Research recently issued by Vienna, Va.-based regional e-commerce and last-mile delivery services provider LaserShip took a close look at the impact of the ongoing COVID-19 pandemic, from various perspectives, including shopping behaviors and consumer expectations, as well as how things have—and changed operationally, for both retailers and last-mile service providers.
The findings of this survey, entitled “How Retailers Can Stay Ahead of Consumer Expectations After COVID-19,” which LaserShip commissioned from Hanover Research, are based on a survey sent to more than 1,000 United States-based online shoppers to “understand how the pandemic has affected consumer shopping behaviors and expectations.
In an interview, LaserShip Chief Commercial Officer Josh Dineen offered up his takes on themes and data within this research.
LM: With COVID-19 rapidly creating changes in shopping behaviors and consumer expectations, do some of these changes have the potential to be permanent? If so, which ones?
Dineen: The COVID-19 pandemic has caused shopping behaviors and consumer expectations to shift rapidly, and it looks like many of those behavior changes are permanent, based on our recent research. Overall, consumers now make 58% of their purchases online since the pandemic began compared to just 32% pre-pandemic. Data from our recent survey suggests the short-term behavior will become a habit, as 48% of consumers plan to shop more online even when they are not forced to due to the effects of the pandemic.
Consumers are also expecting faster delivery, especially younger generations. Our research shows that 40% of Gen Z and 37% of millennial consumers would increase their probability of shopping at a new retailer if they offered next-day delivery service at an additional cost. Almost 40% of GenZ consumers have paid for expedited delivery during the pandemic, and we see COVID-19 accelerating this trend.
Also, Baby Boomers, historically more hesitant to shop online, were forced to adapt their behaviors when COVID-19 hit because they weren’t comfortable shopping in stores. The study found this behavior will continue, with nearly half (47%) of Baby Boomers planning to increase their online shopping after the pandemic. This will have a significant economic impact as this group controls more than two thirds of disposable income in the US.
LM: How do these shifts “change the playbook” for both retailers and last-mile service providers? What are the biggest changes, or shifts, in operational strategies etc?
Dineen: Today’s consumers are demanding free and faster shipping options. However, they are also experiencing a lower level of satisfaction with their shipping experience, citing delays and slow delivery options as the primary reasons.
Retailers can leverage free and faster shipping to acquire new customers and build brand loyalty, especially as younger generations increase their spending power. Our research has shown that consumers are willing to pay for faster delivery, and retailers that can offer it as part of their shopping experience can reduce cart abandonment and increase lifetime value of customers.
Retailers should look to diversify their carrier mix and add regional carriers to meet consumer expectations around next-day service and faster delivery times while also improving their margins. Retailers have experienced higher on-time performance from regional carriers versus national carriers during the pandemic. A single-source delivery provider is no longer able to maintain the reliability and speed that consumers, especially younger generations with growing purchasing power, are demanding. Regional carriers also have less disruption risk to their supply chains and delivery networks than national carriers, reducing the likelihood of delays.
LM: With shipping costs heading up, coupled with consumers wanting/expecting free shipping, how do online retailers counter that service- and costs-wise?
Dineen: Many reports indicate that retailers can spread the shipping cost across their variety of products, but this is certainly more of a challenge for retailers with a less diverse SKU count. Our research indicates 73% of consumers are more likely to purchase from a new online retailer that offers free shipping. Acquiring new customers while diversifying their carrier mix to include regionals can help offset the rise of delivery fees.
LM: How realistic is sustained same-day and next-day shipping amid the “need for speed,” as outlined in the study’s findings?
Dineen: Consumer behavior has shifted and fast delivery is the new normal. Younger generations have grown up in an age where these shipping speeds are available. As they continue increasing their share of wallet and commerce in general, a shift to a slower speed of delivery seems a dubious proposition.
About the Author
Jeff Berman, Group News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman
