6 New Consumer Goods Industry Trends Driven by the Pandemic
October 20, 2020
These days, it seems all I can write about are the effects of the coronavirus pandemic. It drives nearly every conversation in one way or another.
The pandemic has affected and permeated nearly every part of our personal lives; why should our working lives be different? The consumer goods industry has experienced severe and dramatic shifts and changes as a result of the pandemic. Here are six trends that have emerged or been amplified.
Explosive Drop-shipping Opportunities – Crowdfund Insider research found 18% of consumers are now shopping online for the first time due to the pandemic. These are folks who have entirely changed their shopping habits, using the tools and resources on the internet to serve their needs.
New groups of people are shopping and engaging online now that never did before, such as baby boomers. A study published in the Journal of the American Informatics Association found virtual urgent care visits at one health system grew by 683%, and non-urgent virtual care visits grew by a staggering 4,345% between March 2 and April 14. Users are paying for a service and for medication that would have otherwise been handled in-person.
Fulfilling those orders can be exceptionally challenging for companies that aren’t accustomed to that kind of demand. Having proper processes in place to meet the high volume of orders is necessary. Though many businesses are struggling, this is a huge opportunity to grow your profit margins for those that are thriving. You must also be successful on the backend to maintain successful relationships with your new and long-standing customers on the ins and outs of your business operations.
Ideally, you’d have an industry-specific enterprise resource planning (ERP) solution to help you manage all your drop-shipping orders and fulfillment requirements. An ERP with built-in warehouse management functionality helps speed receiving and optimize space management with directed putaway capabilities, as well as capture receiving, picking, packing and other work efforts using handheld devices that allow for real-time visibility and improved accuracy. Picking and packing efficiencies can also be maximized with integrated pre-pack and cartonization rules.
Retailer Bankruptcies – Chapter 11 bankruptcy filings rose nearly 17% year-over-year in August 2020. Brick and mortar enterprises especially have struggled to stay profitable and afloat during the pandemic. Those retailers that have a strong ecommerce presence and still provide consumers their products have been able to thrive. Similarly, those who have been able to pivot quickly to provide online shopping opportunities can stay afloat.
Running an ecommerce business presents an opportunity to sell directly to your customers and fulfill orders for big ecommerce retailers. Honey-Can-Do, a leading home products company, has done exceptionally well during the pandemic.
“With record numbers of consumers home during the pandemic, demand for home products has risen significantly,” said the company’s founder and CEO, Steve Greenspon. “However, many non-essential brick and mortar retailers were closed, and ecommerce was able to provide a tremendous opportunity to meet market needs. We were very fortunate to be in a strong position to fulfill the increased demand from online shoppers while diversifying from the much lower demand of non-essential retailers.”
Online Shopping – Online merchants have earned an additional $107 billion this year compared to 2019. This dramatic increase in online shopping is undoubtedly a result of restrictions imposed by the pandemic. Consumers, either because of personal preference or government restrictions, are spending more time at home. That means consumers are shopping from home and receiving items directly to their door.
It will be interesting to see how 2020 online shopping numbers compare to 2021 and eventually 2022. Will they continue to rise, steady out or even decrease as consumers become more comfortable shopping in stores again?
Shifting Shipping Policies – Because of all the shopping now done online, businesses need to shift their shipping policies to remain competitive in the ecommerce landscape. If big-time online retailers plan to compete with Amazon Prime’s free shipping policies, for example, they need to adopt similar practices. Walmart has just initiated an equivalent annual subscription fee that includes free and fast shipping with orders.
Other businesses, like Target, are offering free shipping if consumers are willing to spend a minimum amount. The whole point is to incentivize consumers by providing a more affordable, user-friendly experience, particularly in shipping and delivery. Many companies are changing their shipping policies to adapt to the competitive landscape.
While it’s crucial to stay competitive, particularly within this ecommerce landscape, it’s more valuable for consumer goods businesses to remain profitable. It’s not worth it to offer free shipping if it means you’re going to go into the red to do so.
Brand Loyalty – Brand and retailer loyalty is less valuable than it was before the pandemic. In the U.S., many people remain unemployed and furloughed, so instead of buying specific brands, consumers are looking for small ways to save money. That starts with buying off-brand products for the home and avoiding the name-brand products they would have purchased months ago.
Brand loyalty trends may have also shifted simply due to a lack of availability. Cleaning products, hand sanitizer and toilet paper have been in high demand and hard to find during the pandemic. Consumers may be forced to try out a new brand, and possibly a new retailer or online marketplace, because many of the brands they’re accustomed to are out of stock.
Importers and Distributors Sourcing Product from Other Suppliers – When overseas factories and suppliers shut down due to government orders, consumer goods orders were put on hold. Since supplies could no longer be delivered from one country to another, consumer goods businesses couldn’t provide products to retailers and consumers. This means consumer goods businesses had to source products from other suppliers, which were likely domestic.
Continuing restrictions can make it challenging to get those deliveries on time. It may be worth expanding the network of potential vendors from which importers and wholesale distributors are sourcing.
If you’re an online retailer and a consumer can’t get the product they want from you because it’s out of stock (because the delivery is delayed), they’ll go someplace else. Consumers have no problem going to another source to get what they need.
You want to ensure you can meet your customer demand. Don’t let a supply chain hiccup or production hold prevent you from making a sale. Visibility into your consumer goods importing and distributing business — what’s done well and where areas of improvement lie — allows you to manage your business better and make the most responsible fiscal decisions. A consumer goods-specific ERP will provide you with the key insights you need to run your business efficiently and profitably while also successfully tracking product as it moves or is halted overseas.
This rapid change makes it hard to know how and where to focus your attention in terms of your own enterprise’s stability, scalability and profitability. Aptean has industry-specific ERP software that can help you overcome today’s challenges and prepare for the unknowns of tomorrow. Aptean software solutions can help you navigate what you don’t know and provide you with real-time data to make those tough decisions with insight and confidence.
If you’d like to talk about how your business can adapt to the pandemic with industry-specific software, reach out. We’d love to talk.