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870 billion dollars. That is the total amount of e-commerce sales made in the US during the pandemic last year.
A recent report by the US Department of Commerce Retail Indicator Division revealed that e-commerce represented 13.2% of all US retail sales in 2021, with the fastest growing categories being furniture, building materials and electronics. As the second largest market for e-commerce in the world, the US has contributed to the global growth rate of 29% over the past year. According to Tiffany Jensen, Executive Vice President of the Americas at Parcel Perform, “The opportunity in the US market is tremendous, with revenue from retail e-commerce projected to surpass $1.3 trillion by 2025.”
With that said, how did the country’s state of e-commerce measure up in 2021? How has its cross-border logistics market evolved during this period? And lastly, how can retailers make the most out of this enormous opportunity in the region? Let’s take a look!
98% Of Parcels Were Successfully Delivered on First Attempt
Despite the pandemic-induced surge in e-commerce sales, 98% of parcels in the US were successfully delivered on the first attempt. When it comes to e-commerce retail, a successful first-attempt delivery is everything. On top of improving customer satisfaction (and thus, customer retention), it can also help businesses avoid additional costs such as rescheduled deliveries and extra manpower which are incurred in the event of a failed delivery.
One other interesting observation is that the delivery success rates on weekdays and weekends were roughly the same throughout the country. This could be a result of retailers adopting the contactless delivery model — a new norm in the post-COVID era’s last-mile logistics. Today, customers can easily opt for contactless deliveries, which allow delivery executives to place the parcel outside customers’ home even when they are not home during the weekend.
Parcels in the US Had an Average Transit Time of 3.6 Days
Contrary to expectations, parcel delivery performance in the US did not see much improvement in the past year. This is more particularly so in terms of transit time, which refers to the interval taken for parcels to arrive at their destination, measured in days or hours. As a matter of fact, the average transit time deteriorated from 3.2 days in 2020 to 3.6 days in 2021. This increase in transit time despite the carriers’ concerted efforts to keep up with the e-commerce boom is likely due to the global container shortage experienced from July to September 2021.
With persistent supply chain issues rippling across industries, delivery delays tend to occur more frequently than anyone would like. In such situations, it is imperative that retailers focus on what they can control: staying in the good graces of their customers by informing them about the issue at hand. Given that the majority of negative online reviews are associated with long transit times and unprecedented shipping delays, e-commerce retailers should consider integrating powerful machine learning algorithms to help provide customers with the most accurate real-time updates. The key is to maintain consistent communication with shoppers throughout the delivery journey and ensure they know when their parcels arrive.
Most International Parcels Entering the US Originate from China, Canada, and Mexico
Cross-border sales, or the selling of products through e-commerce stores beyond national borders, have now become the new frontier of e-commerce. Rather than solely focusing on their domestic market, cross-border e-commerce allows retailers to expand their revenue and customer base. According to the leading research firm Valuates Reports, the global cross-border e-commerce market size is forecasted to reach USD 508700 million by 2027. As far as international parcels coming into the US are concerned, most of them originate from China, Mexico and Europe (UK, Russia, Poland). Meanwhile, the majority of packages leaving the US are headed towards Canada, Australia and the UK.
The Way Forward for US Retailers
The recent spike in consumer demand has highlighted that marketing opportunities are vital to fully leveraging the business’ full potential. Many often forget that the e-commerce journey also encompasses the delivery experience, one that could make or break a customer’s decision to repurchase. In this regard, Tiffany observed that whilst many US-based retail companies have displayed sophistication in the pre-purchase journey, i.e. in marketing their brand identity and creating personalized customer experiences, she found it surprising that few have prioritized optimizing the post-purchase e-commerce experience. In her view, “…there is a massive opportunity to leverage technology in the post-purchase journey to drive increased customer engagement, reduce customer service inquiries, and therefore differentiate brands from their competitors.”
Given that the market is becoming increasingly consumer-driven, e-commerce brands need to realign themselves to the behavioral changes and invest more in providing a superior post-purchase experience. With online retail giants like Amazon, Walmart, and eBay paving the way for new innovations and experiences in e-commerce, we look forward to how the state of e-commerce in the US will evolve in the post-pandemic year of 2022.