Are E-commerce Supply Chains Ready for An Unprecedented Holiday Season?

Published on November 24, 2020

In the wake of COVID-19, there are significant changes in consumer habits and mail carrier performance. Here’s how retailers can prepare for an unpredictable peak season.

2020 is the year of new norms, and that includes holiday shopping behavior. Consumer habits, mail carrier performance and supply chains continuously evolve as the pandemic continues.

In a worldwide study released last week by Salesforce, 58% of consumers and 80% of business buyers expect to do more online shopping after the pandemic than before.

Are retailers and their supply chains ready for the holiday surge?

Let’s consider shipping performance during the pandemic.

As brick-and-mortar stores closed and people began staying at and working from their homes earlier this year, e-commerce sales accelerated rapidly. While the increased demand is a welcomed shift for online retailers, the rapid adoption of e-commerce has led to fulfillment bottlenecks, causing carriers to experience severe capacity constraints and other challenges.

As a result of the volume increase and added expenses, carriers took measures such as implementing peak season surcharges, suspending service guarantees (and associated refunds) and putting volume restrictions in place. The major national carriers have been unable to maintain their usual delivery performance standards, and delays have become the norm, as illustrated by the graphs below.

Percentage of Shipments for 7 Days in Transit

Percentage of Packages Delivered by Transit Days and Month

What to Expect

Parcel carriers have managed holiday-like spikes in shipping volume since the pandemic hit. Research indicates holiday volume will mirror or top that.

Internet advertiser, Criteo, reported that online sales were 30% higher in the Americas and 17% higher worldwide from June 15 to 28 compared to February 2 to 14, pre-pandemic. Increased e-commerce sales during the outbreak indicate that consumers are online shopping more than ever and will presumably continue throughout the holidays. According to the aforementioned Salesforce survey, 88% of respondents reported that they plan to continue purchasing gifts online and sending them to recipients.

This surge could lead to lags in shipping times and increased costs for retailers as carriers place increase surcharges and limit package pick-ups.

Retailers have started their Black Friday and holiday promotions early to combat the volume. What was a 30-day promotional period previously is now around 75 days.

How retailers can best serve customers

Communication is key. Perhaps most importantly, retailers should communicate early and often the possibility of shipping delays, so there is transparency when gifts will arrive.

Create a multi-carrier strategy. Diverse options help mitigate risk. Carrier diversity is a workaround for capped volume and capacity constraints. Additionally, splitting volume between carriers can help avoid the surcharges that apply to shippers who send a certain number of parcels per week. Consider enlisting help from a logistics provider with an extensive network of reliable partners to support this strategy.

Utilize multiple fulfillment centers. Strategically located fulfillment centers benefit both the retailer and the customer. When inventory is stored at more than one location, the product can be shipped from the location closest to the customer and reach them faster without incurring expedited delivery fees, improving transit time. Having distribution centers across the country serve as emergency preparedness if a facility shuts down for several days in the event of a crisis. 

Optimize your packaging. When it comes to packaging, think outside the box. Pun intended. Packaging doesn’t just contain and protect a product; it reinforces your brand. Consider how packaging contributes to the customer’s overall experience. Evaluate whether you are using the right materials—and the right amount of materials—for maximum efficiency. Reducing the package’s size/weight and eliminating excess materials can create savings and allow more orders to get loaded for delivery.

Take advantage of technology. Choose a logistics partner that can optimize shipping processes using technology. Parcel tracking and scan and pack verification systems add an extra layer of accuracy and quality control to the fulfillment process. They ensure the right products get delivered to the right place as timely as possible.

If possible, online-only retailers should consider establishing pop-ups in customer-dense cities to allow curbside pick-up through web and app portals. 88% of customers expect companies of all kinds to accelerate digital initiatives due to the pandemic, and 83% expect retailers to provide flexible shipping and fulfillment options such as buy-online-pick-up-at-store, according to Salesforce.

Silver linings and opportunity

Although recent events have created supply chain disruptions globally, it has also created an opportunity. Companies are re-evaluating their supply chains, finding ways to increase resilience and efficiency and build customer loyalty.

Casey Adams is a contributor to Grit Daily News and the President at Visible Supply Chain Management, the industry leader in shipping and fulfillment services for supply chain management. During this role, he has escalated Visible’s growth trajectory— increasing market value by 400%—all without tapping the well of private equity and with minimal bank funding. Casey began work at Pro Star (now Visible Supply Chain Management) as inside council in 2011 and became President in 2013. Casey has enjoyed helping clients and watching the business grow by keeping his perspective fresh and strategies unique. Casey appreciates the importance of teamwork, and firmly believes that working collectively has a more substantial impact than going it alone. Adams received his Bachelor of Science in economics from Brigham Young University and later his law degree from the University of Utah. Adams has been featured in articles by Forbes, American Express.com, Utah Business Magazine, and Fox 13 News in Salt Lake City, Utah.

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