2020 was a year of transformation for the retail industry, with the industry’s massive shift towards e-commerce. The accelerated e-commerce growth has definitely pushed the e-commerce logistics market to reach higher ground; with the global e-commerce logistics market growing to €368 billion in 2020.
Following such a monumental year, what e-commerce logistics trends have e-commerce brands leveraged to keep up with ever-evolving customer expectations? Let’s take a look at the top 7 e-commerce logistics trends that have dominated the year so far.
1. Big Data
Big data is revolutionizing many industries and e-commerce is one of them. E-commerce businesses can leverage big e-commerce data for predictive analytics to anticipate customer behavior and market trends. With the ability to make real-time and data-driven decisions, predictive analytics give retail and e-commerce companies a tremendous competitive advantage. Big data can also develop a more personalized shopping experience by segmenting their customers based on their profile (e.g. location or gender) and past shopping behavior (e.g. purchase history, frequency, receptiveness to past offers or discounts).
Big data in e-commerce is also important to help e-commerce businesses make informed e-commerce logistics decisions and improve operational efficiency. By capitalizing on big data in e-commerce, e-commerce businesses can apply machine learning to forecast product demand, reduce operational inefficiencies, and optimize deliveries.
2. Cross-Border E-Commerce
By 2022, cross-border shipments will account for 22% of the total e-commerce shipments worldwide. In a report by International Postal Corporation, 33% of global shoppers reportedly made more cross-border purchases due to the pandemic; thus accounting for the substantial cross-border e-commerce growth thus far.
Consumers today choose to purchase from cross-border e-commerce brands because of lower costs or product unavailability domestically. With the growth of cross-border e-commerce, shoppers are offered more product variety whereas retailers have the opportunity to expand internationally and reach new customers from around the globe.
3. Customer-Centric Approach
As the age-old business mantra goes, “customer is king”. Ensuring that customers have the best shopping experience is key to a successful e-commerce business. From empowering customer decisions with product reviews to updating customers with their order deliveries, e-commerce businesses can take action to improve their customer experience.
With the increased use of e-commerce to fulfill their needs, customers are demanding delivery alternatives to reach them faster; 68% shared that they will only purchase if there is an option for fast shipping. Big retailers such as Amazon and Walmart have offered same-day delivery and next-day delivery to cater to these demands.
4. Direct-to-Consumer Fulfillment
Brands have traditionally used retailers or wholesalers as their intermediaries to consumers. In fact, there were very few direct-to-consumer (DTC) brands prior to the pandemic. With the shift to online retail and closure of brick-and-mortar stores, however, we observed the rise of DTC brands this year. With DTC brands witnessing astronomical sales growth, traditional retail brands and conglomerates are also investing in direct-to-consumer strategies and addressing the DTC fulfillment challenges that come with it.
Many global retailers such as Adidas, Under Armour, and Nike had significant growth in sales from their DTC channel over 2020. With DTC fulfillment, retailers will not only have full control over their shipping but can also build stronger relationships with their customers.
5. Parcel Collection Points
Collection points and parcel lockers have been a trend we have observed since the pandemic. Not only is consumer adoption increasing, retailers are also responding to this demand by offering collection points as a delivery alternative. 73% of the Top50 retailers in Europe offer ‘click and collect’, allowing shoppers to collect their online purchases from a physical location. In the US, there are over 70,000 parcel pick-up points offered by FedEx, Amazon, UPS and USPS.
More Australian shoppers are also opting for parcel lockers and collection points since the pandemic. In Southeast Asia, parcel lockers have also started to gain popularity with over 5,384 collection points provided by Ninja Van alone.
6. Rise of Social Commerce
Gone are the days where social media is purely a marketing channel for e-commerce businesses. Retailers can now connect with customers on social media, not only to give store and product information but also as a platform to sell products directly. For example, TikTok users can now purchase products directly without leaving the application. Twitter is also testing out e-commerce features on its users.
When leveraged correctly, social commerce can help retailers to do demand planning for their inventory management. If a certain product is higher in demand in a certain region, retailers can redirect the stock of their products accordingly.
Sustainability has long been on the agenda for years. However, the pandemic has highlighted the impact of economic activity on the world’s climate and therefore the potential for businesses and consumers to make real change. For instance, with no vehicles on the road, the world had a significant 7% drop in global greenhouse gas emissions. The increase in e-commerce consumption also raised concerns about packaging waste and increased emissions from delivery vehicles.
Nowadays, there are many opportunities for retailers to incorporate sustainable e-commerce logistics practices into their processes. Numerous logistics companies such as DHL, DPDgroup, and Hermes have committed to an emission-free future with the use of alternative vehicles. To reduce packaging waste, retailers can also turn towards sustainable product packaging like Loop.
So which of these trends have you observed this year? Competition in e-commerce logistics today is stiff today, and e-commerce businesses should examine how they can reach their business objectives using one or more of these trends above to differentiate themselves.
The e-commerce logistics market is ever-changing and we are excited to see what’s in store for 2022. What will the future of e-commerce logistics be like in 2022? Do look out for our 2022 edition next year!