It’d be an understatement to say that 2020 has been an unprecedented year. The COVID-19 pandemic has created a confusing time of isolation, anxiety, panic buying, and a shift in how we shop. The uncertainty of 2020 has created a situation that’s been fluctuating constantly, with the numbers of people deemed safe in a group dwindling, restaurants, bars, and gyms shutting down, retail stores limiting shopping (or not allowing it at all), and office workers working remotely full time. With nothing else to do, people have turned to E-Commerce to shop their fears away and get their necessities.
This pandemic has accelerated a trend that was already transforming the worlds of retail and consumer goods distribution, into a wildfire that’s spread across the globe, across all verticals. E-Commerce adoption and the digital transformation of traditional retailers have nearly jumped a decade’s worth of evolution into half a year and made it abundantly clear that brands and retailers need to evolve and adapt, in order to see 2021 and beyond. This is even more critical for the SME’s who are trying to break out of the shadows of the bigger, online giants.
With an increase in online buying, comes an increase in logistics and fulfillment. After all, you need to have a distribution channel to get your products into the hands of people who can’t go outside. This influx of orders has strained the existing distribution channels to the brink, and small to medium retailers have to evaluate how they manage their inventory, their customers, and their fulfillment in this new normal.
IN THIS ARTICLE:
The New Landscape
As people have embraced social distancing as a method to slow the spread of the pandemic, there has been a notable decrease in brick-and-mortar shopping. According to a study conducted by the Organization for Economic Co-operation and Development (OECD), the pandemic has seen an accelerated expansion of E-Commerce toward new firms, customers, and types of products, while existing companies have had to adjust and catch up. This pivot for new and existing retail establishments has provided new segments of purchasers who are seeking a variety of products from the convenience and safety of their homes. Brick and mortar retailers/brands have had to build strong E-Commerce and Omni-business models to revive lost sales and build a stronger business. Despite restrictions and shutdowns, it has allowed some retailers to survive and thrive, while others have found it difficult to stay alive.
Across the first half of 2020, countries across the globe saw a rise in online orders, but nowhere was that more prevalent than in the Asia-Pacific region. While many other countries in the western hemisphere saw their estimates rise at the tail end of Q2, Asia-Pacific saw a 70% increase year-on-year during Q1, as their confinement measures started earlier than in the latter half of Europe and North America. With that rise, changes in the E-Commerce and fulfillment segments have emerged, and they’re here to stay in a long-term fashion. In light of any future new waves of the pandemic, the convenience of new purchasing habits, the costs already invested by companies in digital infrastructure, and the new sales channels that have emerged, this retail and shipping landscape is what we have to look forward to.
The Safety of Ordering Online
One of the most predominant questions regarding COVID safety and the sudden rise of E-Commerce was the question of how safe online orders were in regards to the virus living on packages. Given the spike in online purchases, and the comprehensive network of distribution channels, it certainly was a valid question; one with a comforting answer. Not very likely.
Early on, both the CDC and the World Health Organization were able to address this, stating that it’s very unlikely that COVID-19 would survive on purchased items from the time they were packed to the time you receive your package. As well, the shipping conditions would make it extremely difficult for someone to get exposed to the package itself, due to the length of time in transit and ambient temperatures. Even if you were to receive a package from a location with reported cases, it is also extremely unlikely that a) a person who’s been infected interacts with your package, and b) again, the temperatures and conditions would make it extremely difficult.
That said, it still bears keeping in mind that for now, and the conceivable future, diligence, and caution are good practices in dealing with packages that you’re either shipping or receiving. The likelihood of catching the virus from a shipped item is extremely unlikely, but never zero.
The New Normal of Shipping Disruption
While experts on the matter have insisted that we have nothing to worry about when it comes to packages arriving coated in the virus, there has been a noticeable shift in how effective and efficient our delivery systems have become. No doubt you’ve noticed that things take longer, and package tracking is a very hit-and-miss proposition. In order to keep everyone safe, the entire system of parcel processing and shipping has had to be transformed. Depending on the national and local public health authorities, many different safety precautions have been implemented in distribution facilities, including physical distancing in areas that weren’t necessarily designed to keep people 2 meters apart, increased screening protocols, allowing employees to work from home, as well as keeping minimal staff on site. This has led to delays in processing, tracking, and has stretched the existing fulfillment and logistics networks to their breaking point.
Add to that the impact of the disruption to air travel that the virus has caused. Over 90% of the world’s air cargo capacity has disappeared nearly overnight due to the slowdown in commercial air travel. Cross-border shipments that once reached all the corners of the globe within a few days at a relatively low shipping cost, are now arriving after weeks or months in transit, with a higher shipping cost if you want it any faster. This has led to a large gap between brands with a strong localized fulfillment infrastructure and those that have to rely on less mature and scalable supply chains, that utilize long shipping routes to reach their destinations.
As if that wasn’t enough, is the precedent set by the E-Commerce giants such as JD, Amazon, and Alibaba, which have invested billions to build their own sophisticated supply chains, making the last mile shorter and reducing delivery times. This ‘prime-ification’ despite pandemic precaution has created consumer expectations that are nigh impossible to achieve if you’re not one of the big guys.
For brands this means a choice:
Standard cross-border shipments go to Sea Freight and will take weeks to arrive for most routes. This is unlikely to change, given that air freight capacity will take until 2023 to recover.
Switch to Express Crossborder Shipping at a steep cost. Airfreight express packages that ship across countries in a few days cost 5-10x more than before covid, leading to a shipping cost of 10-50USD per package for the Asia Pacific.
Fundamentally redesign your supply chain and switch to localized fulfillment, to offer fast and inexpensive shipping and create a more resilient supply chain that is robust against future disruptions.
In this new paradigm of logistics in a pandemic, E-Commerce SMEs are faced with a challenge.
Make Your Customer Service Exceptional
Understandably, this has been a source of anxiety on both sides of the equation. From a retail/E-Commerce perspective, owners and entrepreneurs are trying to figure out how to maintain an exceptional customer experience, when there are impacts on your supply chain, the demand for your product is higher than ever, and your timelines with your third-party logistics (3PLs) are uncertain. Plus, you know that you are going to get a lot of confusion from your shoppers who want to know when they’ll receive the items they ordered. Hence, there are certain strategies that should become best practices for your E-Commerce business moving forward, implemented before, during, and after they place an order. If customers can expect information and transparency from you, they’ll be more likely to be patient with the delay, and shop again in the future.
Regardless of the operational, logistical, and shipping challenges that your business faces currently, you can still create an exceptional experience for your customers, with the following:
Address Known Issues on Your Website
If you know that there are going to be delayed, you should update your commerce channels: your website, marketplace listings, and any other platforms you’re on. This could be as simple as a bar at the top of the homepage, or a pop-up callout that communicates shipping delays, backups, and any other issues. Other E-Commerce retailers have put this information further along in the customer journey, right before they check out, to ensure that they’re getting their customers invested, before sharing realistic timelines.
Make sure to include links where shoppers can go for more information about ordering, a holiday shipping calendar (if it’s the holiday season), as well as any customer support contacts in case there are further questions.
On the other hand, if you’re not expecting any delays, call that out too. Why not promote the fact that you can offer timely deliveries when your competitors can’t?
Update Your Transactional Emails
Relying on automated emails can be a double-edged sword, especially in these times. It’s best to make sure that your order confirmations and your shipping confirmations are not only reflecting the usual details of the sale, but also updating the customer on how you and your team are handling the items, and what your shipping partner’s process for contact-less delivery is. Retailers have a responsibility to ensure that they’re taking all the necessary precautions and convey that to their customers.
It would also be helpful to add an additional email; the order delivered email. This informs the customer that their order has actually reached their doorstep or mailbox. In these times, you can’t over-communicate with your customers, and it offers you both some peace of mind.
If you know that there is going to be a backlog of shipments and an inevitable delay, add in a few messages to your customers to acknowledge the delay and reassure customers that their order is still on the way. Despite the fact that this has been the case for the better part of 2020, there is still an onus on an E-Commerce retailer to remain open and trustworthy with their customers about delivery timelines.
Offer Free Shipping
Free shipping can actually lower your customers’ expectations for faster delivery. Given that they’re not paying extra for same-day delivery, or next-day delivery, they’ll be more forgiving. Once you’ve lowered their expectations, you can still do your best to improve your shipping times and mitigate any delays.
Within your shipping offer, however, it would also be a good idea to offer shipment tracking as well. Watching your package travel in real-time can reduce the anxiety and frustration that comes with delays.
Be Flexible And Forward-Thinking
Finally, this is the perfect time to re-evaluate your inventory management system, your 3PLs, and your existing retail calendar. While your business operations are trying to be as agile as possible, there are ways to approach this new normal head-on and address any logistical complications with your fulfillment network. Perhaps consider starting your seasonal sales earlier, promote gift cards more often, and be more forgiving in your returns policy. Everything is on the table to ensure there’s a buffer of time between purchase and delivery in a timely fashion.
From a logistical standpoint, you need to ensure that your partners are prepared for an increase in orders and understand how they plan to maintain fulfillment in a timely manner. In fact, it would be best served to get a complete breakdown of how much support your shipping solution has for your business, and what is the time/resources/effort allocated to your account. Yes, longer shipping and delivery times are the new normal, but that doesn’t mean that there aren’t solutions to get things out marginally faster and easier.
If despite everything you do on the retail E-Commerce side to delight your customers, ends up being in vain because your fulfillment partner doesn’t have the resources to keep up, and you’re spending too much time dealing with that side of the business, perhaps a change in a partner might be in order.
The perfect solution would be to seek out a localized fulfillment partner to help you overcome COVID disruptions. Localized fulfillment relies on small, numerous fulfillment centers, located in key areas to stock and ship out goods for e-commerce orders within a short lead time. By bringing the product closer to the customer, then creating and dispatching orders, those orders can be fulfilled faster, on a smaller footprint, and can employ innovative final mile delivery solutions.
Locad Can Help You Face Your Challenges
It’s already hard enough to navigate a pandemic while trying to run your E-Commerce store and try to keep your customers happy. You don’t want to have to worry about the fulfillment side of things right now. You just want it all to be effortless, so you can focus on navigating and growing. But this is the state of the world right now, and everyone is facing the same issues; it’s getting harder and more expensive to ship and distribute. This is why you need Locad. We are a platform for multi-channel fulfillment, on-demand warehousing, with a powerful distribution network for your business. Whether you’re just selling on your own website, or you’re relying on a shop system such as Shopify or Woo, or if you’re on a marketplace such as Amazon or Lazada. It doesn’t matter. We can offer efficient tools to deliver a best-in-class customer experience.
Locad offers a supply chain as a service. Our product is a holistic and simple technology platform to manage the backend infrastructure of your E-Commerce. We can work across your multiple sales channels and consolidate your inventory pool, so you can have a birds-eye view of your stock. You’ll have real-time visibility of sales, inventory, and your KPIs. Then, our distributed fulfillment network brings stock closer to customers, shortening that last mile, making your delivery faster and more cost-effective. Finally, our on-demand fulfillment capacity makes it easier to expand your business and explore international markets.
Granted, you do have the option of leveraging the fulfillment capacities of the big marketplaces such as Amazon, Shopee, Zalora, etc, but that leaves you entirely dependent on a platform that controls the front-end customer-facing side of your business, and the back-end infrastructure. And that still doesn’t solve the ongoing challenge of omnichannel distribution; inventory management across multiple platforms. After all, this is YOUR business on the line, and the big operators are only looking out for their profit, not yours.
Our solution works for you and your brand, and our interests are aligned with your growth and the success of your business. This is already a trying time, and we’re still all getting used to what the future holds. While you’re holding down the front end and winning over customers, let us handle the back-end infrastructure and help you deliver results and speedy deliveries.
Experience fulfillment by LOCAD
Grow your business through LOCAD’s simplified and automated fulfillment solution
- Unlimited and scaleable warehousing
- Pay only for what you store
- No hidden fees or lock-in periods
- Zero inbound costs
- Wide integration with marketplaces
- Automated logistics and delivery
With extensive experience in e-commerce and logistics, Constantin Robertz is the Chief Executive Officer and Co-founder of LOCAD — an end-to-end fulfillment solution empowering online businesses through warehousing, picking and packing, sales analytics, and last-mile logistics integrations. Prior to LOCAD, Constantin was the Chief Executive Officer and President of technology-driven logistics solutions provider Entrego and the Managing Director of Zalora, Asia’s leading online fashion destination. With a background in Business and Management from Universität St. Gallen combined with his expertise in e-commerce, Constantin leads the business strategy and development operations of LOCAD to ensure success.