The pandemic changes that will stick around
“What’s changed over the last year?” “What intriguing trends emerged from the pandemic?”
We can learn a great deal about human nature when we re-examine all that transpired in Spring 2020. We can learn a massive amount about persistence and sacrifice when we recall the long, hard seasons that followed and the unpredictability we all lived through.
In all of it, though, the most important lessons we can learn are the ones that prepare us for the future.
So, in addition to the questions above, let’s add another one: “What are the pandemic-related shifts that will last the longest and have the greatest impact on our industry?”
I want to hone in on a specific arena that has been dramatically affected by the events of the past year. Direct-to-consumer e-commerce distribution operations were thrown head-long into a world — and a way of doing business — hardly anyone had ever envisioned, let alone prepared for.
Not all of that new world was necessarily bad. E-commerce retailers in the United States shattered prior performance figures, lifting the total amount of consumer retail purchases to $861 billion in 2020. That represented a 44% increase over 2019. Online purchases accounted for a whopping 21% of that $861 billion. That, too, was a record increase over the prior year.
>>>But how did e-comm retailers get to those numbers?
>>>What happened as their operations adapted to COVID-19 protocols?
>>>And what will be the most enduring changes in 2021 and beyond?
TREND #1: Online Spending Spikes for Good: Consumers will continue to spend more and more online
As we just saw, despite the massive economic shocks experienced around the world in 2020, consumers in the United States alone spent more than $180 billion with online retailers last year. In 2019, total online retail sales accounted for 15% of total consumer retail purchases. This year, that number will be closer to 25%.
What was already a trend has now become a law of nature, it seems: people want to buy online. That means direct-to-consumer e-commerce operations will continue to be busier and busier.
This has meant and will mean many must invest in expanding facilities (either through leases or purchases), as well as working with larger labor forces.
TREND #2: Labor’s Bounce Back: Workers are recovering lost jobs and claiming new ones
For the immediate future, that need for labor remains an ongoing challenge. In 2020, droves of workers lost their jobs when the economy screeched to a halt in March. Fortunately, a great number found their way back to work, or returned to their original job. But many did not. Worse, many could not because of illness and child care needs.
Even those who were searching for work were hesitant to accept jobs they perceived as more dangerous vis-a-vis COVID-19. That meant warehouse and distribution center openings were sometimes harder to fill, and required a greater investment in wages, benefits, and overall employee investment.
That need for greater investment is pressing. Jobs in DCs and warehouses, which form the backbone of DTC e-comm operations, must be more appealing than ever before in order to persuade leery workers to take the position.
This can be accomplished not only through wage increases, but also through investing in the workplace itself. Make break rooms comfortable, inviting places. Add TVs and microwaves, fridges and comfy chairs. Pay more attention to the working environment, too. Improve the lighting, and enhance the cleaning procedures.
Finally, promote a culture that encourages the employees themselves to invest in the job. Ensure supervisors are visible and attentive to employees. Teach everyone about your values and expected work ethic, even going so far as to make memorable phrases or rhymes out of important statements. Then, have leaders visit the floor and randomly ask employees to recite this or that part of the training. If they can, hand them a $5, or a small gift card. You’ll see bigger buy-in right away.
The point is, workers want to come back, and direct-to-consumer e-comm operators desperately need people to work their supply chains. In fact, there will be more net people working in those supply chains in years to come, making the labor supply situation even more pressing. Businesses will have to be smart, and make themselves a good destination for their potential employees.
TREND #3: The Creative Imperative: DTC E-comm has to get creative with space
Shopping malls are thriving.
Wait, what? That’s not true, is it? Brick and mortar stores have suffered for years, and COVID-19 just made it worse.
But the buildings that made up shopping malls are thriving, in places around the country. E-comm operations (as well as others) have taken over old malls and converted them into DCs and warehouses. In fact, nGROUP is serving clients in last mile fulfillment in malls in several markets, and we anticipate this area of the business growing rapidly. Has your operation considered this option?
Because of the expansion in DTC e-comm, space for warehouses and DCs has become harder and harder to find. That means those operations have been — and will need to continue to be — incredibly creative in how they find, take over, and utilize the space they need.
Multiple operators, even competitors, working out of the same facility or set of facilities will continue to become more common. Add this need for creatively finding new space to the existing need for somehow finding workers to fill those spaces, and you’ve got a tremendous headache indeed. This may mean an increased need for 3PLs and 4PLs to serve the increased volume in e-commerce in creative ways.
TREND #4: The Next Big One: Businesses must plan ahead creatively — and permanently
Now that we’ve seen the world from this side of reality, we’ll never again see it like we used to. At least, we won’t if we’re smart.
What will be the next major destabilizing event in the world? Or in this country or that country? Which sectors of the economy are vulnerable to future threats like pandemics, wars, or… who knows?
The smartest trend to emerge from 2020 — and the most important trend to perpetuate — is that of looking to the future with a careful eye. COVID-19 caught the world sleeping, utterly unprepared for this level of medical disaster. Even something as simple as a facemask (or toilet paper!) seemed to be worth its weight in gold for a time, due to supply problems.
The incredible amount of pivoting, changing, and figuring-it-out-on-the-fly that we saw last year was a credit to the human capacity for reinvention and adaptation.
But how can we avoid that lost time spent figuring out how to adapt? By thinking outside the box more than ever before.
Disaster planning must be part of the program from now on. Not just “local” disasters like tornadoes, earthquakes, or hurricanes. Now we must think about pandemics, global wars, civil disturbances, and more. The world feels volatile right now. That’s why businesses have to be on their toes at all times. A couple of months ago, I shared how we were able to help our client, Optoro after their facility was leveled in a tornado. They were able to stand up a new operation in 10 days! Read more here.
Don’t navigate it all alone
For nGROUP, these trends or patterns are significant. To us, they are challenges to which we must adapt. They’re challenges to which we have adapted.
We work with direct-to-consumer e-commerce retailers all over the United States, companies like Macy’s, Williams-Sonoma, and Carparts.com. Our teams helped many of them to their biggest years ever in 2020.
Even when COVID-19 fears and government aid depressed the labor supply, we were able to keep our shifts fully-staffed. That meant our partners were ready to make changes, and were prepared to be flexible. It also means they’ll be ready and flexible for whatever the future may hold.
If your e-commerce retail operation wants to make sure your workforce is always ready to meet new challenges, reach out to us today. Your labor should always be a strength, never an impediment. nGROUP can give you confidence that everyone on your team is prepared for the years to come.