By Jim Kitts
Are you dreading Peak Season planning – the endless meetings, the constant staffing challenges, and pushing your operation to its limits? Most e-commerce retailers process 40+% of their unit volume in the fourth quarter, specifically between Thanksgiving and Christmas. The success or failure of this busy period can make or break your hard work for the year. The staffing challenges, attrition problems, labor planning, training, anything can go wrong.
E-commerce and mobile-based e-commerce grew significantly in 2013. Cyber Monday e-commerce sales, as an example, reached $1.735 billion originating from desktop and laptop devices, according to comScore. Black Friday, which is known for brick-and-mortar retail sales, even saw online spending reach $1.198 billion in the United States. It’s no surprise that mobile online spending also grew, as some reports indicate that mobile-based site traffic was up 55 percent.
Retailers are forecasting 9-12% growth in 2014 e-commerce holiday sales. In 2013 the increase was 9.3% year over year, according to the National Retail Federation. Shipping and fulfillment challenges were a key issue, as delivery delays infuriated customers who were promised that the packages they ordered would arrive by Christmas.
How are retailers going to perform this year? It is the million dollar question.
What Makes Top Performers Shine?
The Retailers who performed the best pulled out all the stops to offer fast and free shipping. They delivered an exceptional customer experience regardless of significant increases in order volume and units per order.
Top performers excelled in quick turnaround, especially during peak, with the top five retailers averaging 1.6 delivery days for multi-unit orders placed on Cyber Monday. The average delivery time across all retailers during peak season (between Black Friday and Christmas) was nine days—including 3.4 days for processing and 5.5 days for shipping. During non-peak times, average delivery time dropped to six days, with processing averaging 1.5 days and shipping 4.5 days
A growing number of retailers adjusted their online order shipping policies during the holidays, and throughout the year, in order to meet rising consumer expectations and to remain competitive. A Shop.org survey conducted just prior to the 2013 holiday season found that more retailers were offering free shipping year-round than the prior year, and more than one-quarter were starting free shipping holiday promotions earlier due to the sluggish economy.
Shipping multi-unit orders from multiple fulfillment centers creates significant cost challenges for retailers, adding expense and decreasing margins. When retailers fulfill orders through two fulfillment locations, shipping costs essentially double to account for the additional parcel shipped from a second location. And retailers cannot pass these costs through to the consumer. To reduce these costs, many companies used brick and mortar channels to help deliver items to customers.
So how do you capitalize on all three of these things? Talk to experts to understand the challenges of the e-commerce world and are willing to help you plan for the upcoming Peak Season. The Progress Group has over 400 years of combined experience working in the retail sector. The Progress Group has supported numerous top 100 retailers and we can assist you and your team before another peak season drains your organization.
For more information about peak planning see us featured in the Modern Materials Handling magazine ‘5 Ways to Handle Peak Demand’.