Currently in the United States, retail sales for 2015 are expected to be around $3.5 trillion dollars, with nearly 10% coming from eCommerce (Forrester Research eCommerce Forecast). eCommerce has been rapidly growing, having grown from $263 billion in 2013 to $334 billion expected in 2015, and projected to reach $480 billion by 2019 (Forrester). This growth is being accelerated by two main trends: mobile commerce and the on-demand economy.
Smartphone sales make up 10% of eCommerce, up from 6% in 2013 and 3% in 2012 (Forrester) and will continue to grow as society as a whole becomes further integrated with our phones. As people are able to conduct their lives entirely on their phones we are seeing the on-demand economy become increasingly prevalent. People value convenience and the combination of mobile commerce and the rise of the on-demand economy make it a breeze for consumers to receive goods on their own terms. Not only are products more easily available, but now services as well: doctors, lawyers, hairstylists, handymen, groceries and complete meals are all accessible to consumers through their phones and will arrive at their door precisely when they ask them to. This novel way of commerce has created a paradigm shift in the way businesses, consumers, and employees all interact with one another.
While consumers become ever more impatient, the world of fulfillment is changing in order to keep up with consumers expectations. Companies like Amazon and Google are getting in on this unexplored avenue of fulfillment with ventures such as Amazon Prime Now and Google Express. These services offer same day delivery, and in the case of Amazon Prime Now, the option for the product to be delivered within an hour. Whether or not this type of delivery system can be sustained let alone be profitable is still unclear, but it certainly opens the door for innovation in the fulfillment industry as consumer needs continue to evolve towards more on-demand preferences.
What does all this mean for fulfillment and logistics providers? Companies are moving from the traditional single-hub distribution models to multi-hub models in order to get their products in the hands of consumers quicker. Amazon is aggressively building distribution centers closer to high population density metropolitan areas. Omni-channel fulfillment allows for consumers to get their hands on the products they buy in multiple ways. Ordering online and picking up in store, having items delivered directly from the store to your home, and ordering online and having it delivered home quickly are all examples of the way fulfillment has become increasingly complex and a key growth driver in the industry. Companies need be confident in their fulfillment and logistics strategies and that they can meet demanding expectations of consumers lest they be left behind in a constantly accelerating industry.
