As challenging as the past year has been, it has certainly proved the adaptability of many industries, including the logistics and eCommerce sectors. The year has seen not only and increase in people turning to eCommerce as shops close but also a change in eCommerce habits and supply chains.
Virtual Stock, which provides supply chain solutions for retailers such as Argos Sainsbury’s and Dixons Carphone, has reported an increase of orders on its dropship platform not only on Black Friday weekend but also throughout the whole of November. With eCommerce on the rise throughout the year, this may signal a decline in the relative importance of Black Friday.
Dropship fulfilment skips the middleman as the supplier ships the product direct to the customer. It enables retailers to fulfil spikes in demand by accessing suppliers who fulfil orders directly with customers and can also be used to rapidly ramp up and extend product categories online and plug any gaps in inventory.
Growth trends
This year saw 40% and 37% year-on-year growth in order volumes in the two weekends up to Black Friday Weekend, but only a 33% annual growth in orders on Black Friday Weekend itself. The two weekends before Black Friday 2020 had 24% and 15% more orders than Black Friday Weekend 2019 respectively, evidence that eCommerce has grown vastly due to the pandemic.
Consumer purchases this Black Friday Weekend mirrored the trends seen throughout 2020. 3-in-1 sandwich makers, air fryers, and microwaves were all in among the most ordered products as more people were forced into cooking and eating at home more regularly, while computer monitors and coffee makers reflected the sharp rise in home offices due to the pandemic.
“We are delighted to have played a critical role during the pre-Christmas and Black Friday period, helping retailers meet surging demand for various products,” commented Ed Bradley, founder and director of Virtualstock. “This year has seen e-commerce growing stronger as the pandemic has thrust it into the limelight as the primary way in which many people now shop. November has been no different as we saw a huge rise in orders, despite many retailers investing less in marketing this year than previous ones. We expect dropship to be a crucial feature of eCommerce into 2021 and beyond.”
Following this, Barclays Corporate Banking has also reported a shift in consumer habits this year with a boom in manufacturers selling direct-to-consumer (D2C). They estimate this will provide a £24bn boost to the industry’s coffers by 2023.
The new report, ‘A direct approach’, combines polling of manufacturers, logistics firms and consumers with detailed economic modelling to assess the impact of D2C sales, where traditional channels of distribution such as retailers and wholesalers are bypassed. The results show that a surge in shoppers going direct will mean sales through this channel total £120bn in 2023 – an increase from £96bn this year.
Again, this growth is being driven by consumer choices exacerbated by the pandemic. Almost 59% of the people surveyed said they now frequently go direct to manufacturers because they believe they will get a better price (36%) and better service (23%).
Habits that stick
Encouragingly for manufacturers, consumers’ newly-formed habits show no signs of abating even after the pandemic, with more than half of people surveyed said they will continue to shop online as much as they do now, and 13% predicting they’ll turn to eCommerce even more often. Shoppers expect 29% of their home deliveries to come via D2C in 2023, rising from 20% in 2020.
These trends have seen 13% of manufacturers set-up a D2C channel this year, each investing an average of £288,000 to do so, while 22% have seen an increase in D2C sales. However, despite the growing prominence of direct sales, the vast majority (98%) of manufacturers also continue to work with wholesalers and retailers.
“2020 has been a turbulent year for all industries, and the manufacturing sector is no different,” commented Lee Collinson, head of manufacturing, transport and logistics at Barclays Corporate Banking. “However, the increasing demand to procure goods direct from the companies that make them is providing growth opportunities and confidence for manufacturers of all sizes. D2C sales will help manufacturing firms increase their earnings and protect and create jobs in the next three years: that’s a welcome shot in the arm not only for the industry, but also for the wider UK economy.”
