Digital commerce transformation

Stores are open, but customers are still online

Relaxed restrictions and a pent-up desire to shop for pleasure has increased consumer intent to purchase apparel, footwear, and other nonessential products. However, for the foreseeable future, customers will continue to shop online more frequently. What’s causing the ongoing shift?

• Consumers have become comfortable purchasing additional product categories online. Online grocery shopping tripled during the pandemic.
• Expanded online assortments and new promotional tactics have encouraged customers to start their journeys online.
  
• Despite distancing and safety measures, almost half of consumers surveyed by Deloitte in August 2020 did not feel safe shopping in a brick-and-mortar store.
  
• Limited stock and selection in-store is driving consumers online, despite delivery costs and delays. Forty-two percent of consumers are willing to pay for convenience.

In the online world, digital and supply chain capabilities are on display

The heightened consumer preference for online shopping means more focus will be placed on e-commerce services and experiences than ever before. Educated consumers will comparison-shop for services along with products and prices.

Delivery and return policies are the greatest cart abandonment driver. For example:

• Forty percent of customers won’t complete checkout if these costs are too high.
• Ten percent of customers will abandon their cart if a package won’t deliver on time or the delivery time frame is not clear.
  
• Five percent of customers will abandon their cart if they’re not allowed sufficient time to return products or the wait for a refund is too long.
  
• Sixty-nine percent of customers will continue to shop with a brand they’ve had an excellent site, delivery, and returns experience with.
  

When all else is equal, e-commerce capabilities will convert virtual window-shopping into sales.

How will your brand create a digital connection with an online customer?

You can establish a firsthand connection via a traditional direct-to-consumer model or a relay connection using retail and social media partnership models. The key will be determining the right digital commerce model, or combination of models, for your brand and ensuring your ecosystem and capabilities are in place to satisfy the consumer no matter how you reach them. Failure to deliver as promised via any model will ultimately affect your brand.

How will your supply chain be affected?

Warehouses, processes, and systems that were designed to move full cases of products from dock to dock cannot maintain the same levels of efficiency when cases are opened to sell products as individual units. The shift from case-level to unit-level processing will add labor, material, and transportation expenses throughout the product and order life cycles, including:

• Labor for unit-level prep and packing
• Prep materials (polybags and labels)
• Labor to unpack, prep, and put away units
• Replenishment of active pick locations
• Website maintenance and product digitization
• Payment and credit services
• Labor for unit-level picking and packing
• Packing materials
• Small parcel delivery
• Residential or peak volume surcharges
• Higher return rate than in-store purchases
• Delivery costs for mailed returns
• Customer service sites and agents

Based on the average case pack, shifting to unit-level processing results in 24 times more supply chain touches to complete orders. Facility alterations, system enhancements, and new ways of working will be required to maintain expense rates and profit margins.

How will you succeed?

Your digital ecosystem and supply chain must excel in seven key areas in order to support increased sales while maintaining financial performance and service standards.

How Deloitte can help

Deloitte can help retail, wholesale, and consumer products companies realize value quickly and effectively to meet market opportunity today and in the future. Our approach begins with the customer promise and sets the foundation for your future e-commerce ecosystem and supply chain. Deloitte’s digital commerce services can be tailored to accelerate any journey.