Consumers Continue to Disrupt Supply Chains

Consumers-Continue-to-Disrupt-Supply-Chains

UPS released their sixth annual Pulse of the Online Shopper™ study that provide interesting insight into the changing consumer shopping behavior that continues to disrupt retail supply chains. Retailers are going bankrupt at a record pace and there is no end in sight to the casualties. This UPS study sheds light on the retail paradigm shift currently underway.

UPS broke the study findings down into three categories:

Constants: Areas of the retail experience that remain important year over year and influence purchase behaviors. These are pricing and convenience, shipping and logistics and multi-channel shopping.

Emergers: Newer areas of retail that may play a role in the shopping experience of the future. These include technologies such as robots, chatbots and virtual reality solutions.

Movers: Areas where consumers have shown significant growth over the past few years. These are mobile, marketplaces, international shopping and store usage habits.

Constants

79% of US shoppers either purchase online or research online. Total discretionary retail was up 4% with e-commerce growing 13%. Free shipping was the number one option when checking out at 74%,  but has declined from 81% in 2014. 94% of shoppers take action to qualify for free shipping which might include adding further items to the shopping cart.

Shoppers have high expectations for quick delivery with 64% expecting orders placed by 5 PM to be delivered the next day, and 61% expecting orders placed by 12 PM to be delivered the same day. Interestingly 75% are willing to pay a premium for expedited shipping. The convenience of speedy delivery, although not instant, far outweighs the inconvenience of visiting a physical store location.

52% of shoppers are interested in shipping to alternate delivery locations. This is a preference that has increased year-over-year from 2014 at 26% to 37% in 2017.

Emergers

One of the areas that retailers need to pay attention to is the role of technology. However consumers are not convinced about the role of robots, 58% say they would prefer to work with a real human being. 42% of shoppers are comfortable with getting product information from a chatbot and 65% find appeal in virtual reality in some capacity.

Movers

No surprise here with 48% of smartphone users having made an online purchase which is an increase of 7% from 2015. 29% of millennial’s make purchases on their smart phones whereas only 10% of non-millennial’s do. 38% of consumers start their online search on a marketplace rather than an individual retailer – with better prices being the driving factor. 47% have made purchases from an international retailer, 61% of those purchases being made from a Chinese retailer. Better prices are again the driving factor. One ray of hope for brick-and-mortar stores is that 50% of consumers have shipped to a store for pickup and of those 44% of made additional purchases. 35% of consumers still find value to touch and feel the merchandise.

What Does This Mean for Supply Chains?

According to eMarketer, global cross-border eCommerce is projected to grow at an average of 22 percent from 2015 to 2020, compared to 15 percent for U.S. eCommerce during the same time period. E-commerce will only grow and international boundaries are blurring.

“The lines that separate domestic and international retailers continue to disappear,” said Alan Gershenhorn, chief commercial officer for UPS. “Retailers are now competing across the globe.

Amazon recognized this quite some time ago and are rapidly building the infrastructure and knowledge to “own” the delivery of a package from point A to point B anywhere on the globe. Their Chinese competitor “Alibaba” are making the same moves and are holding the Gateway 17 conference in Detroit shortly to educate American companies on how to tap into the e-commerce enabled Chinese market.

The continuing change in consumer shopping behavior is driving disruption in the global retail supply chain on a scale not seen before which opens up many new opportunities for us. It’s a good time to be in the logistics industry.

If you’re interested in learning how shipping by rail might better meet your freight transportation needs, or need warehousing to bring your goods closer to your customers, call New Mexico Transloading at 505 – 908 – 1911. We’d be delighted to have a conversation with you.

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