Pandemic brings Christmas shopping crunch

Published on the 18/11/2020 | Written by Jonathan Cotton

Christmas supply chain_online sales

Online demand faces supply chain shortfalls…

Retailers will be wishing they too had Santa’s magic sleigh as a big shift to online buying is creating logistical issues that have coincided with accidents and automation problems at Ports of Auckland, along with port strikes in Australia creating a supply chain nightmare.

Now, Gartner are warning of a ‘shipageddon’ as online orders are delayed through product availability challenges, delayed order fulfilment or transportation issues as retailers and carriers struggle to handle the volume.

Locally, those woes are being compounded further, with claims Ports of Auckland’s automation project, itself delayed by the pandemic, is causing ship congestion and import delays. While the Port has denied the automation project is to blame, ships are reportedly by-passing Auckland opting instead for Sydney to avoid 8-day wait times. One anonymous worker took to the media infrustration this week to allege it’s a key factor in the problems.

“2020 has been an unusual year for us all with the pandemic changing many aspects of our daily lives, and Christmas will be no exception.”

Australian ports too, have faced issues with recent strike action by port workers.

All this comes against a backdrop of Covid-19, with analysts predicting big shifts in the economics, and logistics, of Xmas 2020.

Among those, there’s a move away from in-store experiences, as the pandemic discourages unnecessary face-to-face contact.

Covid-19 has created the demand for many businesses to offer online shopping, says Anna Hammond, content analyst at Gartner Digital Markets for A/NZ, ‘with 34 percent of New Zealand shoppers stating they will spend more online and less in-store due to the current environment’.

According to Hammond, 43 percent of New Zealanders are now more inclined to shop online due to the convenience – and hygiene – it affords.

“New Zealand is also seeing more use of online delivery services with 45 percent of shoppers turning to online delivery once or twice a week since the start of COVID-19. When asked for the top reasons for using online delivery, 51 percent said that it was to avoid contact with crowds in-store.”

While not every retailer has made the e-com leap, there’s plenty of good reasons to, says Gartner. According to the research, 35 percent of Kiwis say they prefer independent online stores, with 19 percent opting to shop directly from a retailer or brand website and just 12 percent choosing Amazon as their preferred shopping destination.

As we get closer to Christmas, all bets are on a bumper year for digital sales, and that goes for Australia too. New research from payment giant PayPal predicts online Christmas shopping in Australia will almost double compared to previous years.

“2020 has been an unusual year for us all with the pandemic changing many aspects of our daily lives, and Christmas will be no exception,” warns Danielle Grant, Consumer Shopping Expert at PayPal Australia.

“This year many more Australians will shift their shopping behaviour and purchase gifts online, rather than in-store – with safety and security driving this trend.”

Gartner warning of ‘Shipageddon’
Reduced foot traffic likely won’t be the big retail story for Christmas 2020 however. Gartner is now warning that for retailers – and perhaps consumers too – it’s going to be a difficult season.

“The term ‘shipageddon’ is being used to describe what’s increasingly being anticipated as a year where a significantly higher than usual proportion of online orders are delayed due to a combination of product availability challenges, delayed order fulfillment or transportation issues,” says Thomas O’Connor, a global lead analyst with Gartner.

Gartner says that globally retailers have been looking to smooth consumer demand with pre-Christmas sales – think Amazon’s October Prime Day and Alibaba’s Singles Day event in November – but supply chains are already struggling to keep up.

“Data suggests that retailers and carrier partners are starting to struggle to handle the volume of online orders they are receiving,” says O’Conner. “Click-to-delivery lead times – the time from when a consumer places their order to when it is delivered – have been steadily growing since mid-October”.

So how’s an anxiety-filled supply-chain manager to prepare for the most uncertain time of the year?

Gartner has some advice, including working with what you’ve got: Same- or next-day pick-up offerings such as curbside delivery or buy online, pick up in-store to provide increased shopper certainty that their orders will be available in time for gift giving.

Perhaps more importantly, be upfront about delays with customers and clients. “Clear, visible and dynamic (updated based on changing market conditions) communication to shoppers of holiday shipment lead times and delivery cut-off dates to achieve delivery in time for gift giving. This is particularly critical when shipment lead times and/or cut-off dates are materially earlier than in prior years.”

And if the threat of Santa arriving late this year isn’t enough, Cert, New Zealand’s government cybersecurity agency is warning that cyber attackers will be out in force, looking to exploit security gaps in hastily-developed e-com websites.

“We expect cyber attackers will try to cash in as more and more people flock to the internet to do their Christmas shopping,” says Cert NZ Director Rob Pope.

“Lax security measures for online trading websites can make it easy for attackers to steal customers’ money and data. This can also have serious ramifications for businesses, including loss of revenue and reputational damage.”

Research from Cert NZ reveals the extent of the issue: Only 34 percent of Kiwi SMEs who have a website feel they have a reasonably good understanding of cyber security and 60 percent admit that they should do more to keep their business website secure.

The agency is recommending businesses take the following four basic steps:

  • Enable HTTPS across your website to encrypt customer information which keeps it confidential
  • Automate updates to ensure you have the most secure software
  • Auto-renew your domain name to avoid attackers claiming it to set up a scam website
  • Speak to your bank about becoming PCI DSS2 compliant to ensure customer card data is secure

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