even choose the dropshipping model and avoid having to stock any inventory at all.
Hand-in-hand with inventory and stocking is order fulfillment. It is not a given that all e-commerce operators will fulfill orders in-house. Many do but some choose to contract order fulfillment with a third party. That third party receives all the retailer’s stock. It handles warehousing and inventory management. As orders come in, their staff picks, packs, and ships.
E-commerce operators even need to think differently about returns. In a brick-and-mortar environment, returns are not too complicated. Customers simply bring products back to the same location at which they were purchased. In the online world, merchandise needs to be shipped back. Who pays for that? Who handles the shipping? Business owners need to consider such things.
Despite its challenges, e-commerce is thriving. People appreciate being able to shop online so retailers are finding a way to make it possible. And now that it’s entrenched, online shopping is going to drive the evolution of retail for at least the next decade or so.
For more information on how returns affect your logistics, please see the accompanying resource.
Infographic provided by KGR Logistics – managed transportation solutions for your business