by Derek O’Carroll
As winter approaches, a recent Brightpearl study of 500 retailers found that 43 percent of U.S. retailers do not believe their business could survive the devastating impact of a second wave of coronavirus, as the likelihood of widespread shutdowns and restrictions returning increases.
The numbers are staggering: more than 100,000 businesses have shut permanently since the pandemic escalated in March. Even long standing household names that we thought largely infallible have taken unprecedented hits, with the likes of J. Crew and Neiman Marcus recently filing for Chapter 11 bankruptcy, whilst Nordstrom has announced plans to close 14 percent of its stores.
Despite all of this, 47 percent of existing retailers still have not made any changes to their model in order to prepare for the possibility of a second spike of COVID-19, according to our study. Overall, just 37 percent are planning any further digital investment to better prepare their business for future spikes in the virus. These stats are concerning.
As the old adage goes, failing to prepare, is preparing to fail. I’m confident that these tips can help your business ride out the second wave of coronavirus to safer shores.
Make BOPIS a Priority
The ability to offer blended buying experiences such as BOPIS is vital to your firm’s survival of a second wave for a variety of reasons. Firstly, BOPIS is fast becoming a staple option for consumers, and therefore an industry standard for retailers, in fact, an estimated 90 percent of retailers plan on implementing BOPIS by 2021. If your competitors are offering it, and your customers expect it, then you need to implement it to stay competitive.
Secondly, with 56 percent of U.S. shoppers planning on increasing their use of BOPIS over the next 12 months, it should be a major priority for every online retailer with a physical store. As stores reopen with new distancing and safety measures in place, I expect a major upswing in larger retailers offering contactless BOPIS systems which allow guests to order their item online before collecting it safely from outside or via car delivery. Consumer focused initiatives such as BOPIS are a competitive weapon for small and middle-market retailers; one that is currently under-utilized, in my view. If your brand has the capacity to implement these services, then they could prove the defining factor in winning business in an oversaturated marketplace.
Spend on Software That Can Deal with Spikes in Demand
Post-COVID-19, online businesses are operating in an arena of greater competition and heightened demand. Some categories we work with are seeing 600-800 percent YOY increases in direct online sales, with similar highs in demand post-lockdown.
An 800 percent increase in demand is fantastic news in any retail climate, but it does not come without its share of logistical difficulties. Just last month we saw pre-sales open for the next generation of gaming consoles (PS5 & Xbox X Series), causing almost all major digital retailers software and operations issues, even Microsoft’s own store!
Whilst other retailers were citing spiralling delivery delays and stock outs as a result of the heightened demand, luxury brand Fairfax & Favor has been shipping 99 percent of its orders as next day delivery throughout the pandemic, with reduced staff. The footwear brand has credited its ability to automate aspects of the buying experience as one of the primary reasons behind its success in dealing with the unprecedented lockdown demand. It is this kind of crisis management that helped the brand remain active during the pandemic, and provide the type of exceptional customer service that creates brand loyalty — essential in the event of future spikes.
Even when the virus recedes, new online behaviours will likely extend the ‘spike’ to all types of retail, so retailers need to be asking themselves if their current set up supports the increases in traffic of the new normal. Unfortunately, most retailers lack the agile digital retail infrastructure to successfully manage inventory, same-next day delivery, shipping and returns at a level that meets the modern consumer expectations set by ecommerce leaders like Amazon. Brands must make a concerted effort to cut down on order processing times without compromising on the customer journey.
Do Not Forget About Post-Purchase
As we are seeing through the rapid upswing in stores created through Shopify Plus, most brands are aware of and understand the urgency in creating sleek ecommerce sites in the race to attract direct sales. However, few seek to address the operational complexities that lie beyond the buy button, and that is a mistake that often proves costly. Without solid mechanics in place at an operational level, for example, to handle inventory, shipping, and logistics across multiple channels and locations, or for more real-time customer-facing support, any business is quickly going to run into problems.
When talking about the importance of operations to successful ecommerce models, Eve Mattress Co-Founder Kuba Wieczorek puts it best: “That whole back end is so mega important that if you don’t get it right you’re screwed.”
It is important to remember that post-purchase experiences, from delivery to returns, have a direct impact on loyalty. To double down on this, our Rise of the Review Culture study highlighted that a whopping 61 percent of consumers have experienced issues buying from brands online within the past 12 months alone, with the majority of these problems related to post-purchase experiences, such as delivery and returns, inventory management and customer communications.
To truly ‘pandemic-proof’ your business, each scenario in the buying journey – both pre-and post-purchase – should be recognized as equally important. In order to survive future spikes of COVID, to maximize profit and opportunity, retailers need to be in the position to meet heightened demand with exceptional service. That calls for highly efficient and flexible ecosystems that are able to support speed and convenience, can handle bursts of growth as well as the diverse needs of blended cross-channel experiences.
Retailers need to assess their digital infrastructure, identifying improvements and bottlenecks at all ends of the buying experience, and then recruit the right partners that can help ensure the entire retail operation is ready to meet the challenges for a second wave — and any more to follow.
Derek O’Carroll is the CEO of Brightpearl.