DC Velocity - November 2016

72 DC VELOCITY NOVEMBER 2016 www.dcvelocity.com WHEN BLACK FRIDAY ARRIVES IN JUST A FEW WEEKS, THE lines will likely be shorter than last year’s, and they will probably shrink further in the coming years. The mass migration of shoppers from traditional brick-and-mortar stores to digital storefronts is well under way and continues to gather steam.

The latest evidence quantifying what we in logistics already know comes from an annual study released earlier this year by UPS. The fifth annual “Pulse of the Online Shopper” study shows that avid online shoppers, defined as those who make two or more online purchases in a typical three-month span, are now making more than half of all their purchases online.

This is the first time in the study’s five-year history that more than half ( 51 percent) of all purchases made by respondents are made online, up from 48 percent in 2015. The study also suggests that the shift from traditional in-store shopping to e-commerce will continue. Nearly one in five respondents indicated that more of their shopping will take place online in 2017 than in 2016.

And traditional stores aren’t all they are migrating away from. They are also moving away from their computers as their primary shopping tool and instead turning to their ever-present smartphones. A full 77 percent now conduct their online shopping primarily on mobile devices, up from two-thirds in 2014.

Physical retail stores, though, still have a place in the brave new omnichannel world.

“This year’s study revealed that 45 percent of online shoppers love the thrill of hunting for and finding great deals, and that physical stores continue to play an important role in that experience,” said Teresa Finley, chief marketing officer at UPS, in a press release.

In fact, the study revealed that some traditional online retailers are establishing a brick-and-mortar presence—although these are storefronts with a twist. The retailers are experimenting with showrooms without inventory to provide consumers with the opportunity to examine products before buying them online. One in six shoppers say they have visited such retailers.

Just as today’s customers expect to shop via any channel they
choose, they also expect to use more than one channel to execute
a single transaction. For instance, the study showed that about half
the buyers who shop and buy online want to pick up their order at
a store. These “cross-channel transactions,” defined
as purchases using in-store and at least one online
channel, now account for 38 percent of all purchases.
All this has enormous implications for the back
end of the operation—the retailer’s order ful-
fillment and delivery processes. For one thing, it
means retailers must have integrated visibility into
available inventory in both the store and at the sup-
porting DC(s). It also means retailers must create
a seamless experience between their virtual and
physical storefronts that reflects how their custom-
ers want to shop. Providing detailed product infor-
mation with good photography,
professional and peer reviews,
and online access to store inven-
tory are critical.
Our annual report on omni-
channel distribution, which
appears in this issue, provides
great insight into how retailers
and their logistics service provid-
ers are responding to these new
and rapidly changing demands.
The report features the results of
an exclusive study in which we
asked respondents what process-
es and technologies they used to
fill the various types of orders. As
it turned out, their answers were all over the map.
Just as there is no one specific buying pattern com-
mon to the majority of shoppers, there is no one
specific solution to satisfy these shoppers.

Logistics professionals will continue to face challenges as the complexities grow and the variables multiply. As to how they’ll fare, their fortunes will depend on their ability to remain agile and responsive, and their willingness to adapt to consumer demands that seem to change by the day.