Study: Online shopping in biggest slowdown in years as tariffs disrupt purchasing
Online shopping is undergoing its most disruptive period in over a decade as tariffs prompt consumers to rethink purchase timing while retailers respond by tightening access to free delivery amid rising costs.
That’s according to AlixPartners’ latest Home Delivery Survey in which consumers, for the first time since the survey was started in 2012, report that their online purchases have declined across nearly all categories. The one exception was groceries, which remained flat.
Online purchases for home delivery experienced double-digit percentage year-over-year declines across several major categories, including office/home office supplies, down 14%. Furniture and home furnishings were both down 10%. Large electronics and cosmetics were both down by 10%.
Most respondents said their buying behavior had been influenced by tariffs, with 34% reporting they delayed purchases due to uncertainty over prices. Also, 28% pulled purchases ahead to avoid extra import costs and 20% say they’re consciously trying to buy more “made in the USA” goods in response to new import tariffs.
“Elevated consumer awareness of tariffs is clearly flowing through into buying decisions,” said Chris Considine, a partner in AlixPartners’ retail practice. “You can see how people are timing their purchases and the conscious effort among a sizeable minority to ‘Buy American’.”
Service expectations remain elevated despite the weak demand environment, with three-and-a-half days remaining the sweet spot for home delivery. Free shipping continues to drive a majority of buying decisions. Nearly all (97%) surveyed consumers say the availability of free shipping affects their ordering decisions to some degree, with 77% saying it “greatly” impacts their decision.
Returns/Deliveries
In addition to tariffs, retailers are being challenged by the cost of returns and delivery. The survey shows a rise in the proportion of orders being returned, at a time when 76% of executives said per-package delivery costs have increased over the past year.
Most e-commerce executives said cutting last-mile delivery costs was a priority over investment to boosting service levels.
READ MORE: Online orders returned in-store a 'top challenge,' retailers say
Retailers are tweaking service offerings, gating access to free delivery, tightening return policies, and placing more emphasis on in-store pick-up and returns. Almost half (49%) have increased the minimum purchase requirement or require a membership, or both, to qualify for free shipping.
The e-commerce sector’s longstanding reliance on third-party delivery providers has focused attention on contract terms, noted AlixPartners. Half of those surveyed said they had diversified their pool of carriers, and 40% shifted volume over the past year from the two largest players, FedEx and UPS.
“Carriers are feeling the pinch as shoppers reconsider and shippers diversify to lower costs,” said Marc Iampieri, global co-lead of AlixPartners’ logistics & transportation practice. “Optimizing your distribution network is the big lever for retailers, and they are pulling it hard, adding more pressure on the carriers.”
AlixPartners surveyed 1,100 consumers executives in late May and early June. The accompanying executive survey, fielded online during the same period, includes 100 executives of companies with $100 million or more in annual revenue.
