2020 Growth in E-commerce
Article submitted by: UPS Cargo – TIACA Trustee Member
Written by: Houston Mills, Vice President, Flight Operations and Safety, UPS
18% growth. That’s what e-commerce is looking at in 2020. That’s robust, even in the face of a pandemic-fueled recession, social justice protests and a contentious political environment that have made the business environment uncertain.
As shippers and forwarders, TIACA members are feeling these uncertainties too. Business is strong for the mainline cargo carriers, but common carriage options have dwindled. Your customers are trying to figure out how to source components and products with factories in limited production. And your stakeholders aren’t sure how fast, full or long their supply chains should be.
Yet that 18% growth, which translates to 15% of all retail spending, suggests there is opportunity. There is. But it requires discipline and insight.
While most TIACA members aren’t customer-facing, at least from a retail perspective, it’s important that we understand the conditions our retail customers are facing, since their success drives a large portion of ours.
To that end, UPS is happy to share the results of our longstanding “Pulse of the Online Shopper” research with our fellow TIACA associates.
Let’s start with the big picture. Pulse research shows retail success will come down to two factors:
- Capturing market growth by moving (further) into e-commerce
- Differentiation in customers’ brick-and-mortar experience
Our customers must understand who they are and what their customers want, then offer a consumer journey that matches. They can compete in brick and mortar if they focus on low prices and/or unique retail experiences. They’ll be more successful online if they offer large product selection and fast shipping speed.
Our research also shows they’re best served by picking a path and sticking to it, not trying to straddle both.
Whichever way our customers decide to go, there are supply chain implications for us as shippers, forwarders and logistics providers. What quantities are moving and where? Are we working from centralized, end-of-runway express facilities or delivering to individual stores? What kind of turn times do customers want? These are things we’ll have to understand from our customers.
UPS’s Pulse research showed that e-commerce consumers want choice, control, convenience and transparency when completing online transactions. They want to build a relationship with a retailer through an entire ecosystem of easy-to-use online services.
Our solutions will have to be flexible. A consumer who chooses speed over cost on a Tuesday may turn around and choose cost over speed on a Thursday.
Flexibility also includes omnichannel shopping. Consumers may make some purchases in store, some curbside, some online, and some via a hybrid of all.
End consumers prioritize visibility into inventories and product tracking, possibly even as far as into a TIACA member’s warehouse or aircraft in transit. Consumers want to confidently shop with the full knowledge of what products are available and when they will arrive.
And everyone wants ease of returns. So we need to be nimble in retracing our steps.
Trust and transparency are emerging as key value drivers for customers as they decide where they shop. The COVID-19 pandemic has only accelerated this trend. Brands that can demonstrate that they are doing the right things for customers, their employees, and the community will have an opportunity to win and retain new customers.
In response to consumer demands, retailers – our customers – are adapting several approaches of their own to deal with the accelerated challenges of e-commerce. They expect to have an end-to-end view of all parts of their inventory life cycle, from manufacturing to transportation to the customer’s door.
To minimize uncertainties, some companies are making supply chains shorter, both in terms of where products are manufactured and where inventory is stored, creating faster reaction times and greater flexibility to deal with new challenges. And as online and offline sales continue to merge, brands are creating systems that allow for seamless omnichannel operations.
We TIACA members may be the back-end surrogate that facilitates this trust relationship for our customers; our success will be symbiotic with that of the retailers we serve. We can all share in that 18% e-commerce growth if we can move nimbly and effectively, even in these uncertain times.