If you’re looking for signs that the field of eCommerce is booming, you needn’t look further than Amazon. Beginning in April 2020, the online retail giant hired 100,000 additional employees in their fulfillment centers to respond to the surge in online orders they were experiencing as a result of the COVID-19 pandemic. It’s all part of a new and changing eCommerce fulfillment strategy.
What trends are we seeing in the way that online retailers are meeting the needs of consumers? Mainly, we are seeing shippers rethink their supplier and distribution networks due to the global pandemic, but it’s very likely that some of the changes that have been made in the world of eCommerce over the past year will far outlast this current health crisis.
From warehouse to mailbox, direct-to-consumer (DTC) online retailers are examining their eCommerce order fulfillment process to meet with an increase in demand. We’re seeing higher volumes of these DTC businesses employ the use of third-party logistics (3PL) providers to streamline their processes and adapt to changing customer buying patterns, keep an eye on inventory management, improve customer service, handle returns management, and get additional seller support.
Here’s what’s happening in the ever-evolving world of eCommerce fulfillment in 2021.
eCommerce in 2020: Where We Came From
Thanks to the massive societal changes we saw in 2020, consumers shopped online more than ever before, which included massive organic growth of DTC brands. Thanks to the online retail-focused economy, these brands were finally able to compete with larger brands that have a storefront or an in-store presence.
Generally speaking, 2020 made for a major rise in the eCommerce market, including an 18% increase in sales. This means that in 2020, the eCommerce industry reached $710 billion in sales. Even post-pandemic when we can resume shopping in stores, it’s expected that 3% to 6% of this growth will “stick.”
One area where we saw a meteoric rise in eCommerce popularity? The rise of the subscription economy. COVID-19 expedited the process of moving to a customer-centric, digital subscription economy. In fact, according to the Subscription Economy Index, subscription companies outperformed product-based peers in 2020, even during an overall economic downturn. During the second quarter of 2020, S&P companies saw sales shrink by an annualized rate of -10%, but subscription businesses actually expanded during this same period at a rate of 12%.
This growth may be because consumers were looking for easier ways to acquire the products they need daily, such as health, beauty, and wellness products. It may also be because the COVID-19 pandemic made it more “socially acceptable” to order everyday products online and commit to subscription services to do so.
What role did eCommerce fulfillment services play in this growth? How did the eCommerce order fulfillment process support this growth? 3PL platforms made it easier to keep up with demand, thanks to features like artificial intelligence (AI) automation and improved and streamlined customer experience practices. Third-party logistics providers offered seller support throughout the supply chain to make managing any increase in demand easier to manage.
What to Watch for in 2021 and Beyond
If 2020 brought about such intense change, what do the years ahead have in store for DTC retailers and eCommerce brands?
For starters, we can expect to see continued growth in DTC companies and even more DTC brands emerging on the market. With no real incentive to take new products into the world of in-person retail, especially during a time of unprecedented DTC growth, it’s clear we will see even more DTC brands pop up and more growth from existing companies.
What does this mean for eCommerce fulfillment? Many eCommerce businesses have been asked to scale very quickly over the past year — and not without some growing pains like backorders and shipping delays. With the rise of the DTC eCommerce model comes an increased demand for fulfillment services to match, helping sellers keep up with demand.
For example, it’s expected that spending on global reverse logistics will spike in 2021 and may even reach $604 billion by 2025 to eliminate this particular pain point in the customer shopping journey and minimize the costs of returns for sellers to create a more sustainable supply chain. Third-party logistics will be the key for many DTC brands to make this happen smoothly.
Additionally, the need for real-time inventory tools will increase due to the rise of eCommerce, especially in food and other consumables. At fulfillment center locations across the nation, real-time inventory will be the answer to many supply chain challenges and can improve the overall customer experience.
In addition, eCommerce brands are looking to expand into new marketplaces to connect with even more customers. The aid of a 3PL provider can help navigate the worlds of Amazon Marketplace, Fulfillment by Amazon, and even the intricacies of dealing in international markets and exporting. In 2021, many DTC brands will reach out to 3PL platforms to make the leap to these new markets without having to bear the brunt of the workload themselves.
All in all, it’s estimated that 35% to 45% of COVID-19 consumer behaviors will continue past the pandemic — most of which will revolve around digital experiences. What we have learned over the past year is that the support of a 3PL is paramount to making all of these shifts happen.
Streamlining Your eCommerce Fulfillment
What’s next for your DTC business? If the reflection on the past year and the predictions for the upcoming year are indicators, you may benefit from enlisting the services of a third-party logistics provider to keep up with soaring demand, touchy supply chains, and the expectation for quick turnaround times and simple returns management.
What makes 3PL so well-suited to making this kind of work happen?
- Automatic inventory management at the fulfillment center or warehouse, which will expedite the distribution and fulfillment process
- Fast shipping, more personalization, and more time to focus on building your brand while still meeting the expectations of your customers
- Lower operational costs to respond to a bruised economy
- A simplified reverse logistics process.
While 3PL is all about making the operations of a DTC business simpler and more effective, the result is a better overall experience for your customers. Ultimately, this is where your focus should be. After all, 78% of customers will back out of an eCommerce purchase and spend their money with a competitor if they have a poor shopping experience or have a bad customer service interaction.
The partnership between DTC brands and 3PL providers will be the ticket to expedited processes, lowered costs, and increased outreach during 2021 and beyond. At OceanX, our processes are designed to make your life easier. While this results in cost savings and more efficient operations for your business, the benefits are passed directly onto your customers.
With more time to focus on core competencies, product development, and a better user experience, our 3PL services will help you succeed in the world of eCommerce in 2021 and beyond. Are you ready to see what we’re all about? Contact us today to learn more!
