Data from a major ecommerce logistics company suggests 2020 will be a boom season for online retailers in Australia, and some will need to sure up their fulfilment operations to cope.
Online sales have been growing steadily for years but public health restrictions resulting from COVID-19 turbocharged the shift online, according to data from eStore Logistics, a major Australian warehousing and eCommerce order fulfilment provider.
eStore Logistics, which fulfils up to 45,000 orders per day, says analysis of orders and items across its customer base shows orders grew by 173 per cent in Victoria in September compared to last year as lockdowns tightened again. Orders also grew by more than 40 per cent in QLD and NSW which had considerably less restrictions.
COVID ecommerce boom
Leigh Williams, eStore Logistics CEO, says in the first few months of COVID-19 ecommerce gained ground that would otherwise have taken years.
“eStore Logistics customers sold 181 per cent more items in June 2020 compared to that of June 2019,” Williams tells Which-50. “This tells us that the COVID lockdown has brought new Aussie consumers online who may not have experienced the convenience of ecommerce and that they have stayed on for the end of financial year sales.”
And while many states are targeting the holiday period as a potential time for easing restrictions, Williams believes the ecommerce growth will sustain.
“Typically, ecommerce retailers will see an 80 per cent increase or more in sales volume during the Black Friday and the festive season period. In 2020, average sales for online retailers were already higher than the 2019 black Friday and festive season sales period. Based on forecasts we expect a 200 per cent to 300 per cent increase this black Friday and festive season compared to 2019’s regular season volume.
Ecommerce was already growing in Australia, around 20 per cent each year according to Williams, who says there is plenty of room to catch up to more mature markets like the US and UK.
The arrival of Amazon has also accelerated adoption, Williams says, although he cautions there are trade off to using the US giant and competitor.
“Some [local retailers] may well see an opportunity to sell their products on Amazon, enabling them to access the company’s international consumer base. Before they do so, it’s important for them to consider what kind of relationship they want to have with their customers.
“If a retailer’s products arrive in Amazon boxes, it effectively means that the ‘unboxing experience’ is no longer theirs.”
Preparing for the holidays
Williams says local retailers gearing up for the holiday online rush should be over preparing to avoid being caught out in a similar way to the early COVID related rush.
“Earlier when the pandemic first struck, retailers and suppliers reduced order volumes, only to experience unprecedented demand that’s left them struggling to cope. This has shown it’s often safer to over-forecast than under-forecast, so retailers can map out the right staffing capacity, tools and storage models to handle demand.”
According to Williams, retailer’s fulfilment operations are not always given the attention they need and when rushes come often customer experience suffers.
“If a retailer has followed the traditional route of investing capital in their own warehousing and logistics, there is no reason why they shouldn’t be able to cope during peak periods. But this means that they will likely have to focus their time and money on fulfilling customer orders, rather than on customer service, looking at customer buying behaviour, working out deals and price points, or digital marketing, that would enable them to take full advantage of holiday period sales.”
eStore logistics has developed its own high tech fulfilment capabilities, this year announcing a $40 million investment into two fulfilment centres manned by over 200 AI-enabled robots to help pick orders.
Williams tells Which-50 the new MCG-sized site at Felstead Drive,Truganina, VIC is now fully operational and both sites now have the autonomous robots up and running. There are no updates, however, for the reported mulling of an IPO of the company.