The future of retail relies on smart logistics

Crystal Pang December 15, 2020 08:51

The pandemic has triggered a seismic shift to online shopping in Hong Kong. A recent study revealed that 42% of Hongkongers are shopping online more often during the pandemic, compared to 33% globally. The shift in consumer behaviour has led to droves of retailers moving their businesses online and scaling up their digital presence to tackle the increased demand.

With sales opportunities abound online, there is also fiercer competition. To stand out from the crowd, businesses have to adopt a customer-first approach and offer a seamless shopping experience. This especially rings true as a new cohort of online shoppers who demand a convenient, contactless delivery experience has emerged amid the Covid era.

For digital-only brands, the product delivery process is also one of the very few times when they can expand beyond their virtual presence and interact with their customers in real life. The perception that delivery is the last thing to consider has to be discarded as online businesses must start with planning their logistics to be successful.

Digital-savvy consumers influenced by delivery

From searching for the right product to making a purchase and getting their orders fulfilled, today’s consumers enjoy online shopping for its unparalleled convenience and efficiency. Being in the middle of a pandemic while living in a fast-paced city like Hong Kong, customers have rising expectations for the ease and speed of their shopping journey. According to Pickupp’s data, there has been a 39.7% increase in same-day delivery demand since the pandemic.

Meanwhile, it’s found that late delivery is the number one reason for consumer complaints in the past six months. Lacklustre delivery experiences as such may damage your customers’ overall satisfaction with your brand, and ultimately hurt your bottom line sales. Consumers who were hesitant to switch over to online shopping prior to the pandemic will more likely hold back from revisiting your e-shop if their first purchase falls short of expectations.The cost that comes with ignoring the quality of your delivery service can come back to bite your business.

The pandemic has fundamentally changed the consumer expectation on online shopping - beyond a frictionless experience online, they see a delightful delivery offline as compulsory. There’s no going back but a rising bar of the consumer experience in the future of digital retail.

Logistics underpins success of digital business

Taking a step back and looking from an operations perspective, a timely, transparent and efficient logistics process is utterly critical for all digital businesses from first to last-mile. More than half of the local e-shops see logistics as their most impacted area due to the pandemic, citing challenges from supply chain disruptions to delays in front-end deliveries to consumers. The interruptions in their logistics and supply chains – including reduced transportation and manpower capacities – as well as hurdles in delivery timeliness, have resulted in sales dropping by more than 20%, cited by over a quarter of local e-tailers.

Merchants should revisit their logistics strategy and plan to be nimble in this volatile business environment. However, there could be a jaw-droppingly high fixed cost for managing and hiring their own logistics teams, which would be even more hard-pressed for small and medium-sized businesses.

Harnessing technology to get a head start

The best-in-breed solution to responding to higher demands with agility is adopting technologies. Online businesses that turn to logistics tech solutions are able to meet the rising demands for enhanced delivery experience more efficiently, allowing them to focus on accelerating sales growth instead.

Over the past year, we’ve seen more online retailers turning to tech delivery platforms like Pickupp for a reliable and cost-effective way to scale up their operations.

In today’s world of cutthroat e-commerce competition, fast and scalable logistics is not just a nice-to-have but is now at the core of running a successful digital business. As Hong Kong’s social distancing rules are likely to stay for the next while, consumers will continue to embrace online shopping and the demand for a smooth delivery experience will become more relevant than ever. With the right technology and logistics strategy in place, the future looks bright for online businesses.

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Crystal Pang

Co-Founder and CEO, Pickupp