E-retailers provide a silver lining for logistics industry


It is very rare that a crisis of any sort brings universally bad news – there are always parties which can gain an indirect advantage from even the most dire set of circumstances. During the present Coronavirus pandemic, we are finding that the e-retailing logistics sector falls into this category. Both the digital platforms themselves and the logistics and last mile delivery companies which serve them, whilst not enjoying unalloyed benefits, are certainly net beneficiaries to a lesser or greater degree.

In the short term, it seems that consumers are turning to e-retailers to fulfil an immediate perceived requirement for home delivery of a range of fast moving consumer goods. E-retailers are benefiting not only from customers’ stockpiling behaviour, but also from their desire to avoid public contact in physical shops. End-recipients do not even have to come into contact with a delivery driver if they don’t want to. As Amazon informs its US customers, ‘delivery customers always have the option to select “unattended delivery” during checkout if they prefer not to come into contact with others. Orders…will be left in a location specified by the customer.’

According to Amazon, there has been a big increase in volumes of groceries bought over its platform, especially staple items. This has resulted in the company looking to hire 100,000 new employees in the US and raising pay in the US, Canada, Europe and the UK by $2 per hour (or equivalent). However, as with traditional grocery retailers, the demand is creating stress in the supply chain. Amazon commented, ‘As COVID-19 has spread, we’ve recently seen an increase in people shopping online. In the short term, this is having an impact on how we serve our customers. In particular, you will notice that we are currently out of stock on some popular brands and items, especially in household staples categories.’ This is also impacting on ‘delivery promise’ times which are being extended.

Moreover, there are also potential long term upsides. Many people are working from home during the period that offices have been shut. This has led to more people ordering fresh food, necessities and groceries from home via the internet. In countries where over-70s have been encouraged to self-isolate, a new generation is learning to rely on e-retailers rather than traditional shops or supermarkets. Large numbers of new customers are being forced to learn digital skills which to date they had not considered necessary. As part of this trend, in China, Alibaba has found that more consumers in smaller cities and rural areas are starting to use its platform.

In terms of product category, there may also be long term implications for online purchases. Whereas previously the major platforms have been successful at penetrating the consumer electronics and fashion sectors, grocery and FMCG have been harder to crack. This may now change as consumers’ buying behaviour adapts although it is yet to be seen whether once the Covid-19 crisis abates, consumers will revert to bricks and mortar retailers or whether they remain attached to digital purchasing.

 

This Logistics Briefing has been excerpted from an exclusive Ti Insight whitepaper, ‘E-Logistics Winners and Losers of the Coronavirus Crisis’ which can be downloaded here

 

Source: Transport Intelligence, March 17, 2020

Author: John Manners-Bell

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