Delivering on-demand to the social consumer – Future of E-Commerce – by DHL eCommerce

Thanks to today’s hyper-connected world, consumers have evolved to expect instant gratification. We can buy almost anything online, from a cab ride to a curry, a smartphone to the latest sneakers – and have it delivered the same day within a few hours. The on-demand economy has hit retail like a tsunami and its ripples are being felt around the world.

By Charles Brewer, CEO, DHL eCommerce

But it’s not just about speed. The on-demand economy is about offering customers greater convenience, control, choice and an excellent customer experience.

It started out with Uber and Airbnb and has moved on to disrupt entire industries by working out consumer pain points and using technology to remove them.

The Harvard Business Review says 22.4 million customers in the U.S. are turning to on-demand services annually, accounting for US$56.7bn in spending. According to the Siegel & Gale Index, 64 percent of consumers are willing to pay more for a simpler and more convenient experience and will turn away from a brand if they can’t get it. Cart abandonment statistics back this up: 75.6 percent of online retail orders were abandoned in the first quarter of 2018 according to Statista, and although the top reason was high shipping costs (60 percent), the next three all had to do with complicated or time-consuming processes such as creating an account (37 percent), complicated checkout processes (28 percent) and lack of clarity on cost of order (23 percent) – that’s some 88 percent of carts abandoned due to complexity.

Shortening the path to purchase

In response to consumers’ growing need for convenience and speed, e-tailers, platforms and marketplaces have had to find ways to speed up and simplify their processes. Shortening the path to purchase by reducing the number of steps to the final checkout is now ever more important. Before, you might have seen a product on TV or online and then switched to a search engine to find and buy it.

Today, shoppers want to be able to click on the pair of shoes they see on Instagram and buy them straight away. And they can.

Technology like Instagram’s shoppable posts or Pinterest’s buyable pins are making it possible to shop direct while browsing their social media feed. And this is just the beginning. The future of social commerce will mean buying directly on a social channel without having to be directed to a website. According to the Verge, Instagram is already working on a new stand-alone app dedicated to shopping. The IG Shopping app will let users browse goods from merchants they follow and purchase them directly within the app.

Facebook Messenger in Thailand, which has some 51 million users per month, has made a deal with Kasikornbank for a one-stop shopping experience on mobile apps – which means consumers do away with a separate online purchasing session and pay direct through Messenger.

Making it personal

Some companies are streamlining the process even further, like personal shopping service Threads. This luxury social commerce company barely has a website, and does all its business through SnapChat, Instagram, WhatsApp and WeChat. Personal shoppers source items for customers and suggest products they might like. The purchases are shipped straight to the customer, transacting entirely through social media.

Less stylish, but no less direct, are Amazon’s ‘Dash buttons’ which provide a convenient way for Prime customers to shop for essentials. These small devices can be stuck to any surface, such as a fridge, washing machine or bathroom mirror, allowing customers to instantly order household items when they’re running low. Amazon also offers a ‘Dash wand’ which allows customers to scan products and reorder as they need them.

Easy payments pave the way

50% of customers abandon their online purchases simply because their preferred payment options aren’t available, which is why easy payments are key to the success of the on-demand economy. Alibaba’s Alipay mobile app and Tencent’s WeChat Pay app can be used almost anywhere in China, from shopping malls to taxis to roadside stalls. iResearch shows that mobile payments grew 113.4 percent to 22.7 trillion yuan this year, while other online payments reached 6.4 trillion yuan, up 56.1 percent year on year.

India is also making huge strides into the e-payment market after the government scrapped 86 percent of all banknotes last year in its demonetization move. Before that, over 90 percent of transactions in India were in cash. Since then, Indian transactions by mobile wallets, prepaid cards, and paper vouchers have risen sharply and the country’s e-payment market is estimated to be worth some $200 billion.

Voice technology and the connected home

The path to purchase will be reduced even further with the advance of voice technology and home speakers. By 2022, more than five billion voice assistants will be in use on smartphones worldwide. In the US alone, over 70 million households will have voice assistants installed in their homes, reaching over 55 percent of all homes.

IoT and the connected home will speed things up even more. According to Statista, the amount of connected products will triple from 2018 to 2025 and reach a massive 75 billion devices installed worldwide. In the very near future our fridge will order direct from the supermarket when we’re running low on milk, our heating system could turn up the heat and order warm socks direct from Amazon when temperatures drop, and wearable tech will be able to tell us when we need a new pair of sneakers.

The rise of AI and chatbots will increasingly automate purchasing and speed up processes as collected data is used to determine people’s buying habits and predict their purchasing decisions.

Predictive retail is not a new thing, but it will become increasingly personalized and focused by utilizing the increasing amount of data available from smartphones and other smart devices.

Delivering on demand

As the path to purchase shrinks, so does consumer patience when it comes to delivery. Google found that mobile searches related to “same day shipping” have grown 120 percent since 2015. Being able to meet consumers’ delivery expectations is a huge challenge for businesses, especially as demand tends to ebb and flow.

That’s why we developed our Parcel Metro service. It’s an asset-light, technology-based solution that connects to the buyer through a crowd sourced delivery model. Perfect for the on-demand urban consumers, e-tailers benefit from a flexible and cost-effective delivery and consumers enjoy same-day delivery to their convenience. We launched it in Chicago, New York, Los Angeles, Dallas and Atlanta in the U.S. and Bangkok, Ho Chi Minh and Hanoi in Asia Pacific. Our customers love it and we will continue to expand this to more cities in the near future – watch this space!

The great thing about the on-demand economy is how it is pushing the boundaries of what’s possible through digitization, and that’s exactly what we’re doing at DHL. So, when your consumers want it now, we can deliver – on-demand.