Marketing

Most consumers expect to keep shopping online after pandemic


The Covid-19 pandemic has led to a surge in online shopping, and most consumers expect their e-commerce activity to remain at the same level or increase in the next 12 months, according to a new report from the Commission for Communications Regulation (ComReg).

The report on the parcel delivery sector could spell trouble for bricks and mortar retail as it shows half of consumers expect their online buying to stay at the same levels as in 2020, while almost one in five are expecting their online buying to increase further in the next 12 months.

The survey found that almost two in three consumers have bought more online over the past three years than before.

The main reasons were better prices being available online (61 per cent); convenience of delivery (57 per cent); and a better range of products available online (55 per cent).

The survey also found there had been “a surge” in online buying over the past year due to the Covid-19 pandemic. The incidence of consumers buying goods online weekly or more frequently has doubled since the onset of the pandemic.

E-commerce sellers also expect online sales to remain high over the next 12 months and predict further growth in the medium term. For SMEs currently selling online, seven in 10 expect an increase in demand for online buying in the next three years.

Comreg said that while parcel delivery operators and e-commerce sellers were initially unprepared to deal with the significant increase in volumes resulting from the pandemic – particularly the business to consumer increases – they have been quick to adapt.

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It said these businesses are now considering network expansions and optimisation on the basis that increased demand will remain. However, it added that this was not without its challenges.

The total size of the parcel delivery sector was estimated to be between €662 million and €722 million in 2019. This suggests an average annual growth rate of between 4 per cent and 9 per cent between 2013 and 2019.

Growth has been driven by e-commerce, including cross-border e-commerce. The business to consumer segment now represents almost two-thirds of volume.

The Irish parcel delivery sector is made up of seven main parcel delivery operators, with a long tail of smaller and specialised operators. In 2019, the seven main operators in Ireland had an annual turnover of €585 million and processed 105 million parcels.

In recent years, there has been entry of new parcel delivery operators, including Amazon using small-scale “Amazon delivery partners” to deliver certain Amazon products.

Price competition between parcel delivery operators “appears to have intensified”, according to the report. Delivery prices are largely based on negotiated discounts on standard price lists. Almost half of the SMEs surveyed stated that they negotiated the price directly with parcel delivery operators.

Price and reliability remain the most important senders’ requirements for parcel delivery services. Other needs such as tracking and technology are also emerging.

Delivery cost was also the primary consideration for consumers when they are selecting parcel delivery options for online purchases. Lower parcel delivery costs topped the list of desired future changes for SMEs surveyed.

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