The pandemic gave e-commerce a major boost, speeding up the trend toward online shopping by several years. Online shopping saw a 6.5% lift in Q4 2022, in spite of relaxed attitudes toward COVID-19. There’s no sign that consumers will be heading back to a reliance on brick and mortar stores.
At the same time, American consumers are spoiled. They expect fast, free shipping, customized products, and service after the sale. Those things are hard to provide if your supply chain is long.
Consumer demand
The consumer demand for fast, free shipping has had a profound impact on how manufacturers operate. In the past, offshoring production to countries such as China was commonplace, allowing companies to take advantage of lower labor costs. Now this trend has begun to reverse itself due to the rise of e-commerce and the increasing demand for faster and more reliable delivery services.
Now brands are looking to produce closer to the customer in order to reduce transit times and ensure that goods arrive on time. This shift has been most pronounced in the electronics industry, where companies are increasingly choosing to produce goods in countries such as the United States or Mexico, which are closer to their customers and have access to faster shipping services.
The emergence of same-day and next-day deliveries has further encouraged manufacturers to keep production closer to home. Since these services often come with additional costs, companies are no longer able to rely on the cost savings associated with offshoring to keep their prices competitive. Instead, they must find ways to reduce production times and streamline the delivery process in order to remain competitive. This has led to a shift away from offshoring and towards the use of automation and other technologies to reduce the time and cost associated with producing and shipping goods.
The role of e-commerce
The rise of e-commerce has also played a major role in this shift. As more and more consumers turn towards online retailers for their purchases, the demand for fast and reliable shipping has grown exponentially. Companies have had to respond by offering faster shipping services, or risk losing customers to competitors. This has created a need for companies to produce goods closer to their customer base in order to reduce transit times, leading to a decrease in offshoring and an increase in the use of local production facilities.
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