E-commerce to generate half UK’s festive parcels by 2016

Within five years e-commerce will account for one in every two parcels in the UK sent during the run-up to Christmas, according to new research from parcel and carrier management software company Global Freight Solutions (GFS). The West Sussex-based company’s latest study of the market during the festive season suggests that online retailers were the source of about 37% of packages handled by Britain’s carriers in November and December 2011.

The growth in e-commerce parcel volumes this year was as high as 15% compared to the same period in 2010.

GFS director Simon Veale said the rise of internet shopping has already seen widespread changes in the parcel market since 2001, when only around 10% of the Christmas parcel peak was the result of consumer purchases.

Commenting on the growth of e-commerce, Veale said: “It shows no signs of slowing down. Instead, we believe that the more frequent use of smartphones and tablets to buy Christmas presents online will fuel further parcel growth and that, in turn, means home deliveries may well catch up with those destined for business customers by 2016.”

The GFS director said UK parcel companies were doing everything they could to cope with “unprecedented” levels of e-commerce parcels at the end of 2011, particularly since their business was historically based on dealing with mainly business parcels.

Veale added that a fresh trend this year has been the increase in number of e-commerce firms that have put contingency measures in place to use alternative shippers in the event of problems with their primary contractors.

“An increasing number appreciate the need for contigency and are looking for the support of more than one carrier to add expertise and capacity,” he said.

Peak

GFS said its study of the UK festive market had suggested consumers were generally beginning their Christmas shopping during the week starting 22nd November, around seven days earlier than in previous years.

Rather than a particular peak in parcel volumes lasting around a week long, as in previous years, this year saw a high volume sustained for around a month, when more than 4m new parcels were entering the UK delivery network each day.

The peak period saw average daily volumes 3% up on the 2010 peak, while November and December saw a 15% increase in e-commerce volumes compared to the year before, according to the GFS study.

GFS projections suggest that by 2016, consumers and businesses will be contributing 4.75m new parcels to the network each day.

Veale said the traditional slowdown of activity for parcel carriers, once the initial pre-Christmas rush has ended, is also now a thing of the past.

“High street sales used to begin on Boxing Day (26 December) but, thanks to the Internet, retailers can trade on Christmas Day itself when the ‘bricks and mortar’ stores are still closed,” he explained.

“If that pattern continues – and there’s no evidence in the data that we have analysed to suggest that it won’t – it means e-commerce 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.”

Veale added that more and more retailers are now realising the “critical importance” of a reliable distribution system to capitalise on the e-commerce boom.

GFS said it has had a “stream” of enquiries from online retailers for its multi-carrier delivery management software, known as GFS Selector, since it was made available without charge in October.

The company’s management systems now handle more than 5m parcels a year on behalf of clients in the retail, leisure, financial services and engineering sectors.

The GFS white paper on the 2011 festive season will be published on its website soon.