booming ecommerce businesses

The Booming of E-Commerce Businesses

At the start of the pandemic in March 2020, many brick-and-mortar businesses shut their doors, and some of them for good. However, businesses that adapted to the changing market by implementing a robust e-commerce system were not met with the same economic hardship as businesses that did not. Instead, these businesses saw a boost in their sales that surpassed what they did in a typical year before the pandemic.

E-commerce was rapidly expanding before any stay-at-home orders were issued, but it saw a significant boost afterward. This boost affected nearly all sectors, with grocery stores experiencing one of the biggest shifts in sales ever. This is because many consumers took the plunge into ordering their groceries online, citing health and safety concerns despite grocery stores being deemed an essential business.

Now that many places have lifted pandemic restrictions and there is a light at the end of the tunnel, many businesses are wondering whether consumer trends will change back to pre-pandemic patterns. Whether it is a blessing or a curse for a person’s business, retail experts believe the shift is here to stay. The effects of these changes ripple throughout several industries, so what changes can businesses look for in the coming months and years?

Transportation

The e-commerce shift had a massive effect on supply chain logistics, including the transportation of goods. Transportation operations have undergone drastic changes that were projected to take three to five years pre-pandemic in just a few months. Based on these trends, the following changes were made and are set to increase in the coming year.

Micro-fulfillment Centers

A key challenge for delivering goods has always been an effective last-mile strategy. Providers of third-party logistics (3PL) shifted dramatically to meet the unprecedented demand for the delivery of online goods fast. On top of meeting a massive increase in demand, these providers had to meet the need while taking into consideration health concerns and driver shortages.

In 2020, there was a significant trend towards using micro-fulfillment centers to meet last-mile challenges. Micro-fulfillment centers often provide services such as in-home or in-store delivery and have the added perk of being located close to shoppers in areas with a denser population, like big cities. These centers offer companies the benefit of cutting delivery costs and increasing the efficiency of same-day delivery.

Micro-fulfillment centers look much different than the sprawling warehouses like what is seen for companies like Amazon. Instead, these centers can be existing spaces retrofitted to be suitable for a fulfillment center or small warehouses with small square footage to supplement larger warehouses nearby.

Increased Automation

The automation trend has been picking up speed for several years. However, it saw a significant boost in 2020 and is expected to grow even more throughout 2021. Warehouse automation technology is projected to skyrocket to $22.4 billion in 2021, up from the $1.9 billion it was in 2016.

Existing warehouses are seeing more frequent use of automation technologies, including fulfillment robotics. Robotic automation technology improves safety and efficiency, especially in the face of worker shortages seen first during the shutdowns in March 2020 and still experienced now in 2021. Companies are investing heavily in warehouse robotics that helps with things like order fulfillment, inventory management, and the transportation of goods within micro-fulfillment centers.

In the future, businesses are expected to take a greater interest in more automation technology, including autonomous driving. This not only solves the issue of driver shortages but helps assist with recent pandemic-related demands like contactless delivery. While testing is ongoing, widespread adoption of autonomous delivery driving is expected to happen in four to five years.

Better Supply Chain Visibility

Pandemic-related food and goods shortages underscored the necessity of supply-chain visibility. When retailers and customers experience serious setbacks due to delivery delays, real-time visibility helps ensure the quality of the product. This is especially true in the instance of grocers, who need to know whether a delay will hinder a perishable product’s quality and safety.

To get real-time information on order tracking, shipment status, delivery tracking, freight, and carrier metrics, companies will need a complete visibility platform. In 2021, companies will be putting a lot of resources into IT developments that expand end-to-end logistics visibility. Companies that do not have the resources to invest in their own visibility platform should consider hiring a company that already has a developed and experienced system for e-commerce.

Expanded Supplier Bases

When the pandemic started, international travel became difficult, even for shipping imports and exports. This caused many businesses to see first-hand the vulnerabilities that come with a complex supply chain. As a result, 2020 saw a drastic expansion of companies that are bringing manufacturing facilities back to the US or, at the least, closer to the US. On the whole, companies are expected to try to expand the list of places where they source and produce goods.

Increasing supplier bases will help companies avoid things like inventory shortages and help them worry less about finding the lowest-cost supplier. Logistics is a huge consideration when sourcing goods, so companies that utilize micro-fulfillment centers and/or have increased warehouse capacity will have a significant advantage throughout 2021.

What to Expect Going Forward

The pandemic showed manufacturers and retailers the incredible risk associated with short-sighted, one-source supply chain management. Companies that can quickly adapt to the changing market are the most likely to succeed in this new post-pandemic e-commerce world. However, many companies do not have the resources or infrastructure to overhaul their logistics practices from end to end.

For those that can’t make such a drastic change in a short amount of time, it may be better to outsource their e-commerce logistics. Companies that offer full-service warehouse and fulfillment services can help smaller businesses with fewer resources compete with many of the well-known shipping and e-commerce giants, such as Walmart and Amazon.

The Bottom Line

The pandemic has had a major impact on all aspects of life, and many of these changes are here to stay. E-commerce’s explosive expansion is not going to diminish any time soon, so businesses must adapt to the new digital landscape in order to be successful in the coming years.