How You Can Profit from This Holiday’s Online Shopping Boom

This could be the year that the ancient advice “be careful what you wish for” applies to Amazon. Salesforce predicts the volume of digital commerce in the U.S. this holiday season will jump 34% to hit $221 billion, or roughly three out of 10 retail dollars spent. That’s good news for Jeff Bezos, but other headlines aren’t so pleasant.

For one thing, Salesforce estimates the online surge will generate 5% more packages globally than there is the capacity to deliver them; it figures 700 million gifts are at risk of not arriving on time. And online-only merchants’ pricing advantages over brick-and-mortar will decline. “FedEx and UPS will slam big shippers with delivery surcharges that could be as high as $5 per package," American Shipper predicts.

This ominous handling and delivery scenario gets even worse when you factor in porch pirates. A survey of more than 1,000 Americans conducted in June found 18% of respondents recalled having a package stolen in the previous four months; 54% said multiple deliveries had been taken in the previous 12 months. With so many opportunities for thievery heading to homeowners’ front steps, it’s logical to assume the piracy will get worse, turning people further against online deliveries.

And there’s one more issue: Salesforce expects 30% of all packages delivered globally will be returned. Long lines at the shipping counters will create a new, unpleasant definition of Boxing Day.

With potential problems like that, I believe consumers will look for alternatives like you. And the good news is, you already have done much of the necessary prep work.

Dealers nationwide rushed to create, upgrade, or expand their ecommerce capabilities earlier this year. At the same time, 73% of the roughly 600 hardware stores, home centers, and retail-oriented LBM dealers responding to a late summer survey said they had added curbside pickup as a result of the outbreak. Promoting BOPIS—Buy Online, Pickup In Store—quickly has become common at construction supply companies nationwide.

Expect BOPIS to be an antidote to many of the problems cited above. There’s no delivery surcharge. There’s no opportunity for theft. And because customers can inspect the product at your store to assure themselves it’s right, the odds of you having to handle a return are reduced. Those customers also might make a few impulse purchases while they’re there.

Promoting BOPIS also could pay long-term benefits in that it will set you up as a buying source for millennials and Gen Z (basically anyone born after 1980). The Farnsworth Group found that when asked where they made their last home improvement purchase, 12% of millennials and18% of Gen Zers named an online-only retailer. That’s twice to three times, respectively, the percentage of baby boomers who did the same.

It is possible that, as they get older, these generations will go to brick-and-mortar stores at the same rates their parents did. Indeed, the same Farnsworth Group survey said basically the same percentage of millennials as boomers made their most recent home improvement purchase at a hardware store. But that result might have been skewed by how COVID prompted millions of Americans to do lots of minor fix-ups of their homes. Reports suggest the number of customer transactions and products purchased has risen this year more than the total dollars spent. That suggests lots of purchases of small-dollar items. Once a vaccine arrives, those pandemic habits might change.

As with many other lifestyle changes, COVID has accelerated the trend toward browser-based buying. But there comes the point where increased demand outstrips the infrastructure’s ability to make the experience desirable. We may be reaching that point with pure online services. Here’s your opportunity to win some of that business by combining your ecommerce capabilities with your brick-and-mortar storefront. Just make sure you clear space in the parking lot for your BOPIS buyers.