How Has Increased Vaccination Rates Affected US E-Commerce Logistics?
Recently, we have been reporting on COVID’s impact on e-commerce logistics in places like Europe and Australia. But how has e-commerce logistics changed since vaccinations started getting rolled out, particularly in the US?
The US started vaccinating its population from as early as December 2020 and have significantly ramped up their vaccination effort this year. As of June 2021, 46% of its population have been fully vaccinated and the number continues to trend upwards.
With more people getting vaccinated, we have observed some notable changes when it comes to:
Growth in shipment volume
Ratio of parcels delivered on the same day
Proportion of parcels delivered to collection points
Note: This report will cover the pre-vaccination period (H2 2020) and post-vaccination period (H1 2021) and see how they match up to each other.
Let us take a closer look at the latest data:
E-Commerce growth in the US is not stopping
The pre-vaccination period saw a 17.4% growth in shipment volume as compared to a significantly lower 1.4% growth after the vaccine roll out. Despite the lower rate of growth, this still indicates a continuous growth in the consumption of e-commerce products even after vaccinations.
With estimates of e-commerce hitting $1 trillion in 2022, the e-commerce boom shows no signs of stopping which explains the continuous growth in shipment volume. In fact, consumers spent $121 billion alone online early this year even as more people get vaccinated.
However, the slower parcel volume growth in H1 2021 can be explained by the rise of physical retail as people head back to shop for essentials after getting vaccinated — as much as 35% of American consumers have made increased visits to grocery stores since receiving the vaccine. Foot traffic to US malls have steadily gone up since the end of year 2020, increasing as much as 20% weekly from February through March 2021.
Another reason for the higher shipment growth in H2 2020 was because this period preceding the roll out of vaccines also included peak season shopping holidays such as Black Friday, Cyber Monday, and Christmas, which saw carriers delivering over 3 billion parcels — a record-breaking number in 2020. This is also another explanation for the significant growth in parcel volume in the pre-vaccination period as compared to the post-vaccination period which only comprises H1 2021.
There was a dip in same day deliveries post-vaccination
The same day delivery ratio before vaccines were rolled out stood at 1.2%, with this number dipping to 0.8% in the post-vaccination period.
Both periods generally saw a significantly low proportion of same day delivery. This is due to the constant delivery delays experienced in 2020, where the average transit time stood at 3.2 days. Amazon, the largest online store in the US that sells a wide range of items, saw severe delivery delays at the onset of the pandemic and was unable to offer same day delivery to shoppers. The delayed deliveries persisted even in 2021, which is why the ratio of same day delivery remains low.
The even lower ratio of same day delivery in H1 2021 is a combination of both delayed deliveries, as well as consumers increasingly purchasing items from abroad amidst a growing cross-border e-commerce market. With more US consumers shopping from foreign stores online, shoppers would see an increase in the time taken for their goods to be delivered from abroad.
Additionally, more shoppers returned to physical stores to shop in the post-vaccination period. It is likely that these consumers are making same day purchases in-person as opposed to waiting for their online shopping orders to arrive, explaining the fall in same day deliveries in 2021.
More parcels were delivered to collection points in the post-vaccination period
4.7% of parcels were delivered to collection points during the post-vaccination period as compared to the 1.0% of parcels in the pre-vaccination period.
This notable increase is due to how there was an increased reliance on home deliveries in 2020. This is in contrast to 2021 where the vaccine roll out encouraged more consumers to use alternative delivery methods.
One likely cause for the greater use of collection points in 2021 is due to how collection points are more complementary to the urban lifestyle of shoppers. 2021 saw more people returning to the office for work. The return to the office, combined with the accessibility of collection points in urban areas, are possible factors explaining the higher proportion of orders delivered to collection points.
Moreover, an increasing number of American consumers are preferring alternative delivery methods over standard delivery options. For instance, ‘Buy Online, Pickup In-Store’ (BOPIS) experienced a 67% year-on-year growth in February this year, showing an increased adoption of other forms of delivery.
With more shoppers getting vaccinated, returning to work, and being more open to alternate delivery methods, we expect the use of collection points to rise with time.
What will happen in H2 2021?
With the delta variant spreading rapidly among the population on the one hand, and the slowly increasing uptake of the vaccine in the US, the state of e-commerce logistics in a post-vaccination era remains uncertain. We look forward to seeing how this will develop over the remaining half of the year, especially during peak season at the end of 2021!
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