As the 2012 holiday season comes to a close, lessons learned
are being compiled and plans are probably already underway for the 2013 holiday
season. Although final financial figures have yet to be recorded, it appears
that once again ecommerce continues to gain on traditional retail sales.
According to Chase Paymentech, year-over-year US ecommerce sales growth from
October 29 to Dec. 25 increased 15.2% despite an overall holiday season that
some retail analysts are predicting to be the worse since 2008. For the UK,
Experian Hitwise reported an estimated 17% increase in visits to online retail
sites on Boxing Day alone. It’s expected France and Germany also witnessed
ecommerce double-digit growth during the holiday season. Combined, France,
Germany and UK comprised 70% of European ecommerce sales in 2011.
For logistics providers, this evolving retail shift means
changes in not only delivery and fulfillment but the entire supply chain. For
example, last year, UK-based Yodel was caught off guard as an estimated 750,000
parcels were not delivered in time for the Christmas holiday. This resulted in
investments in forecast demand processes, additional warehouses and storage at
its busiest locations and it increased deliveries to seven days a week in
December. Despite a 30% decline in the number of deliveries this recent holiday
season, the need for flexible logistics solutions is important and Yodel will
likely benefit from its investments.
Another example of flexibility is that of US regional small
parcel provider, OnTrac, which serves six US western states. The company
provides Sunday pickup for Monday deliveries and does same-day deliveries for
Quidsi, a subsidiary of Amazon.com Inc. that operates a number of web-only
merchants including Soap.com and Diapers.com. Partly as a response to demand
for quicker shipments, along with the overall growth in online retail, OnTrac
has over the past year added 1m sq. ft. of warehouse space to accommodate that
growth—a 70% increase from its previous space.
Speed and flexibility is evident in the changing
distribution centers. Robotics and automation is speeding fulfillment as orders
and delivery options increase – to the end consumer, to the retail store, to an
independent location or to another agreed on location. Amazon.com has taken
note and acquired Kiva, manufacturer of robots, earlier in 2011 and has
introduced this in some of its facilities.
Finally, shopping patterns, particularly those in the US,
indicate most buying is done at the beginning of the holiday season and
days/hours just before the actual Christmas holiday. If this holiday season is
any indication of things to come, consumers will likely demand shorter delivery
times – dare I say – same day delivery. While still a relatively new concept
for many US consumers, it is one that many like but few have taken advantage
of. The question is, will consumers be willing to pay for same day delivery?
More importantly will the larger delivery companies be flexible enough to
deliver such a service?
