Consumers are habitual, but over the last six weeks, our habits have been drastically disturbed, and we’ve adjusted by forming new ones. From work to exercise, we’ve changed how we go about things, and nowhere is this clearer than how we shop.
Before COVID-19 hit, e-commerce penetration in Australia had been on a steadily growing trajectory and reached 10 percent of all retail spend. The belief was that we would continue to see growth going forward, but at a more modest pace.
While there is some debate as to how long it takes to form a new habit, one study by the University College London found the range to be between 18 days and 254 days. Australian consumers have gone one better and developed the new habit of purchasing everything online seemingly overnight. We’ve experienced a decade of e-commerce growth, in the space of a month.
I’m yet to see conclusive figures on Australia’s current e-commerce penetration, but speaking with partners and customers in the space, 15 percent has been touted as a reasonable estimate.
What didn’t grow overnight however was our delivery capacity.
The breaking point
Australian consumers have traditionally been in the habit of having deliveries made to home. But the rise in parcel volumes during COVID-19 and need for social distancing in warehouses have made the last mile more difficult. Deliveries that were previously made within two to three business days are now taking weeks.
An obvious solution lies in consolidating distribution via click and collect or pick-up and drop-off services (PUDO), but traditional in-store click and collect has proved challenging for some retailers in recent weeks.
Those with robust digital offerings already in place have been able to make agile pivots, by offering carpark click and collect, for example, and setting up pop-up click-and-collect points to deal with increased demand.
But this hasn’t been the case for all. Notably, our two biggest supermarkets were overwhelmed by the demand for click and collect in those first few weeks of the COVID-19 crisis and had to suspend services.
PUDO, through services such as Australia Post’s Collect & Return, which enables consumers to pick up their e-commerce orders at Australia Post locations as well as lockers and a range of retailers, is another key plank in expanding the capacity of the final mile without compromising the customer experience.
The second wave
There are two considerations for retailers here and now. The first is how to keep going in the face of all the challenges and changes COVID-19 has thrown at them. The second is how to ensure their business is ready for the second wave.
KPMG refers to a coming e-commerce boom when consumer confidence begins to return in Australia in a report titled, COVID-19: Retail’s Survival and Revival. The report likens our current situation to the Global Financial Crisis, when e-commerce rode a four-year boom after the crisis abated.
If the current e-commerce boom has stretched our delivery capacity to breaking point, a second boom will undoubtedly break it. Unless we proactively drive a greater proportion of our e-commerce parcel volume into consolidated delivery options.
Some retailers are reticent to make changes to delivery propositions while fire-fighting. But regardless whether or not retailers have benefited from the recent e-commerce boom, every retailer will want to be in a position to capitalise on the recovery.
The need for alternative delivery options then will be far greater as consumers will not want to stay home waiting for a delivery when we are allowed to mix and mingle more freely again.
Forming new habits
The habits that served us in the old world, may not be so helpful in the new. There’s a lot we don’t know about the extent to which life will return to “normal”.
What we do know from past experience is that e-commerce won’t be going back to the old normal. This brings huge opportunities for retailers to rethink how to serve customers and how to help them adjust to yet another set of circumstances.
Delivery will be a key component in the new multichannel landscape and will need to be broader and more flexible than it was before.
This is the time for retailers to start supporting customers to make new delivery habits to ensure we uphold consumer expectations and deliver great experiences now and into the second wave, in case that is sooner than we think.
Justin Dery is the CEO of Doddle Asia Pacific.
Justin joined Doddle in 2017 to establish the first international expansion in Australia. He is responsible for managing Doddle’s regional go-to-market strategy, including managing its key partnership with Australia Post. Justin is also responsible for business development of Doddle’s proprietary technology platform with major retailers through Asia Pacific.
Prior to joining Doddle, Justin was founder and CEO of Coverpoint Marketing Group, a full-service digital and brand management agency based in Sydney.