DISRUPTING RETAIL – THE IMPACT OF ONLINE SHOPPING
Date: February 9, 2016
|
Posted by:
Originally published on MENG Blog.
VIEW ON MENG BLOG
Online Shopping Pick-up

Amazon led holiday hiring this past season with 100,000 seasonal workers, up 25% from the prior year.  the retail giants continuing growth is primarily driven by demands stemming from the e-commerce market and online shopping.  Amazon’s hiring trends are an important of the acceptance of online retailing.  It was a brilliant decision for Amazon as this past holiday season saw a record number of consumers making more of their purchases through online shopping and across digital channels.  While total retail sales grew 7.9% year-over-year (YoY), e-commerce spending jumped 20% YoY according to MasterCard SpendingPulse.

In fact, this past holiday season demonstrated how all retailers’ strategies are shifting to meet the demands of consumers.  From purchasing behaviors to delivery of online orders, consumers have more choices and more information and are demanding better service.

As consumers, we have experienced this shift.  We have entered the “age of round-the-clock retail” as noted by BI Intelligence, which also recently reported the following based on holiday retail numbers:

  • Specific shopping days, such as Black Friday and Cyber Monday, are becoming less important.
  • Consumers are spreading out their retail purchasing across channels, forcing retailers to spread out their online marketing budgets.
  • Paid search stood out especially as a major source of spending by retailers.
  • Mobile continues to drive the most sales growth for retailers, but sales still did not keep up with retail traffic. However, BI Intelligence expects mobile commerce to rise by a compound annual growth rate (CAGR) of 39% between 2015 and 2020 compared to desktop-based e-commerce which is expected to remain at current levels over the same period.

One of the most noticeable disrupters of this past holiday season was the shipping issues due to the growth of online shopping.  The holiday spike in sales put a news worthy strain on the shipping and logistics industry.  According the BI Intelligence, “holiday shipments this past season increased 10% and 12% YoY for UPS and FedEx, respectively.”  As a result, both companies struggled with the increase in volume as well as higher customer demands.

  • The number of UPS ground packages delivered on time during the holidays fell to 91% in 2015, down from 97% in 2014, according to ShipMatrix.  Additionally, the Wall Street Journal reported that UPS managers were called in to help sort packages in warehouses.
  • FedEx’s on-time delivery rate during peak holiday shopping this past year was 95%, lower than usual as well. 

For online shopping, shipping and delivery are now part of the customer experience.  Beyond the cost, consumers want convenience.  Larger companies, such as Amazon, are investing in alternative shipping methods—drones, same day delivery—as an enticement to buy as well as a proofpoint of superior customer service.

Some larger brick-and-mortar retailers offered package in-store pickup.  Typically, online shopping purchases picked up in-store do not have shipping charges attached to the purchase price, which is attractive to consumers.  Termed “click-and-collect,” approximately 32% of holiday shoppers in the U.S. used in-store pickup according to the International Council of Shopping Centers.  And of those customers picking up their e-commerce packages in-store, 59% bought additional items in the store.

While online shopping continues to grab the spotlight, brick-and-mortar retailers are also able to offer new opportunities to excel in the customer experience.  Bottom line, consumers are in the driver’s seat when it comes to retail and e-tail, and companies will need to meet these new and evolving demands to win online shopping customers’ loyalty.

Bobbie Wasserman

0 Comments

Leave a Reply

Your email address will not be published. Required fields are marked *