As a result of the pandemic, consumer brands have seen tremendous increases in online shopping. Upward trends in eCommerce data began almost right away and continued over the summer. But these days, those numbers straddle a line between exciting and downright frightening as marketers work at a fever pitch to match the intense demand of the peak season.
The term “peak season” comes from the travel industry and is meant to describe the times of year when the maximum or peak number of tourists engage in travel related services. In other words, a peak season in travel terms is one of a few chunks of time in a given year when people tend to travel the most or take the most vacations.
But what is peak season as it relates to logistics? Consider the same notion, but substitute human travelers with containers and/or packages and you get the supply chain market’s version of peak season.
Traditionally peak season occurs along the supply chain during the summer months through September or October for ocean containers, while for packages it is typically between the Thanksgiving holiday through the first week or two of January. Both seasons are connected as inventory from Asia, Europe or elsewhere arrives stateside in ocean containers during the summer months. Once in country, that inventory makes its way to retail warehouses, either by truck or rail, just in time for the holiday season beginning on Thanksgiving.
This is why the term often appears as a set of coordinating adjectives – peak, holiday season – and why Black Friday and Cyber Monday exist at all in the US, and Singles Day in Asia.
And much like the travel industry, for shippers, peak season presents a dangerous prospect every single year. For FedEx, UPS and USPS, the peak season requires more vehicles, more workers, and more volume. Each of these is a costly proposition that if well executed with packages delivered on time and undamaged, often results in higher customer satisfaction, increased profits, and perhaps a bit of new business. Easier said than done, even on a good year.
The truth of the matter is that many marketers are still reeling from the order volume surge that took place during the Spring lock downs. Certainly marketers, shippers, and 3PLs stood to make money, but at what cost?
At Fosdick, we tried to be transparent during that time about significant staffing issues as employees were lost to quarantine from contact tracing, direct infection, or their own anxieties about working on the front lines. Despite some terrible days, we are lucky to have come out on the other side, and largely attribute our ability to do so to the dedicated employees that weathered the storm along with us.
During the pandemic peak, Fosdick also had the unique advantage that comes with more than 50 years of industry experience. Our 20 and 30 year guys and gals have seen it all, been through it all, every category of adversity imaginable. And while the pandemic is certainly like nothing we have ever seen, there’s something to be said for the value of experience, and the scar tissue built up after all those years.
We are stronger now, and better prepared, but there is still so much for which brands and 3PLs alike just cannot possibly plan. As the second wave of the virus heats up throughout the country just in time for the holiday rush, we’d like to offer our colleagues in the industry and the many brands like those we serve whatever help we can. First, our account of some of the challenges we faced back in the spring, published in our May Newsletter. And second, a few pertinent, bite sized statistics that reflect the realities of eCommerce, DTC, and general retail fulfillment right now: some more timely order volume projections, potential pain points, potential levers, and more. Read on to learn more.
Pain Points & Potential Levers: Shipping Costs
46% of small to mid-sized businesses increased their profits with free shipping
- Shoppers don’t just avoid businesses that charge too much for shipping. They flock to the brands that offer free shipping. In a recent study, 46.5% of small to mid-sized businesses dramatically increased their profits by implementing free shipping just because so many new customers wanted to take advantage of what they see as a great value.
24% of shoppers will spend more to unlock free shipping
- Free shipping doesn’t have to be a profit eater. You can create a spending minimum that customers must reach before they can “unlock” free shipping. HubSpot research reveals that 24% of shoppers are willing to spend more so they can qualify for free shipping, so you’ll increase your average order value along the way. It’s a win-win.
58% would take some sort of action to qualify for free shipping
- Spending minimums aren’t the only way you can entice customers seeking free shipping. E-tailers can get creative and ask for email signups, a yearly or monthly fee for access to members-only perks or something similar. Customers are always on the lookout for free shipping, and 58% said they would take some sort of action to qualify for it.
Free shipping is consumers’ most important factor when choosing where to shop.
- The two most important factors for consumers deciding where to shop have to do with shipping. Free shipping is most important, but the second priority is hassle-free shipping. Third place goes to low-cost or free returns. This shows that customers value the post-purchase experience more than brand names or price tags, so e-tailers should act accordingly.
Free shipping is the second most popular email offer
- Ecommerce email marketing is one of the top strategies for building customer relationships, and in turn, subscribers get access to exclusive promotions and other “members only” offers. Clearance events and sales are the most popular offers consumers want to receive by email with 35% ranking this as their top choice. A close second, however, is free shipping with 20% of shoppers hoping for this offer in their inbox.
75% of shoppers have shopped with Amazon
- Seeing as Amazon is the largest ecommerce marketplace, it should be expected that three-quarters of consumers have shopped there to access low prices and favorable shipping. Of the shoppers interviewed, 55% of them have made purchases from different marketplaces like eBay, Wayfair and others.
112 million consumers have access to Amazon Prime two-day shipping
- One major reason American consumers have grown accustomed to fast and free shipping is because one-third of them are Amazon Prime members. There are now 112 million consumers who have access to Amazon’s free two-day shipping and are used to that level of service. Other retailers have followed suit, so the service is no longer unique to Amazon. Its prevalence has only solidified consumer expectations.
The #1 reason for cart abandonment is high shipping costs
- Modern consumers simply do not tolerate high shipping costs anymore. According to Statista research, high shipping costs are the primary reason US consumers over the age of 18 abandon their carts when shopping online. Simply put, online shoppers do not consider shipping to have a tangible value and, therefore, don’t want to pay for it.
79% of shoppers would be more likely to shop online if offered free shipping
- Ecommerce is a $4.2 trillion industry, but there are still plenty of consumers who prefer to shop at brick-and-mortar stores. One reason is because in-store shopping doesn’t have shipping fees. According to Walker Sands research, 79% of US shoppers would be more likely to purchase from ecommerce sites if there was free shipping.
Pain Points & Potential Levers: Delivery Speeds
40% of respondents did not make a purchase because of unsatisfactory delivery options
Researchers surveyed 1,888 US online shoppers to discover why they chose to not follow through with purchases, and the results were insightful. Of the respondents, 40% said they abandoned a purchase because it would take too long to arrive or would be delivered after the date they needed it. Another 20% said the delivery date was not precise, so they chose not to order after all.
Over three-quarters (77%) of shoppers have shipped items to a store for pickup
- Buy online, pick up in store (BOPUS) has grown increasingly popular in recent years, which has impacted shipping by increasing the volume of packages sent to brick-and-mortar stores or other pickup locations. Roughly 77% of ecommerce customers have sent their purchases to a physical store, and 13% of those utilized Amazon lockers to pick up items.
Same-day shipping is the #1 purchase driver for the under-25 crowd
- Speedy shipping is popular across generations, but younger consumers seek it out more than their older counterparts. (This makes sense, as Millennials and Gen Z grew up with the Internet and the instant gratification that comes with it.) It should come as no surprise that same-day shipping is the top purchase driver for US shoppers under age 25.
Only 15% of shoppers are satisfied with delivery speeds
- When shopping online, there is a wide range of delivery options—large retailers can deliver orders in a matter of hours, while smaller businesses may take a week or longer. These discrepancies result in only 15% of US consumers being satisfied with shipping speeds offered across the board. Compare this stat to their opinion of Amazon: 30% say that Amazon delivery speeds meet their expectations.
80% of American consumers want same-day shipping
- This holiday season, try offering same-day shipping to attract more customers—80% of them are looking for this service when they visit your website. Same-day shipping is not the same as same-day delivery, so it gives you a bit of breathing room while still standing out from the e-tailers who ship on their own schedule. Considering that Americans are spending 36% of their shopping budgets online, that is a large chunk of change you can secure by speeding up order fulfillment.
63% of respondents expect delivery within 72 hours
- Amazon has had a major impact on consumer expectations, especially when it comes to delivery time. In fact, nearly two-thirds (63%) of online shoppers expect their orders to be delivered within 72 hours. Forty percent say taking more than two days for delivery would prevent them from making a purchase. Many businesses now offer same-day delivery, so there is even greater pressure on e-tailers of all sizes to offer this service.
One-third of consumers stop shopping with a brand after a poor delivery experience
- The post-purchase customer experience can have a major impact on a company’s reputation and brand loyalty. A 2019 shopping study from Pitney Bowes shows that 54% of consumers will shop with a retailer less often (or never again) after a bad delivery experience, and 19% of millennials will complain on social media.
Pain Points & Potential Levers: Order Tracking
83% of US shoppers expect updates about their online orders
- It’s rare for online shoppers to visit a website, add items to their shopping carts and make a purchase all at once. It takes time to nurture prospects and convince them to become customers because you first have to prove trustworthiness. Even after the purchase, it’s best practice to be transparent with customers and provide them with regular updates about their orders. Per Narvar, 83% of US shoppers expect these updates.
More than half (53%) of US shoppers won’t make a purchase if the delivery date is unknown
- There is an element of surprise when shopping online because customers don’t actually get to try out the products before buying. However, one surprise shoppers definitely don’t want is when their orders are going to arrive. If they don’t know when their purchases are supposed to arrive, 53% will abandon their carts
Global parcel volume is forecasted to reach 200 billion by 2025
- Global parcel volume was 87 billion in 2018 and surpassed 100 billion in 2019.
2,760 packages are shipped per second
- When you break down the total number of packages shipped around the world per year, reports show that nearly 3,000 packages are shipped every second. The US has the highest parcel revenue, generating $119 billion last year.
51% expect a shipping cost refund if the order is delivered late
- Shoppers who pay for shipping expect to get their money’s worth. More than half (51%) expect e-tailers to refund them the cost of shipping in cases of late delivery.
25% is the average return rate of ecommerce orders
- Ecommerce shipping and returns go hand in hand, which is why sellers need to have both in tip-top shape before seasonal shopping gets underway. Shoppers are looking for a good return policy, automated processes, and free returns.