The New Reality for E-Commerce in the U.S.
A lot has happened since Jeff Bezos launched Amazon in 1994 to become one of the first American e-commerce companies to sell products over the Internet. Back then, online shoppers were few and far between, and there was plenty to be fearful of —privacy, fraud and more, and—on average—deliveries took over a week (that is, if it even reached you in the first place).
Fast-forward to 2018 and things have changed beyond recognition. Nowadays, with 220 million Americans shopping online, e-commerce is becoming the preferred way to shop, and consumers increasingly expect their purchases to be delivered to their convenience, wherever and whenever they wish—especially urban consumers. E-commerce is now about instant gratification. And what was once primarily a price-driven, single-channel concept has evolved into a broad, unified offering that puts the customer experience first. To enhance that experience further, e-tailers are striving to reduce their lead times and make deliveries even more responsive.
How is that going to happen? Some current trends point the way.
Product regionalization perhaps tops the trend list. Until recently, logistics providers tended to operate from centralized fulfillment centers not located near major metropolitan areas. Designed to meet the sheer volume of individual e-commerce orders across the U.S. supply chain and reap economies of scale through a central location, these facilities are models of efficiency. Nevertheless, their remoteness makes meeting consumers’ same- or next-day delivery expectations hard to achieve.
Storing your inventory closer to the consumer
Regional fulfillment centers, built near urban areas, is a new breed of warehouse strategy positioning products close to where people live and work, making faster delivery times much easier to achieve. By way of example, Amazon—working seamlessly with its central fulfillment centers—has launched 25 regional “sortation centers” designed to get its products closer to consumers. The newest addition to the network will be a $30 million, 362,000-square-foot sortation center in Mobile, AL, opening later this year.
Spurred on by the need to drive down lead times, retailers and e-tailers across America are following suit. And to make the new strategy affordable, they are teaming up with third-party logistics companies to establish shared regional fulfillment centers in key locations. Taking this strategy a step further, retailers such as Target are even adapting their brick-and-mortar infrastructure to include fulfillment and returns services.
Real-time tracking and visibility
Not only do today’s consumers want purchases to arrive quicker, they also want to know exactly where shipments are, when they will arrive and have the choice to reroute their deliveries at the last minute.
DHL eCommerce’s Parcel Metro solution, already available in a growing number of cities including Chicago, Los Angeles, New York, Dallas and Atlanta, addresses all of these demands. Designed to provide affordable and flexible same- and next-day deliveries, the service makes selecting day- and time-specific delivery slots easy for consumers. Once a slot has been arranged, consumers have full visibility into each step in the journey, can easily reschedule delivery—and can even provide the driver with real-time delivery instructions (e.g. don’t ring my doorbell, I don’t want my dog to start barking).
Flexible delivery methods
In line with other expectations, consumers also want their deliveries to be more flexible.
The groundwork for this trend was laid by food delivery start-ups like DoorDash and Postmates in the U.S., and Deliveroo and Foodora in Europe. These fast-moving innovators have put restaurants at people’s fingertips, provided additional source of revenues for both restaurants and drivers, and revolutionized food deliveries by offering fulfillment speeds that often clock in under 30 minutes.
With consumers now expecting this kind of speed and convenience, the obvious next step would be to roll-out “instant delivery” for a whole range of other products. Brick-and-mortar retailers could easily leverage this opportunity, using their urban storefronts for warehousing and fulfillment to gain a competitive advantage over e-tailers. After all, their dense networks of physical stores in American cities are ideally situated to provide the fast turnarounds consumers desire—combined with a flexible delivery solution.
Perhaps the thread tying all these trends together is mobile commerce (m-commerce). Feeding people’s constant need to check and interact with their phones, mobile-optimized websites, shopping apps and digital wallets put consumers closer to products than ever before.
M-commerce adaptation is huge among Americans. As of December 2017, 82 percent of online users in the U.S. used a mobile device for online shopping, with 35 percent being mobile-only online shoppers. But aside from putting the shopping mall in consumers’ pockets, mobile devices also make organizing, authenticating and completing our deliveries extremely easy. Thanks to this technology, time slot selection and rescheduling, real-time tracking, and delivery-status push notifications are right there at consumers’ fingertips. By fueling the need for instant gratification, these devices are also part of the trend towards faster, more responsive deliveries.
Fast delivery times and mobile convenience quickly lose their appeal if the consumer feels unwanted purchases cannot be returned quickly and easily. Growing consumer expectations are also impacting returns policies. In fact, they are crucial to the consumer’s overall online shopping experience. A study on cross border e-commerce found that 46% percent of consumers are willing to abandon a shopping cart if they discover products cannot be returned.
To remain competitive in this environment, e-tailers need to offer return policies that make consumers’ lives easier and further enrich their e-commerce experience. DHL eCommerce offers an efficient returns solution designed to keep costs low and maximize convenience for customers and e-tailers alike.
It all comes down to consumers
Growing consumer expectations are driving all of these trends. As a result, e-commerce is now about enhancing the consumer experience and removing barriers to instant gratification. Products must be stored nearby, deliveries must be fast and manageable, and returns must be easy for the consumer.
Circling back to 1994, online shopping was already forecast to be a huge deal. “At some point it will be a really big business,” a UBS analyst said to Reuters in 1994. How big? E-commerce has already hit 563 billion USD in the U.S. in 2017 and still expected to grow over 10% till 20221 – we’ll continue to watch this space very closely.