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UK online sales ‘will settle at £12.8bn’

960 640 Stuart O'Brien

Shoppers may be flooding back to High Streets and shopping centres, but online sales are still booming.

That’s according to ParcelHero research, which says our shopping habits post-Covid will result in e-commerce levelling out at around 25% of all retail sales. That means that UK internet sales will be worth around £12.8bn annually.

ParcelHero’s Head of Consumer Research, David Jinks M.I.L.T., said: ‘Our figure of 25% is a significant fall from the 36.1% of all retail sales that online grabbed last February at the height of lockdown. However, it’s still a huge increase on the 19% share online used to take, before the pandemic permanently shook up retail.

‘For some months now, retailers have been trying to guess what the new normal will look like. We believe the picture has now become a lot clearer. The cash registers have certainly been ringing more frequently in stores ever since non-essential shops returned to life on 12 April, but ParcelHero’s own research shows that 46% of consumers have no intention of returning to their pre-Covid, High Street spending levels. Indeed, July saw a decrease in retail footfall compared to June.

‘Online sales fell 4.7% in June compared to May, and they have been falling every month since March, but not at such a rate as to indicate shoppers have abandoned their new online spending habits. As a result, everyone has been trying to assess the new “natural order” and it’s looking like online will permanently secure around a quarter of all retail spending.

‘We’ve looked at data from the smallest online marketplace traders to the largest retail behemoths such as Amazon. There’s no doubt the growth in online spending has slowed dramatically, but any retailer trusting that things will return to how they were pre-pandemic will be sadly mistaken.

‘At the peak of the pandemic, Amazon was experiencing growth of 41%. In contrast, its gross revenues are expected to grow at “just” 10% to 16% next quarter. That’s a big slowdown but, significantly, the continued projected growth indicates that post-Covid shoppers will keep the online habit.

‘Similarly, Etsy, the online marketplace for handmade and crafts items, is still growing in the second quarter of 2021, despite the return of High Street shopping. Etsy, which now owns Depop and Reverb, saw group revenues rise 23.4% to $528.9 million in the three months to 30 June. For the next quarter, it thinks revenues will come in between $500 million and $525 million. That’s a definite decline but far from a collapse to pre-Covid levels.

‘ParcelHero anticipates there will be something of spending spree on our High Streets during August, as everyone enjoys the Great British Staycation. However, the return of colder weather this autumn will likely see new concerns about Covid-19, flu and other illnesses. Everything points towards long-term equilibrium, with online spending maintaining a 25% hold on the UK’s overall £51.4bn retail spend.

‘Ultimately, the fight between online and in-store sales must end in a draw. An omnichannel sales strategy, embracing both shop and online sales, with both services complementing the other, is the only way forward as retail claws its way back from the clutches of the coronavirus.”

Amazon Prime Day will be a $15bn 48-hour bonanza

960 640 Stuart O'Brien

ParcelHero says this year’s Amazon’s Prime Day event (21-22 June) is set to break all records. It forecasts last year’s $10.4bn (£7.37bn) Amazon spending spree will rise 44% to $14.9bn (£10.56bn), with Brits alone set to spend a whopping £1.4bn ($1.98bn).

ParcelHero’s Head of Consumer Research, David Jinks M.I.L.T., said: ‘Traditionally, Amazon Prime Day sales have jumped by around 55% every year. We also know that many people who remained employed during the long lockdowns have some serious money burning a hole in their wallets and purses.

‘However, we must also be realistic. Last year’s Prime Day was in October, ideally placed for the beginning of Christmas shopping and at a time when many countries were still in full lockdown. This year, it kicks off on 21 June – the earliest date ever – and the High Streets have reopened. With that in mind, we’re being a little cautious with our forecast this year and predict a “mere” 44% growth in spending over the two days.

‘This reflects Amazon’s latest sales figures, so we think it’s the minimum increase likely on the big day. It means that last year’s global spend of $10.4bn (£7.37bn) will rise to at nearly $15bn (£10.62bn). Indie Marketplace sellers on Amazon are primed for a real bonanza, with sales set to soar from $3.5bn (£2.48bn) to $5.04bn (£3.57bn).

‘Brits are certainly not going to be left out. ParcelHero’s exclusive research reveals that UK customers splashed a huge £18.78bn ($26.5bn) on Amazon over the course of last year and over £1bn ($1.41bn) during the two-day event itself. This year, spending looks set to rise to an enormous £1.4bn ($1.98bn) over the Prime Day event for the first time.

‘Other e-commerce sites enjoy the knock-on effect of all this activity, thanks to what ParcelHero dubs the Prime Day “Halo Effect”. Last year, online sales on non-Amazon sites grew by 69% globally on the first day of the sale.  According to Adobe Digital Insights, large retailers also experienced up to 50% increased sales in the days following the last Prime Day – presumably as shoppers searched the web for items they couldn’t find in Amazon’s sale.

‘Finally, some people question whether Prime Day items are genuine bargains. According to one anonymous retailer, Amazon requires that Prime Day discounts are exclusive to Prime members and are at least 5% cheaper than the lowest price on the product over the previous 30 days. Additionally, the products included in Prime Day deals must have at least 3.5 star ratings.

‘The date of Amazon Prime Day was announced shortly after news that the e-commerce giant plans to buy the MGM film studio.

You can read more about Amazon’s revolutionary retail and distribution plans in ParcelHero’s in-depth report:  Amazon’s Prime Ambition .

Record online spending will create the ‘Mount Everest of Christmas peaks’

879 586 Stuart O'Brien

Online retailers and couriers are experiencing record peak volumes and many are stretched to full capacity.

That’s according to ParcelHero, which says the worst is yet to come as Christmas 2020 could be 50% busier than last year – the firm is urging retailers to work closely with their delivery partners, otherwise a looming driver shortage and strained supply chains will mean Christmas chaos.

The company says this year’s boom in online sales, fuelled by the impact of the coronavirus pandemic, has already created unprecedented demand for home deliveries.

ParcelHero’s Head of Consumer Research, David Jinks MILT, says the double-whammy of families, separated by Covid restrictions, mailing their gifts, plus a shortage of skilled drivers created by Brexit, could prove a mountain too high to climb. He is urging retailers and couriers to start escalating their Christmas planning immediately to conquer the ‘Mount Everest’ of Christmas peaks.

Jinks said: “The huge demand for deliveries is being compounded by the reported loss of a quarter of a million EU nationals from the UK economy this year, which will lead to a 30% shortfall in drivers and warehouse workers.

“Even though many retailers and delivery companies are attempting to hire thousands more staff in preparation for this year’s Christmas peak, this might be difficult to do in practice. Retailers may need to radically shake up their Christmas distribution plans.

“Despite a partial pick-up of High Street store sales in recent months, online sales are still over 50% higher compared to a year ago. ParcelHero had its busiest day ever just last week and online pure-play Ocado has overtaken Tesco to become the UK’s most valuable retailer. This year’s home delivery growth is unprecedented for both parcels and groceries.

“With capacity already stretched, the impact of Christmas can’t be underestimated. For many retailers, Christmas at least doubles their usual sales. Indeed, there are some companies that run at a loss for the rest of the year and make almost all their profits at Christmas. With many families unable to get together this Christmas, more people than usual will be sending presents to loved ones and ordering their gifts online. We anticipate Christmas volumes could be 50% higher than last year.

“Christmas success is always balanced on a knife edge. As a dreadful warning, it only took an increase in the popularity of online Black Friday shopping in 2014 to cause Christmas chaos across the retail and delivery industry. Nearly one in three (31%) online shoppers experienced problems with their orders that Christmas, 49% suffered from missed deliveries due to overstretched companies’ erratic delivery patterns, while 45% experienced late deliveries or never received their goods.

“The spike in online orders caught many of the UK’s most respected brands off-guard. The likes of AO.com, M&S, River Island, Currys-PC World, Shop Direct and Debenhams all admitted to disruption to their delivery networks in fulfilling the record amount of orders. Even the e-commerce leader Amazon found itself overstretched, while Yodel was forced to stop picking up parcels from retailers as it struggled under the weight of demand.

“There’s no doubt the problems of Christmas 2014 could be repeated this year if retailers underestimate the scale of the challenge. Berry Recruitment, one of the largest temporary worker suppliers in the country, says demand for delivery drivers is running at 30% above supply. It believes a combination of a huge increase in online ordering and fewer European workers has created a perfect storm. This view is supported by findings from the business news service Quartz, which analysed data from the Government’s Office of National Statistics (ONS) and found around a quarter of a million people from the EU have left the UK economy since the start of the year, because of the impact of both Covid and Brexit.

“Can the crisis be averted? This year, Yodel seems determined not to repeat the experience of 2014 and has announced it will create 2,950 new jobs to handle volumes during the Christmas peak. Similarly, many other delivery companies have been gearing up for some time to cope with the rise in demand. Amazon is planning to create more than 20,000 seasonal and permanent positions ahead of the festive period.

“However, with supply chains stretched to breaking point, we advise online shoppers to buy their presents in good time and that everyone sends their presents with time to spare, as Britain’s couriers battle with potentially record volumes.”