Ecommerce will drive a sea change in the UK carrier industry in coming years, with half of all parcels delivered to consumers rather than businesses by 2016, a study has found.
Some 37% of items handled by the UK’s carriers in the run-up to Christmas 2011 were sent by ecommerce firms, according to the report from parcel and carrier manager Global Freight Solutions (GFS). It predicts that 50% of all parcels will be sent by online traders by 2016, with significant consequences for the way the industry is organised.
Currently the majority of packages are business parcels, but etail is growing fast, sending 15% more parcels in November and December 2011 and business and consumer parcels are likely to reach parity in five years, predicts the report, The GFS Review 2011.
“A decade ago,” said GFS director Simon Veale, “consumers were responsible for approximately 10% of the Christmas parcel peak. The increase we’ve witnessed since then has predominantly been caused by internet shopping and much of that has come after 2006, when ecommerce begin to really gain in popularity.
"It shows no sign of slowing down. Instead, we believe that the more frequent use of smartphones and tablets to buy Christmas presents on-line will fuel further parcel growth and that, in turn, means home deliveries may well catch up with those destined for business customers by 2016.
“Given that much of the parcel industry has historically been geared to handling business parcel traffic, this represents a major milestone.”
GFS said the change would mean that high-volume shippers would need to have a wider portfolio of delivery partners, while etailers may need to amend their delivery promises from guaranteed next-day delivery to two or three days, in order to guarantee deliveries and keep customers satisfied.
GFS found that in the run up to Christmas, parcel traffic to high street stores fell by almost 2%, year-on-year, as a result of the recession. But consumers started their online shopping early, perhaps mindful of delays to deliveries during the snowfalls of December 2010. Volumes resulting from ecommerce stayed consistently high for a month, said GFS, with more than 4m new parcels coming into the UK delivery network every day, up by more than 3% on the previous year.
Projections from current data suggested, said Veale, that consumers and businesses would together contribute around 4.75m new items a day by December 2016. It also seems that the period after Christmas will also be busier.
"Whereas parcel carriers used to experience a comparatively quiet period once the pre-Christmas rush was over, it appears that they will do no longer. High street sales used to begin on Boxing Day but, thanks to the internet, retailers can trade on Christmas Day itself when the 'bricks and mortar' stores are still closed.
"If that pattern continues - and there's no evidence in the data that we have analysed to suggest that it won't - it means ecommerce firms having to carefully consider how they manage deliveries not only up to but beyond Christmas Day, something which they have never had to do before.
"However, the indications are that more and more online retailers are now truly beginning to realise the critical importance of having reliable distribution to their chances of capitalising on the ecommerce boom."