This peak season may seem out of the ordinary because of the pandemic, but the trends in increased e-commerce are most likely here to stay. Even though 61% of shoppers felt safe going to the store for holiday shopping, many brick and mortar stores have closed and may not ever open again.
Online shopping was already increasing in popularity, and shoppers being isolated indoors since March has only accelerated that shift. “It’s amazing how e-commerce has converted buying habits for so many people who previously preferred traditional brick and mortar stores,” says Mark Fiorini, President of Westgate Global Logistics, “They were forced into online purchasing initially earlier this year but now it seems they realize all the benefits and have converted their behavior.” With more people staying at home, having packages of groceries, clothing, and household items show up at their door is seductively easier than taking a trip to fight crowds and lines at the grocery store or mall.
Predictions from both Forrester and Deloitte say that online shopping will boom in the holiday season. “For the last four years, e-commerce growth has averaged between 13% to 17% increase, and last year it was up 14.7%,” says Ron Sides, Deloitte’s vice chairman and U.S. leader retail and distribution, “This year it will go ballistic, somewhere around 25% and it may go higher.”
As a result of this boom, transportation capacity has been tight with inventories running low at many places. At the same time, the boom in e-commerce is good for the trucking industry when it can keep up, particularly if companies are connected to order fulfillment. There are more LTL and final mile shipping needs with a high demand for at-home delivery. While LTL has risen, the truck volumes will most likely stay consistent, with the length of hauls and types of shipments changing. Couriers or ride-share type shipments are being seen as innovation in new services, where e-commerce middleman warehouses do order fulfillment and distribution. Because of the increased demand for goods, spot rates were up 10% year over year in July and have continued to trend upward, according to DAT. The current rebound could be a result of suppliers catching up to pent up demand.
The normal holiday shipping surge on top of an already tight capacity market has been challenging for many supply chains. Companies are scrambling to re-evaluate the resilience of their supply chains, looking for more transparency in their value chain, and diversifying the sources of their products so they can shift more easily when hit by a disaster.
When the pandemic shifted purchasing habits to be online, shipping patterns changed. The Resilience360 and Business Continuity Institute survey found almost 15% of shippers had seen their ocean transport significantly affected by the pandemic. The drop in in-store shopping severely disrupted east-west shipping routes, and put pressure on the ships delivering goods to the west.
But now that people are used to ordering more online, the trend may continue even after the pandemic is over. “E-commerce is likely to slow once social distancing is lifted,” said Bob Costello, chief economist at American Trucking Associations. “However, I suspect that some of the market share gains that e-commerce grabbed will remain with e-commerce.”