Earlier this year, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act in the hope of stimulating business and easing the disruption caused by COVID-19. According to Morgan Forde of Supply Chain Dive, that act included billions of dollars in resources through the Paycheck Protection Program (PPP), disaster declaration loans, and direct help to supply chains involved in the medical and pharmaceutical space. Unfortunately, the pandemic continues. And it shows little sign of slowing across the US. In addition, the upcoming election has further complicated the matter of what’s next in terms of COVID-19 relief. Regardless, e-commerce logistics is finding itself in a unique position, especially as e-commerce swells to unbelievable levels. The benefits created by the CARES Act are starting to run out, and it is time for supply chain professionals to start thinking about how a future stimulus could influence peak logistics and the upcoming holiday shopping season.
Part of the confusion surrounding how a second stimulus could affect peak logistics lies within misconceptions about peak logistics. Most associate peak season logistics with increased revenue and demand in moving products between brick-and-mortar locations. However, the coronavirus pandemic created a new challenge by accelerating growth of e-commerce by six years. That is a phenomenal speed, but it comes at a cost. Supply chain professionals simply cannot keep up with the growing demand. If it continues at current rates, peak season logistics will take on an entirely new burden and meaning. Right now, the e-commerce supply chain is already functioning at its capacity in peak season logistics for 2019. The implication is clear. The coming peak season, even if it does not involve a massive outpouring of support for brick-and-mortar locations, will result in record-breaking growth within the parcel sector of logistics. In fact, most consumers are already planning on spending just as much on the upcoming season as they did last year. However, they are leaning toward e-commerce and online ordering above all else.
Consider this. According to a recent survey, published by DC Velocity, “despite the pandemic, most do not plan to change their spending significantly or shop earlier compared to 2019. The survey revealed a stronger preference for online shopping this year, however, with 66% of shoppers saying they expect to increase their online purchases this holiday season.”
Without getting into a political discussion, a second stimulus check would effectively ease the burden on everyday Americans trying to make it through the pandemic. Remember that the one-time stimulus check itself, which was $1200 earlier this year, is not the full scope of the stimulus package.There is an argument that the added amount to unemployment benefits could be classified as a type of stimulus check. Obviously, there are cases where those extra benefits did not even compare or rise close to what a person would earn. However, those benefits are essential to keeping the supply chain moving or at least in keeping things working until the economy recovers.
Earlier this month, the administration rolled out an executive order that would restore $300 of those added unemployment benefits. At the same time, Congress is looking into a second stimulus bill, known as the HEROES Act, which could further benefit everyone. Yes, a second single check may be in-store, but that’s not the big picture. The big picture is looking at all the benefits that can help businesses stay afloat, continue paying their employees, help struggling families, and continue to move the economy forward with spurred supply chain growth trends.
The need to move products remains paramount. Consumers still need to purchase necessities, and even for the items that are not necessarily essential, purchasing them online is likely preferred. Health experts agree that people who have the luxury of staying home should, so even if half the country decided to follow that advice, it still amounts to more e-commerce orders. More e-commerce orders now leave little room for extra capacity to ramp up inventory, sales, and demand as peak season logistics approach. Ultimately, a second stimulus will find its way into requiring more from peak logistics planning and execution.
Another consideration revolves around the “Amazon Effect,” which created a fast-paced expectation for standard delivery windows. Obviously, Amazon has addressed those expectations by noting that some purchases may take a day or two longer to receive. Regardless, consumers still expect a fast order fulfillment and delivery process. As a result, now is not the time to relax e-commerce logistics and peak logistics planning. Now is the time to figure out what opportunities exist and how companies can take advantage of a contactless delivery model while still taking advantage of existing resources.
For example, more organizations and retailers are rolling out curbside pickup options, and others are continuing to redefine their returns policies in the wake of the COVID-19 pandemic. Ultimately, everything is getting more complex, and a second stimulus will only add to the need for more from the current logistics space.
That’s a loaded question. The uncertainty within the market remains clear. Returns processes are evolving, and retailers are trying to find a way to take advantage of existing brick-and-mortar spaces without putting the safety and health of both their employers and consumers at risk. The best steps are to follow expert recommendations and offer contactless deliveries where possible, meaning more curbside service, more online ordering, and less time in a physical location. Obviously, peak season logistics must also consider that shoppers will visit brick-and-mortar locations. As a result, peak season logistics must further take into account occupancy requirements and how social distancing may influence in-store sales. Regardless, the whole outlook for the coming peak logistics season is still subject to change. The best thing any company can do today is to partner with a 3PL that can help make sense of the uncertainty, roll with the punches, and execute on a peak logistics strategy that is subject to change.
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