The recent surge of e-commerce brought on by the COVID-19 pandemic has been so massive that the shipping industry is still adjusting to the changes.
Despite these sudden changes, the shift towards e-commerce has been a long time coming. Experts anticipate that the recent surge in online shopping is likely to continue to climb even after the pandemic has run its course.
Traditional Retail vs E-Commerce Logistics
Traditional retail logistics primarily operates by shipping bulk orders on a consistent basis to brick and mortar stores where customers would then make their purchases in person. This system relies on reliable purchasing habits that allow for a steady flow of products from suppliers into regional distribution centers and then into physical stores.
E-commerce logistics, on the other hand, are more complex because the products need to be delivered directly to customers. Further, e-commerce logistics are made even more difficult due to the expectation of speedy and cheap (if not free) delivery. Companies like Amazon and Walmart played a large role in establishing a connection between online shopping and free shipping during the early days of e-commerce.
Another major difference between physical retail and e-commerce is their return rates. Due to the nature of online shopping--such as being unable to try things on--customers return products far more often when buying online. According to David Sobie, CEO of Happy Returns, “Shoppers return 5 to 10 percent of what they purchase in store but 15 to 40 percent of what they buy online.”
To handle the differences between e-commerce and standard retail logistics, shipping companies are having to quickly evolve the way they do business.
Shipping Industry Changes Due to E-Commerce Boom
With the increased complexity of e-commerce logistics, comes a need for systems that can handle that complexity. As a result, the shipping industry is seeing a massive uptick in the adoption of new technologies and best practices.
Last-mile distribution centers are in high demand right now with more being needed. These are specialized sorting centers that sort packed orders by final destinations as companies deliver directly to the customer’s home. Additionally, tracking technology and Internet of Things (IoT) empowered devices are needed to help improve the visibility of products throughout the global supply chain.
The massive surge in e-commerce has left the shipping industry scrambling to make the appropriate adjustments necessary for maintaining a steady flow of goods across the globe while also delivering on customer expectations of speed and low cost. With all of these concerns, the shipping industry is still undergoing massive changes to adjust to the new demands of the global trade market.
Contact Clear Freight to learn more about the evolving shipping industry and how we can help with your logistic needs.