By Linnworks
In their recent State of Commerce Ops report 2024, Linnworks surveyed more than 2,000 consumers and 1,000 eCommerce retailers to create the most comprehensive analysis of the priorities and challenges consumers and retailers face.
So, what are the top trends retailers need to be aware of in 2024? Here’s a snapshot of our survey’s top 11 findings – and don’t forget to download the report for more detailed analysis.
1. Shipping costs and marketplace connectivity are significant challenges.
43% of UK online retailers and 33% of US online retailers have identified managing delivery costs and connecting to new marketplaces (36% in the UK, 35% in the US) as the primary operational challenges during business growth. These concerns align with consumers’ top issue: delivery cost. Other significant pain points for retailers include coordinating warehouse movements, fulfillment, and logistics across various platforms, as well as syncing inventory across multiple channels.
2. Mid-market retailers are investing heavily in inventory visibility
Retailers with higher revenues have superior inventory visibility across their sales channels and warehouses. Four out of five UK firms with a turnover between $1M and $50M reported ‘good’ or ‘excellent’ visibility, a trend closely mirrored by US retailers in the same revenue range. This underscores the importance of inventory visibility as businesses grow.
3. Retailers are advancing rapidly with process automation
Automation is helping retailers to scale sustainably and cost-effectively. Although only a few industry pioneers in the UK (7%) and the US (10%) have fully automated operations, over a third of retailers in both countries have automated significant parts of their business. Businesses generating between $1M and $10M in revenue show the highest automation rates, with 49% in the UK and 51% in the US. Despite this progress, approximately one in five firms still have minimal or no automation in their eCommerce operations.
4. Automation of inventory and order management takes precedence
ECommerce businesses are prioritising automation efforts in order processing and inventory management. More than 60% of retailers in both the UK and the US have automated their order processing, while approximately half have streamlined inventory management. Leading in this area are firms with revenues between $500,000-$1M and $10M-$50M. Automating manual eCommerce processes ranks third in priority, with around a fifth of US respondents and a quarter of UK respondents focusing on this aspect. Most successful firms perceive automation as a continuous, organisation-wide initiative rather than a singular effort.
5. Selling on two to three marketplaces is the sweet spot
A majority of firms (74% in the UK and 70% in the US) choose to sell their products on one to three marketplaces, such as eBay, Amazon, and Etsy. However, approximately a quarter of businesses (24% in the UK and 28% in the US) expand their market reach by selling through four or more platforms. Among firms with revenues exceeding $10M, nearly half of US businesses (47%) and over a third of UK businesses (35%) target more than four marketplaces. Generally, retailers with higher revenues tend to engage with a broader range of marketplaces.
6. Retailers continue to rely on custom and manual integrations
Many online retailers still utilise custom-built or manual integrations to link their operations with marketplaces. Approximately 40% of retailers in the UK and US use custom solutions, while nearly half (46%) rely on manual integrations.
Moreover, 48% of UK and 60% of US retailers utilise third-party software tools. Notably, higher-revenue retailers are more inclined to adopt third-party tools, with 71% of US and 60% of UK retailers earning over $10M opting for these solutions.
7. Retailers lack extensive connections with shipping couriers
In the US and UK, most retailers (63% and 64% respectively) connect with two to three shipping services. Our research indicates that companies with higher revenues tend to engage with a greater number of shipping providers.
For example, 34% of US firms generating over $10M in revenue partner with four or more shipping providers.
8. Delivery times and costs rank as the top fulfillment challenge.
Managing order fulfillment can present significant hurdles, particularly during periods of rapid growth. A substantial number of retailers (47% in the UK and 45% in the US) identified managing delivery times and shipping costs as their primary challenge when faced with surging order volumes.
Following closely, about a third of respondents cited handling returns/exchanges and maintaining inventory accuracy as major challenges. As revenue increases, retailers increasingly struggle to scale fulfillment operations, maintain precise inventory levels, and effectively coordinate with multiple couriers or suppliers.
9. Retailers continue to rely on spreadsheets for tracking product listings
While many retailers invest in centralised eCommerce platforms or order management systems to maintain a unified view of products across sales channels, a significant percentage still use spreadsheets for this purpose. In the UK, 25% utilise spreadsheets; in the US, 17% prefer this manual approach. However, relying on spreadsheets and disconnected technological systems can pose scalability challenges. In contrast, integrated and automated systems offer enhanced opportunities for growth and efficiency.
10. Nearly half of retailers use spreadsheets for inventory forecasting
A significant number of retailers, approximately 45% in the UK and 47% in the US rely on spreadsheets to predict inventory levels. Slightly more than this percentage utilise third-party software (47% in the UK and 54% in the US) for the same purpose.
In the UK, spreadsheet use remains consistent across different retailer turnovers, with 44% of businesses generating between £10M and £50M relying on them. In contrast, in the US, smaller firms use spreadsheets less frequently (29%), whereas 60% of retailers with turnovers between $10M and $50M rely on this method.
11. Expanding into new markets and channels is the primary objective for retailers in 2024
A significant majority, 48% in the UK and 55% in the US prioritise breaking into new markets and channels. Following closely, sales channel optimisation ranks as the second most important goal, identified by 44% of UK and 46% of US retailers.
Additionally, approximately two-fifths of retailers (36% in the UK and 39% in the US) intend to invest in technology and automation. Other critical areas of focus include efficient commerce operation management, sustainability initiatives, and expanding partnerships with warehouse and fulfillment providers.
Key takeaways
Navigating the online retail landscape in 2024 demands a strategic approach to address key challenges and capitalise on emerging trends. The State of Commerce Ops 2024 report highlights critical issues such as rising shipping costs and the complexities of marketplace connectivity, which remain significant hurdles for many retailers.
Mid-market players notably invest in enhanced inventory visibility, underscoring its pivotal role in operational efficiency and growth. Meanwhile, automation emerges as a crucial lever for scalability, with a notable portion of retailers already automating their order processing and inventory management systems.
Manual and custom integrations persist despite advancements, reflecting ongoing challenges in achieving seamless operational connectivity across multiple platforms. Looking ahead, embracing technology, expanding market reach through diverse marketplaces, and optimising logistics will be pivotal for retailers aiming to thrive amidst dynamic consumer demands and competitive pressures in the digital era of commerce.
How does your retail business compare?
To learn how your retail business compares with the competition and meets your customers’ expectations, download your copy of the State of Commerce Ops 2024 report today.
Linnworks is a Connected CommerceOps platform that gives online retailers the power to connect, automate and scale their ecommerce operation from a single source of truth.
Our solution brings three core attributes to the retailer: connectivity to a diverse number of marketplaces, automation to traditionally time-consuming ecommerce processes and a centralised platform to manage listings, inventory, orders and shipments.
Published 23/07/2024
