Ecommerce is experiencing another fundamental change after the Covid-19 pandemic shifted consumer behavior to online first shopping.
Initially, many companies in the ecommerce space saw this shift as a lasting change in consumer shopping. PayPal CEO Daniel Schulman even said, “it won’t go back to the way it was,” based on his conversations with CEOs in the retail space.
However, much has changed since 2020. Not only have vaccinations significantly reduced the threat of major Covid-19 complications, making people feel comfortable again to shop in retail stores, but supply chain issues — mostly due to China’s Zero Covid-19 policy — and the war in Ukraine, have created new challenges for online commerce.
This has caused major economies in North America and Europe to be plagued by high inflation, not seen at such levels in decades, causing prices to rise, and costs for ecommerce retailers and sellers to increase as well.
As many of our industry experts in our 2023 predictions article already alluded to, 2023 is a year of many uncertainties due to continued macroeconomic challenges.
Last week, DHL eCommerce Solutions released its fourth annual “E-tailers’ Almanac” looking at key trends that will shape online commerce this year, especially in the lightweight parcel industry.
DHL eCommerce Solutions is a division of Deutsche Post DHL Group, providing domestic and international parcel delivery solutions for high-volume shippers.
But as much as this almanac is aimed at its higher volume customer base, the findings by DHL eCommerce Solutions are applicable to any sized business, even those that do not use the carrier or sell on online marketplaces.
Let’s take a look at the four market trends in this year’s E-tailers’ Almanac.
DHL eCommerce Solutions 2023 E-Tailers’ Almanac
Cost-consciousness is here to stay: “With global and U.S. macroeconomic uncertainties looming in 2023, consumers are expected to be more cost-conscious in their online spending.
“Budgetary pressures are forcing consumers to make trade-offs and reallocate their budgets across purchase categories.
“This shift in online consumer spending is impacting online merchants’ shipping requirements and making the cost of shipping their number one priority, pushing the speed of delivery to a close second place.”
Pandemic volume boom gone, closer to 2019 levels: “With less consumer spending across product categories, DHL eCommerce Solutions U.S. has seen volumes normalize but reach approximately 20% higher volume compared to 2019, a slight decrease from pandemic (2020-2021) volume levels.
“This overall normalization of volume across the logistics industry is due to online retailers facing margin pressures, a dip in demand, and cost and labor increases, resulting in many negotiating with multiple shipping carriers for the most economical and reliable service.”
Reliability and real-time visibility: “Based on online merchant feedback provided to DHL eCommerce Solutions, reliability, proactive real-time visibility, and tracking top their list of needs in addition to the price.
“Regarding shipment tracking and exceptions, online merchants request proactive, timely updates via email or API real-time updates and feeds.
“As a result, we can expect increased investments among logistics providers in data analytics and instant tracking and transportation disruption notification capabilities.”
Regionalization of demand returns: “As supply chain bottlenecks ease and market conditions stabilize, we expect to see a return to long-term shipping trends such as regionalization of demand.
“For ecommerce merchants, regionalizing their distribution networks can help them get closer to their end consumers and save on transportation costs, but this will demand a strong logistics partner with an extensive footprint.”
Lee Spratt, CEO, DHL eCommerce Solutions, Americas summarized the E-tailers’ Almanac: “What a difference one year can make. With order volumes down and less demand in capacity, our e-tailer customers’ priorities have evolved to ensure they retain customers in a tough economy,
“Overall cost, reliability, and visibility are some of the factors driving the ecommerce industry this year and at DHL eCommerce Solutions, we hope to partner with our online merchant customers to navigate together the year ahead.”
What You Can Do To Help Your Ecommerce Business
The DHL eCommerce Solutions E-tailers’ Almanac highlights key trends many online sellers have already been experiencing or suspected they will experience this year. In many ways, they are not that surprising findings.
Shipping costs are always a factor, especially since “Free Shipping” has proliferated as a marketing ploy to drive sales. It continues to be one of the biggest pain points for online sellers.
But have you considered highlighting and offering Priority or Express shipping options? These could provide additional revenue and profit for your business.
Furthermore, with a return to pre-pandemic times, ecommerce merchants and marketplace sellers will have to watch their inventory and turnover rates to match consumer demand.
Lower cost items, including pre-owned or refurbished items, are playing a more significant role in the purchase decision. Some of this is driven by the higher cost of new items, while other consumers are also looking at sustainability as a factor in their decision-making.
In short, pre-owned and refurbished items are far more acceptable today to consumers than ever before.
If your sales have suffered over the past months, it may be time to review your inventory mix and look at your overall operations. Here are a few areas for you to consider:
- Are you offering the right items that buyers want today at the right price points?
- Do you provide sustainable options, including eco-friendly shipping options, to attract a growing consumer interest, especially among younger aged consumers, for environmentally conscious shopping?
- While shipment is tracking for most delivery solutions today, are you providing updates throughout the journey to enhance your customer’s experience?
Macroeconomics matter, even if you only sell a few items per month. Ignoring the reality of today’s consumer can reduce a profitable side-hustle to a drain on your business or personal finances.
The biggest advantage solopreneurs and small business owners have is the ability to change things quickly to meet consumer demand. Now is a good time to look at your business and make the necessary changes to have a successful 2023.
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