Blog Month: November 2022

Introduction

Warehouse and distribution professionals understand that the timeline of order processing has ebbed and flowed significantly over the last few years. In September 2022, Reuters reported that “FedEx (FDX.N), United Parcel Service (UPS.N) and other delivery firms that struggled with too much pandemic-fueled demand from online retailers like Amazon and Walmart, now have the opposite problem – too much delivery capacity.”  

With such drastically different challenges year over year, shippers and BCOs must bolster their business health by focusing on end-to-end e-commerce solutions. There is no better time to do this than during peak season.  With the rising popularity of online ordering, the need for reliable digital shipping logistics and services is more vital than ever. Weak links in the supply chain, particularly with e-commerce logistics, warehouse, and distribution services can impact the entire supply chain. 

Failure to do so can further complicate logistics, add to existing bottlenecks and delays, lower on-time delivery ratings, weaken customer impressions, and eat into profits with higher operational costs.  It all goes back to improving logistics and routine operations with end-to-end e-commerce solutions.

What Is E-Commerce Peak Season?

Peak season is known as the time when retailers record significant hikes in sales (DCL, 2022).  Small businesses and large e-commerce platforms alike can discover this timeframe by looking at past monthly sales records.  It is not just the sales themselves that add to the load carried by the global supply chain during peak season. Reverse logistics and an inevitable load of return orders also impact e-commerce performance and planning with warehouse and distribution logistics. 

Reverse logistics and returns are often overlooked and expected as part of the cost of doing business. E-commerce return rates can often be expected to account for more than ¼ of all sales. In fact, a National Retail Federation study found that all retailers expect to see about 17.8% of merchandise sold to be returned both online and in person. This constitutes as much as $158 billion worth of goods, which is a staggering 56% increase from 2020. It is for this reason that end-to-end e-commerce solutions are so vital for the modern global supply chain. (NRF, 2022).

However, online stores preparing for peak season have different challenges than brick-and-mortar companies. Shippers and BCOs for an e-commerce platform must account for the timelines of shipping services, especially international shipping. Meanwhile, brick-and-mortar locations are focused on maintaining stock for purchases that are processed in person in real-time. 

Keeping up with accurate inventory flows can improve supply fulfillment, speed up deliveries, and ensure forward and reverse logistics are properly balanced and maintained. A responsive and transparent Order Management System (OMS) can help with complex, multi-brand, and omnichannel capabilities. Additionally, it offers a much more simplified platform with robust functionality and fast deployment by utilizing end-to-end e-commerce solutions effectively. 

What Is E-Commerce Peak Season?

Online shopping experiences the largest peak of sales during the holiday season of November and December. Warehouse and distribution center peak season typically predates this time frame as companies aim to get their products closer to their customers before having to pay expedited shipping costs. 

Peak season preparation is especially pertinent given the cross-border challenges over the last few years. The lengthened oceanic shipping process often has retailers and customers alike checking their tracking numbers constantly. Thankfully, automation has drastically changed the game for e-commerce shipping, especially when it comes to the ability to track shipments in real time via smart shipping labels. 

It is worth noting that according to some global supply chain experts, the entire year could be seen as a multi-faceted peak season. Ken Fleming, President of Logistyx Technologies spoke with SupplyChain247 experts about peak season trends and the need for improved warehouse and distribution management and logistics. 

He noted that “There have been times when peak season has either started earlier or ended sooner, but typically shippers can expect and plan for peak to start in late July and run through the first week of December. However, during the COVID-19 pandemic and pandemic recovery, peak has been a constant. Variables such as parcel volumes, carrier capacity limits, and escalating pricing have continued to grow, forcing industry leaders to quickly – and frequently – reimagine their shipping and fulfillment operations” (Ken Fleming, 2022).  Ongoing volatility and instability make end-to-end e-commerce solutions all the more vital for continued growth and recovery.

The E-Commerce Peak Season Checklist

Divining the future of peak season 2023 and all the future peaks will be challenging. Even with a robust plan of attack, it’s still possible to overlook core functions and needs. Shippers and BCOs can prepare their teams by following a peak season checklist with end-to-end e-commerce solutions. Further, the unique nuances of each company mean that the e-commerce checklist for one company may vary from another. 

For example, the below checklist notes inventory needs, but it’s possible that considering warehouse management for the short-term storage of returns, setting out racks, or otherwise assessing fall and summer leftover SKUs, may be higher priorities. 

Still, it helps to have something to start with and add to it as individual managers and teams work through their own process of utilizing end-to-end e-commerce solutions to improve warehouse and distribution logistics.

Inventory Logistics and Planning

Stocking up on inventory before the worst of peak season hits can make it easier to meet increased demand before and during peaks. Consider the historical purchases of seasonal items when necessary and plan for anticipated peaks. It is important to not be too rigid with predictive planning and to remain flexible as needed to accommodate exceptions and changes from year to year. The final way to improve inventory logistics and planning for peak season preparation is to stagger orders to ensure an ongoing supply of inventory during peak times.

Shipping Solution Planning and Pricing

Prices for everything usually go up around the holiday peaks, including fuel, shipping fees, and driver rates. Make sure the company shipping process is efficient to avoid unnecessary delays and additional expenses. Management must know which service levels are most cost-effective and align well with company values while remaining profitable in the long run. It is also important to keep tabs on competitors to ensure pricing is profitable yet attractive. Consider overhead costs when offering discounted shipping to encourage sales and keep profits high.

Carrier Selection and Returns Management

Who a company works with for shipping and logistics can make a huge difference for forward and reverse logistics. Pick the right fulfillment partner to manage capacity and stock with a scalable strategy that can be adjusted to accommodate real-time data. Companies need a reverse logistics plan for returns during and after the e-commerce peak season so they know where returned goods will be transported and stored in warehouses. Streamlining warehouse and distribution processes with advanced reverse logistics is key to good carrier relationships.

Staffing Needs and Considerations

Peak season is never the time to deal with driver shortages and related issues so staffing needs and considerations must be addressed. Management can offer refresher training to staff and consider raises or flexibility to promote retention and develop a system to get seasonal staff consistently trained. Pulling from talent pools of vetted providers for short-term or urgent staffing needs can help fill the gaps when peak season surges hit the hardest. Management can also follow a managing-by-exception approach to give staff more freedom and flexibility.

Website and E-Commerce Digital Presence 

Having a strong online presence and the right MoR pay model is essential for any business that wants to survive peak season rushes online. E-commerce websites must be integrated with payment service providers (PSP) and leverage custom tracking services and real-time monitoring of industry price trends. Service providers must work with management to ensure that all apps and integrations are up to date for mobile and desktop views. It is also vital that e-businesses solidify the checkout process, especially if utilizing a merchant of record (MOR) and other virtual or digital platforms. 

Promotions, Rewards, ad Membership Benefits

Customers usually expect to pay more for service during peak season, but that doesn’t mean they like it so softening that blow is always good. Managers should ensure all network partners and e-commerce 3PLs know about all promotions and that they offer them when appropriate. It is important to utilize end-to-end e-commerce solutions to improve communication with customers while using real-time data to rack consumer habits and customer behaviors to see applicable incentives. Reward loyalty and support customers during the peak season crunch. 

Customer Service Considerations for Shipping 

After sales and especially during the return process, companies must be able to keep customer service and need front and center. They must be prepared with a CRM to locate customer profiles and track data and trends. There should be a plan and a list of solutions for common issues and concerns to maximize customer experience and promote customer loyalty. Utilizing push notifications and automated communications for critical updates can help better manage higher-than-normal requests and queries during peak season shopping time.

Track Big Data Analytics in the Network

Data is key to surviving peak season and improving services each year. Service providers should implement sound end-to-end e-commerce solutions to enable data analysis and sharing with a comprehensive tracking system designed to monitor company and industry-wide trends. They should also look for ways to leverage digital automation and supply chain tools. This can help them better monitor warehouse and distribution trends compared to prior years’ data and trends. All of this can help improve future predictions and streamline the process even further.

While these eight categories are not exclusive, they are pivotal when it comes to moving toward a successful e-commerce peak season.

Use the Checklist and Partner With ModusLink for E-Commerce Peak Season Success

From a consumer’s perspective, peak season challenges are only visible in the final mile. However, an effective peak season checklist starts with efficient, proactive warehouse and distribution management. Shippers and BCOs can then leverage e-commerce solutions at each following step of peak season preparation as they watch the logistics landscape.

ModusLink offers end-to-end e-commerce solutions to streamline the process for shippers year-round. With B2B and B2C fulfillment strategies in play at their warehouse and distribution centers around the world, ModusLink utilizes modern IT to promote transparency and efficiency every step of the way. Schedule a conversation with ModusLink today to gain insight and solutions to apply in and out of peak season.

Bibliography

LM Staff (2/4/2022). The 12-Month Peak Season! SupplyChain247. Accessed 10/31/2022 From https://www.supplychain247.com/article/the_12_month_peak_season 

Danielle Inman (1/25/2022).  Retail Returns Increased to $761 Billion in 2021 as a Result of Overall Sales Growth. National Retail Federation. Accessed 10/31/2022 From  https://nrf.com/media-center/press-releases/retail-returns-increased-761-billion-2021-result-overall-sales-growth 

Lisa Baertlein (9/19/2022).  2022’s holiday delivery challenge: softening e-commerce demand. Reuters. Accessed 10/31/2022 From https://www.reuters.com/business/retail-consumer/2022s-holiday-delivery-challenge-softening-e-commerce-demand-2022-09-19/ 

 Maureen Walsh (10/14/2022). Checklist for Ecommerce Peak Season Readiness. DCL. Accessed 10/31/2022 From https://dclcorp.com/blog/holiday/peak-season-checklist/ 

With all the turmoil and upheaval, the global supply chain has endured since 2020, the impact of changes the EU is initiating stands to throw more disruptions and issues at shippers. Managing cloud-based e-commerce platforms and global shipping logistics is a vital part of the process of overcoming cross-border challenges for online retailers.

According to the industry experts at Whistl, “The EU’s e-commerce industry has been experiencing a lot of positive growth over the past few years. A new report from the industry association E-commerce Europe found that there was a 15% growth in 2016 and the industry is predicted to be worth €602 billion by the end of 2017. That would represent a further 14% year-over-year growth.” (Whistl, 2017).  This level of growth and value highlights the challenges of e-commerce and the need for strong cross-border e-commerce logistics and operations. 

The growth seen within e-commerce and online transportation are indicative of changing market trends and consumer purchasing habits. As businesses open and people start returning to some semblance of normalcy in their day-to-day habits, the demand for fast and reliable shipping service remains as important as ever. Consumers have gotten used to the benefits of cross-border e-commerce and shipping and are unlikely to go back to accepting slower shipping options for many of their shopping demands (Yun Express, 2022). 

Increasing e-commerce shipping, services, and sales along with advances to VAT and import/export services have all helped achieve this and create such projections.  Cloud-based e-commerce platforms with the right merchant of record (MOR) pay model is crucial in helping companies in Europe be prepared for a number of challenges that face the e-commerce and online store shipping industry.

The Importance of E-Commerce Shipping and Logistics in EU Transportation

Many of the most commonly cited challenges of e-commerce within the EU are those that impact logistics, shipping, and customer service. Companies dealing with the transportation of goods, whether importing or reporting, must be mindful of advanced e-commerce shipping advancements.

With improved digitalization and automation, cloud-based e-commerce platforms become much more influential and impactful. According to Ecommerce Europe, “Western Europe is, by far, the strongest region in terms of B2C e-commerce turnover, holding 63% of the total turnover for 2021. Southern Europe follows in second place with just 16% of total turnover, while Central Europe and Northern Europe come in third and fourth (10% and 9% respectively), and Eastern Europe (2%) in last place” (E-commerce Europe, 2022).  E-commerce services can be a major factor that plays into EU services.

The continued focus on cross-border e-commerce and having the right MOR) is critical for continued growth and recovery within the B2C commerce industry.  Dealing with the top challenges of e-commerce often relates to one of the following cloud-based e-commerce platform issues or cross-border e-commerce concerns.

Delivery Speed and Accuracy Falling Below Acceptable Levels

Issues with the speed and accuracy of deliveries remain the most reported problem for e-commerce businesses in the EU and many other countries as well. Customers who experience delivery failures, delays, and problems are unlikely to give shipping companies a second chance. 

Despite the close transport networks and links that connect many European countries, due to issues such as weather anomalies, local and global politics, environmental factors, and cloud-based e-commerce platform problems, delivery issues continue to be an issue.

The findings from the “Tomorrow’s Supply Chain: Disruption Around Every Corner” report by SAP highlight that “since the start of the pandemic, supply chain issues have been disastrous for organisations in the UK. 66% of businesses have experienced delays in the production of goods/delivery of services, 64% have seen revenues decrease and 58% have experienced a loss of customers. Given this outlook, it perhaps comes as little to no surprise that almost a quarter (23%) of businesses expect supply chain issues to last until Summer 2023.” (System Analysis Program Development)

The ultimate cause for these issues with speed and accuracy comes down to poor management within the supply chain in the UK and with other EU countries. Without access to cloud-based e-commerce platforms and the delay in embracing cross-boder e-commerce solutions the bottlenecks and delays continue to impact speed and accuracy with EU deliveries.

Technical Supply Chain Issues Within the EU Network

Technical failures within cloud-based e-commerce platforms are another risk for e-commerce service providers within the EU. Cyber-attacks and hackings have been on the rise, with reports showing nearly half of all businesses experienced at least one cybersecurity breach or attack over the last year. The latest innovations in supply chain tech and cyber security keep companies protected but they must be properly applied, onboarded, and embraces in order to be successful, something many companies have been slow to understand.

Many supply chain networks and companies in the EU today struggle in this area due to poor management of current tech trends and a reliance on outdated data and processes. Tech Monitor noted in a report last year that, “Taking a look across our supply chains, the current system remains highly fragmented, often paper-based, with limited interoperability, sporadic collaboration, and poor information flow… Organisations have a colossal amount of data at their fingertips, but the majority are either not gleaning the right insights from this data, or are failing to share meaningful information with key stakeholders.” (Tech Monitor, 2021) 

For businesses dealing with cross-border e-commerce this is obviously a serious problem. Digital companies stand to be impacted more than more traditional companies as the majority of their activities are based online and rely on omnichannel supply chains.

Political Landscape and Cross-Border Regulatory Change

There are a number of issues that have impacted cross-border e-commerce in Europe, some of the most well-known being the Brexit vote and changes to VAT processes. Challenges of e-commerce become all the more complicated when political factors come into play.  More expensive trading costs and new regulations are expected to impact e-commerce companies in the coming years.
However, ongoing Brexit negotiations, VAT regulations, and other changes also will come into play for international shipping providers. This was highlighted in a 2022 report from nShift that noted even before Brexit, UK consumers were often hesitant about dealing with cross-border e-commerce and ordering from abroad. This recent survey asked 1000 UK residents why they avoided buying products from overseas. The major issues, with each earning more than 50% response, included concerns about returns, returns, high delivery costs, and the delivery process itself (nShift 2022).

Another concern for B2C and B2B e-commerce shippers in the EU is that the existing policies and regulations are changing and updating at a rapid pace. The European cloud-based e-commerce platforms that play a role in e-commerce shipping services are always in a state of fluctuation. New regulations and changes to EU shipping processes and requirements will make it all the more vital that importers and exporters have a single source of information and service. From financing to merchant services, a single point of contact will be much easier to manage and track as political uncertainty continues to plague EU cross-border e-commerce businesses. 

Purchasing Power

Ongoing global factors including war and other supply chain disruptions are proving to be major consequences on the European economy overall and the cross-border e-commerce industry as well. A number of companies within the transportation industry have reported declines in consumer purchasing power and confidence.  

Cloud-based e-commerce platforms can be influential in improving customer experience, services, and purchasing power. All of this change in purchase power is mostly due to high energy prices, inflation, shipping costs, supply chain issues, and overall uncertainty. AJ Todd of Flock Freight noted that “3PL’s are skilled at finding areas for extra cost savings, such as more efficient routing or carrier selection. Plus, by placing it in the hands of experts, you no longer have to focus on day-to-day oversight of your transportation supply chain” (Flock Freight, 2019). 

Working with a 3PL provides management with greater access to data and provides them with greater bargaining power with carriers, shippers, and forwarders. It can significantly improve cross-border e-commerce processes from start to finish. EU businesses that work with a 3PL can often see consistent benefits that include a reduction in rates for transportation and stronger logistics services. 

Overcome the E-Commerce Shipping Challenges With ModusLink

Although the EU’s e-commerce industry has seen growth in many sectors over the last few years, there are still many effects from COVID-related shutdowns being felt today. European e-commerce solutions providers and medium to small businesses should still be prepared for a number of challenges that face the industry. 

These common challenges of e-commerce cannot be completely avoided but they can be mitigated and largely avoided by having a merchant of record (MOR) and the right approach to e-commerce shipping within Europe. 

Contact ModusLink today to learn more about how our cloud-based e-commerce platform and unique approach to cross-border e-commerce and MoR payment services can impact EU E-commerce.

Bibliography

AJ Todd (2/4/19).  5 Benefits of Working With a 3PL. Flock Freight. Accessed 10/31/2022

 From https://www.flockfreight.com/blog/5-benefits-of-working-with-a-3pl/ 

Delivery Management (7/3/22). How might Brexit impact delivery and cross border shipping? nShift.  Accessed 10/31/2022  From https://nshift.com/blog/brexit-impact-delivery-cross-border-shipping 

Jeremy Silver (8/23/21). The future of the UK economy depends on supply chain innovation. Tech Monitor.  Accessed 10/31/2022 From https://techmonitor.ai/leadership/innovation/future-of-uk-economy-depends-on-supply-chain-innovation 

Press Release (6/8/22). Supply Chain Crisis: Over 85% Of UK Businesses Plan To Move From ‘Just In Time’ To ‘Just In Case’ Model And Prioritise UK-Based Solutions To Overcome Challenges. SAP. Accessed 10/31/2022  From https://news.sap.com/uk/2022/06/supply-chain-crisis-over-85-of-uk-businesses-plan-to-move-from-just-in-time-to-just-in-case-model-and-prioritise-uk-based-solutions-to-overcome-challenges/ 

Luca Cassetti (6/28/22). European e-commerce still growing but new global challenges lie ahead. Ecommerce Europe. Accessed 10/31/2022 From https://ecommerce-europe.eu/press-item/european-e-commerce-still-growing-but-new-global-challenges-lie-ahead/ 

Whistl (7/1/2017).  Main Challenges Facing European E-commerce Businesses. Whistl. Accessed 10/31/2022 From https://www.whistl.co.uk/news/main-challenges-facing-european-e-commerce-businesses 

Yun Express (3/15/2022).  Top Three Challenges to Mind for Your E-commerce Logistics across Europe. Yun Express. Accessed 10/31/2022 From https://www.yunexpresseu.com/blog/top-three-challenges-to-mind-for-your-e-commerce-logistics-across-europe/

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