E-commerce sales are primed to reach US$200 billion this holiday season, according to a research done by Berkeley Research Group, but retailers' distribution centres and logistics partners do not have the physical capacity to support the much-needed holiday sales.

"Online purchasing that accelerated last spring as a result of the pandemic shows no signs of slowing," said Richard Maicki, a managing director in BRG.

"With COVID-19 cases still rising, this trend has staying power — meaning smart retailers and their logistics partners must develop plans to be ready for the holiday season."

Pandemic to boost e-commerce

Berkeley Research Group noted that the pandemic is "primed to supercharge holiday e-commerce," which was already increasing.

Before the pandemic, it noted that holiday e-commerce sales were expected to increase 13% to US$155.5 billion, up from US$137.6 billion in 2019.

"After record e-commerce volumes in recent months, the projected increase is now 45% to US$200 billion," Berkeley Research said. 

"The projected e-commerce increase is an opportunity — but it is also a warning to retailers not to rely on traditional strategies like Black Friday deals, holiday decorations and promotions to drive in-store traffic," Drew Goins, a consultant in BRG's Retail Performance Improvement team said.

Goins noted that given the uncertain landscape facing the industry, retailers need to plan for multiple scenarios — including problems for logistics carriers like those we saw in the early days of the pandemic.

"To prepare, organizations must build strategies around how this unprecedented holiday season could affect promotional plans; inventory management and access to store inventory; the broader market and competitors; and shipping networks," the Group said.