The start of the peak season for online retail is nearly upon us. Friday November 27th is Black Friday 2020, the traditional start of the holiday shopping season. The trend in recent years, both globally and here in NZ has been for Black Friday deals to start a few days before the actual day itself, rolling through the weekend. Next is Cyber Monday on November 30th, then on towards Christmas, Boxing Day, and New Year.
As we can see from the NZ Post chart below, online spending is 28% up year on year, with 11% of all retail spending in NZ now online.
Chart shows: online spend between Jan and September 2020 and 2019 in New Zealand
Source: NZ Post
COVID-19 lockdown forced more Kiwis to try shopping online, and many have stayed online even when stores reopened. The growth realised, and retained post NZ lockdown, has seen the future arrive early, with consensus that online retail spend has jumped forward at least a few years. All of this means retailers and associated fulfilment delivery partners are expecting a bumper peak season.
Argon & Co’s Regional Director for New Zealand, Chris Foord spoke with Bryan Dobson, Chief Customer Officer at NZ Post and Justus Wilde, Chief Executive Officer at TheMarket.com to get their in-market insights on e-commerce trends.
What learnings have been taken from the spike experienced through Level 3 lockdown to be ready for this bumper volume?
Bryan Dobson, Chief Customer Officer at NZ Post says: “Like a lot of companies, we ‘stress tested’ our business during the first COVID lockdown. We learned where things worked well, and where things needed to be improved. Following an in-depth review, we have implemented a number of changes across the business.
We have really improved our surge protection capability and have developed much more robust ‘FIFO’ processes.
We have implemented a production planning and control function to ensure we are taking a disciplined and integrated approach to managing supply and capacity with customers and across our network.
We have made a series of changes to our priority and perishable products to ensure that these items are identified and appropriately streamed across our network.
And we have focused on improving the frequency and timeliness of communications on how our network is performing. We are also working on enhancing the visibility of items for both senders and receivers. We have made some short-term changes here and are also working on longer term improvements.”
Justus Wilde, Chief Executive Officer at TheMarket.com says: “COVID-19 was like a second, unexpected and prolonged Christmas which was an excellent opportunity to accelerate learnings in our first year of operation. The lockdown volumes tested our teams, systems and processes. As an outcome we have further developed our reporting and monitoring systems to proactively manage potential merchant shipment and network delays. We have also fine-tuned our CS processes and resource model. Perhaps the most valuable aspect has been the rapid pivoting and close (yet remote) collaborating we learned as a team from going through this period which gives me every confidence that we can rise to any challenge that will be thrown at us.”
This is an exciting time, what can we look forward to?
Bryan Dobson, Chief Customer Officer at NZ Post says: “Obviously, this is a very important time for our customers and for NZ Post, and we are looking forward to delivering for our customers. We are taking a very disciplined approach to our peak planning this year and are using a scenario-based approach to ensure we have a number of options covered. I know we are all hoping that we don’t go into another lockdown, but we have been preparing for it all the same.
I think this is quite an exciting time for eCommerce in New Zealand. In terms of what we are seeing with the penetration of online sales and, as a result, our volumes we are a year or so ahead of where we planned to be. The future has arrived a bit quicker than we expected and that is a great opportunity. There are a lot of shoppers who are new to eCommerce and customers’ expectations are maturing quickly, so it is up to New Zealand online retailers and their delivery partners to keep up with customer needs and ensure people get a good experience. We are all hoping that this volume growth will ‘stick’.”
Justus Wilde, Chief Executive Officer at TheMarket.com says: “We have doubled our product range in the past year and are excited about the variety and depth of offer we can provide in line with our holiday positioning of “All you want for Christmas”. Thousands of new customers are shopping with us for the first time every week, many of them having only been introduced to online shopping this year due to COVID-19. It’s exciting seeing so many kiwis taking advantage of online shopping.
Our MarketClub membership program providing free unlimited shipping has grown significantly this year. We launched a strategic partnership with Vodafone in August providing membership to MarketClub as part of their phone or broadband contract and expect this to scale significantly over this peak period.”
It would not be the peak season without a few innovations to delight customers. What is going to be different from last year?
Bryan Dobson, Chief Customer Officer at NZ Post says: “As I mentioned previously, we have put a lot of effort into our communications, reporting and the visibility of items in our network. We have also ‘productised’ the delivery of priority and perishable items.
Same Day Evening Delivery is now available in Auckland, Hamilton, Wellington and Christchurch in line with customers’ “I need it now” expectations. We are also planning to add further express solutions early in the new year.
We know a number of our merchants use Shopify and we have created a ‘plug in’ to make accessing NZ Post’s authenticated addressing database really simple for Shopify merchants. More features will be added in the new year.
And for our smaller senders we have created our ‘Business Self Service’ solution which provides a much lower touch, easier to use experience.”
Justus Wilde, Chief Executive Officer at TheMarket.com says: “We have launched our Fulfilment By Market (FBM) service providing end-to-end sales and fulfilment services to merchants. This has enabled strategic partners on TheMarket.com. We plan to launch same day metro delivery for FBM in the near future.
Since the lockdowns we have also launched the food and beverage category and are excited to be providing customer solutions for all the celebration needs including beer, wine and spirits this year. “
Every retailer has been focused on increasing their fulfilment capacity and improving their customer experience since COVID-19 lockdown when the online retail supply chain was severely stress tested. Many retailers have expanded existing operations or converted retail stores into dark store or overflow fulfilment centres. Delivery partners have scaled their operations and enhanced reporting and visibility.
This network reconfiguration, providing increased capacity will bring agility and efficiency to online retail supply chains that wasn’t in place when NZ online spending spiked during Level 3 lockdown. Coupled with enhanced visibility and controls through digital solutions means the customer experience should be better.
Whether the capacity is enough to avoid congestion in fulfilment centres and delivery networks is to be seen. What is true is that the volume this online peak season will be significantly higher than anticipated 12 months ago. Those that have responded to new customer demands and built in a degree of latency will cope best.
Here’s to the peak season for online retail.
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