Online retailers are facing a major crisis. Since Covid-19 hit, reduced headcount and social distancing practices within the walls of warehouses and distribution centres mean retail businesses are struggling to manage the stresses and strains of increased e-commerce demand – which is set to continue to soar.
Recent research from the IMRG reveals online retail sales grew by 36% in 2020, the highest annual growth since 2007. Brightpearl’s own research shows that two thirds (65%) of shoppers are planning to increase their online shopping spend in 2021 over 2020. As a result, online retailers have been seeing year-on-year sales increases of upwards of 600% in the first half of the year.
While any increase in sales is good news, there’s evidence that retailers are not adjusting quickly enough to the new normal of ‘heightened demand’ outside of traditional peaks. They are often winding up overwhelmed because of an inability to process increased demand from shoppers that are moving online. As a result, orders are being missed, wrongly placed, or being oversold – resulting in disappointed customers.
In fact, one in three consumers have been let down by an online order since the Covid crisis and four out of ten buyers say online deliveries are taking longer to arrive since social distancing restrictions were introduced.
You’d be forgiven for thinking that this is only a problem for small and mid-sized retailers but some of the largest businesses in the world struggle to process sudden demand, as we saw when Microsoft encountered a myriad of problems after opening the pre-order window for the new generation of Xbox consoles.
These types of operational problems have been a major theme since Covid, which – as consumers – many of us will have experienced when shopping online. Widespread stockouts and delivery delays due to sudden increases in demand have significantly damaged shoppers’ relationship with online brands, with 34% of consumers saying that unreliable delivery has lessened their trust in online shopping altogether.
Nailing Delivery Expectations
In order to operate viable and successful online businesses long-term, vendors must process online orders more quickly, more accurately, and in a manner which safeguards both their employees and the end user. If they don’t, they risk errors and delays that will likely further damage an already tenuous relationship between seller and consumer – and result in lost return sales.
There’s a reason people remain so loyal to Amazon. From order to delivery, they have it nailed. They’ve invested billions in a highly efficient ecosystem that supports speed and hyper convenience. Of course, smaller brands struggle to compete.
When you’re operating in different markets and seeing demand grow across channels, you’ve got to have the right retail operations in place to respond effectively. Lost in the desire for growth, too many brands lack the agile digital retail operations to thrive in today’s multichannel e-commerce environment and successfully manage all the key operational touch points, including inventory, customer communications, and, of course, delivery.
This ultimately leads to weak infrastructure that can’t support demand, service failure and poor consumer experience. It should be a simple fix – make sure your foundations are stable and able to cope with sudden spikes in demand – but 25 percent of shoppers still experienced items being listed out of stock after purchase last year.
Automation is the Answer
In this current climate, retailers and their warehouses need to maintain flexibility and scalability and decrease their reliance on temporary or unreliable labour pools to meet operational requirements.
Automating retail workflows, from order processing to inventory and shipping, negates the need for a human presence in large parts of the warehouse. Not only does this safeguard employees by supporting greater social distancing but it removes the risk of human error from these repetitive manual tasks. It also ensures orders can be picked and packed efficiently and quickly, boosting employee productivity.
Because automation optimises e-commerce workflows, retailers’ labour pool can be better allocated to other areas of the business – for example, to support growth and innovation within the business.
While Amazon remains faster than every major competitor, smaller players are speeding up, with research suggesting firms that automate shipping can increase ‘orders out the door’ by up to 92%. This means smaller brands have an opportunity to present themselves as a truly viable alternative to the online giants.
This is one example of how COVID-19 has shone a spotlight on existing retail models and technologies that brands might not have considered before the pandemic, but are now aiding recovery and providing a competitive edge.
Automate first, grow later
No doubt, there are an abundance of exciting technologies that support new sales avenues – voice commerce, augmented reality, new social media outlets (e.g. Reels, TikTok) and even in-app purchasing via platforms like WhatsApp.
But retailers need to be wary of prioritising growth at all costs. Before exploring new sales avenues, firms first must ask themselves if their current set up is sophisticated enough to support a further increase in demand.
And if it isn’t, they must embrace technologies that sync sales channels and orders with inventory and shipping so consumers get the right product on time, every time, alongside tools that can automate order management and fulfillment. This will enable them to exceed expectations and maximise customer lifetime value.
The truth is, companies that are only concerned with acquisition post-Covid will always be at risk of being overwhelmed by demand and delivering a substandard experience
The brands that instead focus on creating outstanding experience at every stage of the buying journey, alongside strategically implementing automation to stay true to customer expectations, can look forward to greater retention, profitability and success over the long term.
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Brightpearl is a retail operations platform for retailers and wholesalers with a clear mission to automate the back office so merchants can spend their time and money growing the business. Brightpearl’s complete back office solution includes financial management, inventory and sales order management, purchasing and supplier management, CRM, fulfillment, warehouse management and logistics.