It seems that consumers like the idea of online shopping. The fifty percent jump in online at the start of the pandemic was significant and might have been expected to fall back as shops reopened. It may still be too soon to say but early indications are that this change is permanent. What does this mean for retailers and their warehouse operations?
To understand the significance of the increase in online we need to step back to the dark ages. Back in December 2006, online sales barely registered in the overall statistics, representing just 2.5% of total retail. That figure rose steadily over the next decade or so. By the end of 2019 online was growing by around 18% each year and accounted for about 20% of all retail. Then came Covid-19 and the world changed.
With all but the essential shops closed consumers had little choice but go online. Within weeks online jumped by 50% to well over 30% of all retail. Although this figure fell slightly later in the year as many shops reopened it did not go back to anything like pre-pandemic levels. There are probably all sorts of reason for this, including the ongoing impact of in-store precautions such as limiting visitors and social distancing that took much of the fun out shopping and no doubt deterred many. But perhaps the biggest factor is that once people had tried online for the first time, they realised it was far more convenient, offered broader choice, and was better value than going to a real-world shop.
Well into 2021 the proportion of online has remained at around the 30% mark and most industry predictions now suggest this is the new baseline. In the next few years, assuming no more significant lockdowns, online will revert to smaller but steadier growth and will approach 40% of all retail within a couple of years. That is double the level immediately prior to the pandemic.
That is significant growth and it could present some novel challenges to e-commerce operators and their supply chain partners. Successful ecommerce relies on multiple factors that bind together to create the overall customer experience. These include an integrated set of customer-facing applications that enable customers to find and buy products and a streamlined fulfilment operation that delivers items to the right place at the right time. Sitting between these, and enabling both, are stock control, order picking, and other processes that are ideally overseen by a warehouse management system.
Warehouse management systems are generally justified by the productivity, efficiency, and cost-saving benefits they deliver through improvements in accuracy and consistency throughout the warehouse. Properly configured and implemented they streamline the processes they oversee and eliminate day-to-day decision making from warehouse operations. That removes a significant management burden and frees up resources to deal with more pressing and immediate tasks. This is one of the reasons why ecommerce businesses with robust and resilient solutions were better able to respond and cope with the demands of the pandemic. Businesses that had no solutions in place, or who had failed to upgrade older application, faced a more difficult challenge. Making the right decisions may well have been the difference between survival and going out of business.
Whatever their situation, any business with significant ecommerce operations should ideally employ proper warehouse management systems. In addition to enabling better control over stock, which itself is a desirable benefit, these support many essential customer facing and fulfilment processes. Working together they can create and enhance the customer experience that leads to positive perceptions and reviews and the loyalty that encourages repeat businesses and generates new sales. Any professional class warehouse management system will meet these objectives, but cloud-based applications in particular offer the agility, scalability, and speed of implementation that businesses need when the dynamics are changing quickly.
So, has the jump in ecommerce stuck and is it the new normal? It would seem so and, of course, it is bigger than before. Figures for online have remained robust despite most shops now having reopened. Almost nine in ten people in the UK have now bought something online: around three quarters of all purchases are from UK suppliers. Industry research suggests that the proportion of online will remain high and, after some minor fluctuation in 2021, continue to grow at pre-pandemic rates. Time may be running out for businesses that still have not embraced the ecommerce revolution.
Alex Mills is marketing director for warehouse stock management solution ProSKU. With a logistics background and long career at WMS software vendors (and ProSKU parent company) Chess Logistics Technology, Alex has seen momentous changes and developments in both areas. He has worked extensively with companies in the retail, wholesale and logistics sectors, as well as more recently within ecommerce and fulfilment.
Alex is keen to help ecommerce sector companies benefit from some of the experience and practice of stock and warehouse management in other fields. Over the years he has contributed articles, views and opinions to industry trade journals and media on a variety of themes and topics.