After all the disruption of this extraordinary year, it can be hard for any organisation to know what the future holds right now. But one thing we can be sure of is that this holiday season will be different to any other we’ve experienced.
The pandemic has already caused a huge acceleration in online shopping, leading to higher volumes and capacity crunches for post and parcel companies across the world. Accenture’s 2020 Holiday Shopping Survey shows that roughly two thirds of people in the US say the events of this year have changed their shopping behaviour and prompted them to buy more online.
A holiday season like no other
If that wasn’t enough of a challenge, we’re set for another big ecommerce surge over the holidays. Our survey shows that two in every five consumers (43 percent) will shop exclusively online this year—and that rises to more than three in five (63 percent) for older millennials. And with all the uncertainty surrounding COVID-19, these figures could still go higher.
What’s also interesting about this is that the preference for online shopping is skewed toward higher earners. The idea of luxury retail has rapidly morphed from something very high-touch and person-to-person to the complete opposite, and those with household incomes over $100,000 are the most disinclined to shop in store this year. So the consumers with the most disposable income are likely to be doing the most online shopping.
The cumulative impact of all this is that we should expect the ecommerce holiday peak to be 50 to 60 percent higher than last year. To manage this extra demand, retailers and delivery companies are going to need to work together to maximise capacity. There are three things in particular they need to urgently address.
Promote DIY delivery models
While most people still generally favor delivery to the home for their online shopping, the pandemic has made a host of alternative “do it yourself” options more palatable for consumers. As delivery networks reached capacity, people were willing to look again at models like instore pickup, curbside pickup, locker pickup, and similar. With growth of these models up over 250% from last year, it is clear that consumers are becoming more comfortable with DIY delivery.
These distribution models are going to be essential to keeping ecommerce sales flowing during this peak season. It goes without saying that, for consumers, the holidays are the very worst time to experience delivery delays. So both retailers and delivery organisations need to be looking for ways to encourage them to consider alternatives to home delivery wherever possible.
Look for small-scale technology initiatives
Clearly, digital technology has a massive role to play in expanding capacity. The important point is that this doesn’t always need to be a vast organisation-wide transformation exercise. There are many things you can do quickly, and on a smaller scale, to increase capacity right now.
That includes small-scale automation initiatives, such as sort systems that can fit into smaller sites and transform where the organisation does its warehousing. These systems can be stood up and down very quickly—in some cases in as little as two weeks.
Postal organisations should also be looking to use technology to augment and streamline employees’ day-to-day work. A good example would be devices that scan packages and help workers sort them to the right place in the most efficient way.
Getting strong analytics on your operations is another important part of this. By understanding where your bottlenecks actually are, you can identify productivity improvements and other quick wins to relieve pressure on the network. At one client, for example, we’ve seen a 30 percent throughput boost by using analytics to get the machines running smarter, and with the right staffing complement.
Rethink delivery orthodoxies
One of the consequences of the pandemic is that contactless delivery is the preferred model for most consumers right now—and maybe indefinitely. For post and parcel organisations, that offers the prospect of solving some longstanding inefficiencies surrounding attended deliveries, carding, and customer signatures. By going contactless, and so increasing the rate of first-time deliveries, they can instantly create more capacity in their networks.
Another key area is local-to-local deliveries. Retailers are putting more of their inventory closer to their customers, whether shipped from stores or via micro-fulfilment. As a result, there’s less need to take inventory out to sort centers, especially if you’re only then bringing it back in for delivery a few miles from where it began.
If retailers and delivery organisations can work together creatively on this, there’s a huge opportunity to eliminate round trips and reduce choke points in last-mile distribution.
Still time to avoid a distribution crunch
The holiday season is almost upon us, but there’s still time to mitigate the capacity crunch that is coming. All of the strategies outlined above can be implemented this year if organisations move quickly to address them.
What’s more, these will not be short-term or wasted investments. The long-term trend is for volumes to continue growing. So the network flexibility and extra capacity provided by these new delivery models and digital technologies are exactly what retailers and post and parcel organisations will need to secure their futures long after the holiday peak has passed.
Capacity is not the only issue facing post and parcel organisations of course. In my next blog post, I’ll take a deep dive into the other major challenges this holiday season will pose.
The views and opinions expressed in this document are meant to stimulate thought and discussion. As each business has unique requirements and objectives, these ideas should not be viewed as professional advice with respect to the business.