How Can Ecommerce Retailers Make Sure They Have a Successful Order Fulfillment Plan During the Peak Season of 2021?

With the holiday season fast approaching, the time is now for eCommerce and brick-and-mortar retailers to pick the right strategies for the anticipated flood of orders that will challenge every single corner of their order fulfillment operations.

 Companies selling online will need to be creative, not only to survive, but also to capture the surge in profits. Covid-19 increased the volume of online commerce to a level that was not expected to occur until 2025 or beyond. The pandemic not only changed the volume of online sales, but also the infrastructure to support it. Online retailers were forced to quickly implement changes in operations to handle the increase. Delayed deliveries and out of stock products were commonplace.

The good news (bad news if retailers are not ready), is that shoppers will continue to order online, but now consumers have higher expectations. They expect that companies learned from their 2020 operations and changes in order fulfillment processes. They believe retailers should have everything in place now to fulfill their current and future orders. In other words, they expect there to be no problems with their deliveries for the approaching holiday at the end of the year. Indeed, most retail companies have made great progress by adopting better technology for online catalogs and shopping carts, as well as the systems powering them. As a result, most serious eCommerce companies have the front-end figured out and they are now ready to serve their customers. The concerns are, however, on the logistics and operations side.

Retail companies will face issues that, granted, already were affecting them to some degree in previous years, but they became notorious during 2020. The pandemic caused online retailers to experience problems such as labor shortages, inventory issues, and delivery surcharges.

SEASONAL LABOR SHORTAGES AND THE CHALLENGES AHEAD

2021 will see an increased demand in eCommerce. In fact, eCommerce alone will account for about 19% of total holiday retail sales. This is a record number since the beginning of eCommerce history, and even surpasses what we saw in 2020. As a result, you will likely observe an interesting trend develop. Many retailers will begin advertising their holiday specials even earlier than normal. The consequence? This will start a domino effect as soon as the first online retailers unveil them. This is, however, not necessarily something bad. Why not?

In theory, this is a good strategy because the peak demand is extended across a longer time span, allowing shoppers to place their holiday orders earlier in the year. This spreads the processing volume out and therefore increases order fulfillment efficiency. It will also permit a seemingly more organized seasonal labor hiring process. But is this really the case?

Unfortunately, most of the distribution centers used by online retailers are in the same geographical area where many other retailers are also located. They are all after the same temporary labor pool, meaning there is not enough seasonal labor for all. Some HR departments will not be able to align their needs with the available resources of the region. This will mean shortages, not only in order fulfillment personnel, but also in delivery drivers. Such undersupply of needed workers will again erode the profits of online companies. Therefore, the strategy of advertising online specials early can only be successful if it is combined with a good seasonal labor strategy. The latter is critical to avoid a repeat of some of the retail order fulfillment nightmares of 2020.

POTENTIAL INVENTORY ISSUES CALL FOR A CLEAR STRATEGY

Retailers will have about an 8% loss in revenue due to out-of-stock inventory during the Holiday Season. This can be minimized dramatically with a good strategy, not only for potential new vendors, but also for the effective management of returns. The best online retail companies have an excellent strategy to put returns back in circulation as quickly as possible. In fact, many new online retailers are fanatical about returns.

Returns is a topic few retailers like to talk about, but now it has become central to the strategy of many online companies because it is at the core of a great customer experience. Given a choice, who would choose an online retailer with a reputation for a difficult or nonexistent return process? Customers are more attracted to companies with seamless, hassle-free, and easy return policies. 

In addition to attracting a wider shopping audience and securing greater customer satisfaction, successful online retailers also know the sooner they bring a returned item back into circulation, the more they minimize revenue loss and inventory issues. Therefore, an excellent inventory strategy is needed for the peak season of 2021.

THE RAISE IN SHIPPING RATES AND THE SUBSEQUENT REVENUE EROSION

How can companies manage increased customer expectations while keeping shipping costs under control? On top of favorable negotiations with popular shipping companies, you also must have an excellent strategy to use regional carriers during the peak season. This will bring not only substantial savings in shipping but will also increase customer loyalty and overall customer experience.

Retailers must offer their customers, not only full visibility of their order, but they must be able to deliver by the 2nd day or faster, or even within hours in some metropolitan areas. Why? This will allow them to capture the largest market segment and leave their competitors behind.

IF YOU HAVE A PLAN FOR PEAK SEASON, IS IT GOOD ENOUGH?

Have you noticed I have mentioned the work “strategy” a few times?

Planning is not enough in the highly competitive, demanding and ever-evolving world of eCommerce and retail. You must have the correct strategy in place, already defined ahead of time, in order to succeed and thrive during the peak season of 2021. 

What is the difference between a plan and a strategy?

Planning defines the "what and why", whereas strategy defines the "how, where and when".  In other words, a plan outlines the steps you need to take in order to reach a particular goal. The strategy, however, looks at the entire picture and defines where and how to best take those steps.

Remember, having a plan is paramount, but a powerful strategy is what breathes life into your plans. Strategy catapults the plan toward the goal. A plan alone with no strategy goes wherever the wind takes it.

Who can guide you in choosing the best strategies for the peak season of 2021? Look for help from the experts. But look for those who have the actual experience and not only the theory. In other words, search for those who have been there and done that. I can help you. Private message me. Let's have a chat. ;)