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/