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In many ways, the COVID-19 pandemic has acted as a time machine to the future for post and parcel organisations – demand for eCommerce is propelling skyward while accelerating the decline of mail. Nearly everywhere you look you can see that jump. And the numbers are astounding. European eCommerce delivered a 71% increase in online orders, while Asia-Pacific eCommerce rose 82%. This year, Amazon will reach sales levels projected for 2025[1]. eCommerce sales in the US leaped by almost 93% in May[2], making up 22% of all retail sales—double the percentage from one year earlier.

The questions that I, and many others in the industry are now asking, are: how long can we expect this peak to be sustained? And how should post and parcel organisations respond in order to outmanoeuver eCommerce uncertainty?

The future is here to stay

Although the future remains uncertain, our analysis shows that eCommerce shipment volumes will remain elevated through the remainder of the year, up to 30 or 40% higher than a year before in some countries, even accounting for seasonal patterns in spending.

That is significant, near-instantaneous growth, and some of it is here to stay. Here’s why:

1. Consumers have adopted new purchasing habits.

Our analysis shows a strong correlation between eCommerce growth and the length and severity of lockdown orders. Some of these behaviours will be permanent as people buy more online and those who rarely bought online now make it a common channel. According to our consumer research in April, respondents who used online channels for less than 25% of purchases prior to the pandemic went from 1 in 20 of their purchases being online to 1 in 6 – a 160% increase in online activity. Across all the countries we study, the long tail of eCommerce adoption has been shortened considerably.

2. In-store experiences are broken.

Shoppers are returning to brick-and-mortar stores slower than retailers would like[3]. For example, foot traffic in the 30 largest metropolitan areas in the US is still 57% lower than pre-COVID-19 levels two months after reopening. In the UK, foot traffic remains 41% lower and even in places like Germany, where the impact has been, relatively-speaking, less than elsewhere, foot traffic is still down over 10%.

When consumers do visit stores, they are finding unappetising experiences. Lines to get in because people capacity is being limited, masks and other social distancing rules, the wrong inventory and limited inventory are all creating broken retail experiences.

In addition, many consumers are hesitant to visit stores. In May, Accenture asked consumers how comfortable they were going to public places in the next 1-2 months. In countries where new daily cases are advancing (such as the U.S. or Brazil), only 30% are comfortable visiting a non-essential retailer. Consumer confidence in physical retail is at an all-time low.

3. More stores are transforming into local fulfillment centres.

Because physical stores were closed to shoppers, retailers have accelerated transformation of their supply chains. Retailers saw a 195% increase in click and collect order dollars, according to Accenture research[4], and demand for small, local warehouse space has surged[5]. Both of these trends point to retailers accelerating the transformation of brick-and-mortar stores into local fulfillment centres. We estimate that by the end of the year, 50% of all deliveries will be local.

Catching up to the future

A ‘never normal’ has arrived for eCommerce sales—and consequently, for post and parcel organisations. Simply put, more packages need to be delivered. But while retailers have accelerated transformation, most post and parcel organisations have not. I see many new opportunities to catch up with the market and become ready to outmanoeuver uncertainty. Seize this moment and you could take market share to set your business up for years of future growth.

My next two blog posts will explore how post and parcel organisations can catch up fast and position themselves for success and sustainability for years to come. Stay tuned. And for a little background reading, check out our recent (pre COVID-19) report on Reinventing the last mile: Win the race to the top.

 

 

[1] https://www.economist.com/briefing/2020/06/18/can-amazon-keep-growing-like-a-youthful-startup

[2] https://www.retaildive.com/news/e-commerce-sales-spiked-nearly-93-in-may/579725/

[3] https://www.wsj.com/articles/coronavirus-changed-everything-except-t-j-maxx-11592818200

[4] https://www.accenture.com/us-en/insights/retail/coronavirus-consumer-behavior-research

[5] https://www.cbre.us/research-and-reports/demand-continues-to-outpace-supply

 

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